US prosecutors indict Nicola founder on fraud charges

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US Nikola CEO and founder Trevor Melton speaks during a presentation of his new electric, battery-powered hydrogen fuel cell truck in partnership with CNH Industrial, at an event in Turin, Italy on December 2, 2019.

Massimo Pinca | Reuters

Trevor Melton, founder of EV startup Nicola, has been indicted on three counts of criminal fraud by the US Attorney’s Office in Manhattan for allegedly lying about “nearly all aspects of the business,” according to the indictment issued by the grand jury Thursday.

Prosecutors indicted the billionaire, who resigned as chairman in September, on two counts of securities fraud, including making false statements about the company, and electronic fraud.

In the 49-page indictment, prosecutors said: “The Milton scheme targeted non-professional individual investors – the so-called retail investors – by directly making false and misleading statements to the investing public through social media, television, print interviews and podcasts.”

Milton, who was the company’s largest shareholder, owned approximately $8.5 billion of Nikola shares at the height of the company’s value.

Nikola’s shares are down more than 9% during pre-market trading to less than $13 a share.

The grand jury said that Milton would forfeit all property “attributable to the commission of the said crimes,” which would likely include the more than $1 billion he received when Nicolas announced in June 2020.

Prosecutors said Melton “was motivated to engage in a fraudulent scheme in order to enrich himself and raise his profile as an entrepreneur”.

A Milton spokesman did not immediately comment on the indictment.

In an emailed statement, Nicolas said he had “cooperated with the government throughout the investigation period.” The company emphasized that the allegations were directed against Milton and not the company itself.

“We remain committed to previously announced milestones and schedules and are focused on delivering Nikola Tre battery-powered trucks later this year from the company’s manufacturing facilities,” the company said.

Several allegations of false and misleading statements were first revealed by short-selling firm Hindenburg Research in September.

Hindenburg accused Milton of making false statements about Nikola’s technology in order to grow the company and partner with car companies. The report, titled “Nicola: How to Exploit an Ocean of Lies in Partnership with America’s Largest Car Manufacturers,” was released two days after the company announced a deal with General Motors that sent shares of both companies soaring. Nicola was described as a “complex scam built on dozens of lies” by Milton.

After an internal investigation, Nicola said in February he had discovered that Milton had made several inaccurate statements from 2016 through the company’s initial public offering last year that misled investors.

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