Nikola Motors Founder Trevor Milton Faces Federal Fraud Charges

By - June 28, 2022
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The founder of electric truck company Nikola Motors, Trevor Milton, is facing federal fraud charges and also was hit with another charge last week related to purchasing a ranch in Utah.

New York federal prosecutors charged Milton last week with a new wire fraud count. They allege he misrepresented Nikola’s financial affairs to convince the owner of Wasatch Creek Ranch to take an option to purchase Nikola stock as partial payment for the ranch in 2020.

The new count is the fourth that Milton has been hit with by the US government. In 2021, a grand jury in federal court charged the Nikola founder with several counts of criminal fraud for lying about most aspects of his company to increase the sales of the company’s stock.

The option to purchase Nikola stock would have allowed the ranch owner, Peter Hicks, to purchase at least 500,000 shares of the firm at a discounted price of $16.50 per share.

Nikola’s stock increased to more than $60 a share in 2020 but fell after Milton had to leave the company after fraud allegations came to light. The firm’s shares are trading at $5.60 as of last week.

Federal investigators argue that Milton knew the stock shares would drop in value and he misrepresented what they were worth to Hicks.

Prosecutors Allege Milton Ran Elaborate Stock-Pumping Scheme

Federal prosecutors say Milton constructed a complex scheme that intended to pump up Nikola’s stock for his own financial gain by lying about the company’s products and technology, as well as its future sales prospects.

Prosecutors also accuse him of using the company’s deal to go public to go after small retail investors, and many of them lost hundreds of thousands of dollars.

Hicks filed a civil suit against Milton that alleges the Nikola owner made representations to him to take the stock option as payment for the ranch.

Many of the federal charges regarding Milton’s false statements were first revealed by short seller Hindenburg Research.

Milton is still awaiting trial and says he is innocent. He pleaded not guilty in 2021 to the fraud federal charges in New York.

However, during an internal investigation last year, Nikola said that the founder made inaccurate statements in 2016 via the firm’s IPO that may have misled investors in June 2020.

At the end of last year, Nikola said it would pay the SEC $125 million to settle criminal charges that it defrauded investors by lying to them about its business prospects, products, and technical abilities.

Milton Asks Judge To Block Evidence From Jury Of His ‘Wealth’

Last week, Milton asked the federal judge on the fraud case to block several pieces of evidence related to his wealth and spending habits. His attorneys argued that sharing the details of his wealth with the jury could be unfairly prejudicial.

Federal prosecutors say Milton incorrectly claimed that Nikola had constructed an electric and hydrogen pickup truck from scratch and had developed their own batteries, but had really bought them elsewhere. Also, they say Milton said his firm was developing a truck prototype that he already knew didn’t work.

Attorneys Also Asked For 30-Day Delay And Change Of Venue

Also, Milton’s attorneys filed a letter this month asking for a 30-day delay of his trial. The letter noted that the latest fraud charges are different than the others, which involved him allegedly pumping up Nikola stock by being on social media often and doing interviews with various financial media outlets.

His attorneys say the ranch issue isn’t related to the other charges and will require them to use a different defense. They say it could take several months for them to devise a defense to the land sale charge and they will be unprepared if the trial goes forward in July.

Milton attorney Bradley Biondi wrote the judge that nothing in the first federal indictment provided the defense with notice that the ranch issue would be presented during the fraud trial. He said the defense first found out about the ranch transaction this month. Nothing in earlier discovery from the federal government talked about the private land sale.

The judge earlier ruled against the Nikola founder’s bid to get the trial moved to Utah, where he lives, or to Phoenix, where the company has its headquarters. The federal trial date was set for late July when Milton didn’t appeal the denial for a change of venue.

The attorneys say that going ahead with the trial means they must either go ahead with a trial that leaves them unprepared for the land sale allegation, or he must give up his right to a speedy trial. They argue that a speedy trial doesn’t mean they should have to accept a last-minute, new federal charge.

The fraud charge for the ranch sale could result in a 20-year federal prison sentence.

Federal prosecutors are keeping the heat on the defense, however. They filed a motion last week seeking to require Milton to declare this week if he will use an ‘advice of counsel’ defense, which would blame his lawyers for giving him poor advice on the federal case.

During the fraud allegation charges going back a few years, Milton has sold tens of millions of shares and is now a minority owner of the company. Mark Russell succeeded the CEO in 2020 and holds about 11.7% of Nikola equity.

Attorney Geoffrey G. Nathan

About Geoffrey Nathan, Esq

Geoffrey Nathan is a licensed attorney in the Commonwealth of Massachusetts since 1988, admitted to practice in both Federal and State courts. He is a Boston criminal defense attorney with over 25 years of experience in felony, federal, and white-collar crimes. Board of Bar Overseers Number #552110