Nikola founder Trevor Milton accused of making false statements

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Electric car update

Trevor Milton, the founder of Nikola, has been accused by US federal prosecutors of misleading investors in the products and technology of this electric truck startup.

The U.S. Attorney’s Office in Manhattan charged Milton with Step down As the chairman of Nikola last year, he used “false and misleading statements” to deceive investors and persuade them to buy the company’s stock. He was detained in New York on Thursday morning and will appear in court later that day.

“This is a very straightforward case,” said Audrey Strauss, the U.S. Attorney for the Southern District of New York. “Milton lied to generate demand for Nicolas stock.”

In the indictment unsealed on Thursday, he was charged with two counts of securities fraud and one count of wire fraud. The US Securities and Exchange Commission also filed a civil lawsuit against Milton.

The indictment stated that federal prosecutors accused Milton of direct conversations with “thousands” of retail investors through social media, television, print and podcast interviews as a goal. It said that many of these investors had no previous trading experience, and they bought stocks to make up for lost income from the pandemic or to pass time during the lock-in period.

The indictment stated: “After some of Milton’s statements were revealed to be false and misleading, the value of Nicholas’ stocks, including those held by retail investors, plummeted.” The indictment stated that, as a result, some investors suffered. Thousands of dollars in losses, “in some cases, including the loss of their retirement savings or the funds borrowed to invest in Nicholas.”

Milton’s spokesperson said he would make a statement soon.

The prosecutor listed several allegedly false and misleading statements by Milton, including the claim that the Nikola No. 1 truck was a working prototype despite its lack of propulsion; Nikola had developed it when sourcing batteries and other components from a supplier These components; and truck bookings are binding orders worth billions of dollars, and most orders can be easily cancelled.

The indictment also includes detailed information about a video intercepted by critics of the company that depicts Nicholas One rolling down a hill because it cannot move on its own. The indictment stated that the truck door was made of minivan parts and “must be taped to prevent it from falling off during the filming process.”

The indictment stated that the vehicle’s turbine was designed to run on natural gas, and the battery was removed before commercial shooting to reduce the risk of fire.

The US indictment stated that Milton aspires to be one of Forbes’ 100 richest people and has the motivation to “enrich himself and enhance his status as an entrepreneur.” The value of his stock increased from US$844 million when the company went public to US$8.5 billion at the peak of Nicholas.

According to the indictment, Milton is keenly aware of the company’s stock price and the large number of users who purchase shares on the trading application Robinhood. When an executive pointed out the speculation of retail investors, Milton allegedly responded: “This is how you build a foundation. Love it.”

Nikola stated that Milton resigned on September 20, “Since then he has not been involved in the operation or communication of the company. Today’s government action is directed at Mr. Milton personally, not the company. During the entire investigation, Nigeria Gula has been cooperating with the government.”

The company said it still plans to deliver the Nikola Tre battery electric truck later this year.

Nikola merged with VectoIQ Acquisition to become a public company in June last year. VectoIQ Acquisition is a blank check company founded by former GM executive Stephen Girsky.

Its share price soared to $80 after the initial public offering, and then plummeted when Hindenburg Research issued a short-sale report, which stated that the company was A “complex fraud”An internal investigation by the company found that Milton’s nine statements were Completely or partially inaccurate.

Regulators are increasingly concerned that retail traders do not understand the risks of investing in special purpose acquisition companies, and they have filed charges against Milton.The U.S. Securities and Exchange Commission recently issued multiple statements Warning investors Regarding the huge benefits that insiders derive from the transaction, they have begun to scrutinize the transaction carefully.

She said that although Strauss refused to comment on other Spacs, “we discovered something in the Spac structure that allowed him to do something we claimed to be a crime.”

Gurbir Grewal, head of the U.S. Securities and Exchange Commission’s enforcement department, said the case “also shows that company executives cannot say anything they want on social media without ignoring securities laws.”

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