Trevor Milton, founder of Nikola, was in the southern district of the New York Federal Court on Thursday securities fraud. The charges allege that Milton made a series of fundamentally false claims that described the release of a product that works closer to the electric vehicle company Nikola than it actually was, and raised more than $ 500 million in investment in the process.
“Milton didn’t sell the Nikola version as it was – an early-stage company with a new idea to market products and technology still to be proven, but rather a path as an explosive company that had already reached many groundbreaking and game-changing milestones,” the accusation claims.
In particular, the allegation was that Milton used a staged video to create the false impression that a prototype of a Nikola One truck was able to move on its own, when in fact the vehicle was only moving downhill. In addition, Milton erroneously claimed that the company produced its own hydrogen fuels below the market and had been accused of receiving billions and billions of billions and billions of dollars in committed truck orders.
Nominal competitor to Tesla, Nikola emerged in 2020 a flatbed truck with traction fuel cells and a tractor trailer cab. The tension around the trucks peaked that September, when General Motors announced a $ 2 billion deal acquire a stake in the company and assist in the release of its Badger platform truck.
The excitement was short-lived: less than a week after the plans were announced report by short selling company Hindenburg Research accused the company of fraud. Based on discussions with an anonymous former employee, the report claimed that the much-publicized demonstration had succeeded at the stage in giving the impression that Nikola’s truck was able to move on its own. Instead, the report claimed, “Nikola took a truck to be towed to the top of a hill on a secluded road and only described it moving along a hill.”
The prosecution reiterates this argument. “A few weeks before the incident, Nikola’s chief engineer informed Milton that the truck would not operate at the unveiling incident unless the incident was postponed,” prosecutors claim. “Milton decided to proceed on schedule, knowing that the vehicle on display would not work.”
The indictment confirms that the truck’s movement was the result of rolling from the top of the hill, and claims that the “towing and rolling process” was repeated three times to produce material for the company’s advertisements. Some materials were also speeded up in editing, which “made the Nikola One seem to move faster”.
The final version of the video was uploaded to Nikola’s official YouTube, Facebook and Twitter accounts with the title “Look, Nikola One is on the move”.
The prosecution also provides more detailed information about how inoperative the vehicle was. According to the statement, all electrical components were used externally (and not from the truck battery), no fuel cell or hydrogen gas tanks were installed, no air compressor and turbine were commissioned, no gearboxes were assembled, and vehicle level controls were incomplete. The dashboard interface that Milton seemed to use to start the truck was a ready-made tablet and was not integrated into the vehicle’s systems in any way, the archive claims.
Hindenberg claimed in the report that the Securities and Exchange Commission was investigating Nikola, even though the SEC refused to confirm the investigation at the time.
The drop in the report was quick and devastating. General Motors withdrew from the share transaction, and Milton resigned as CEO shortly thereafter. The company has continued to operate, but has significantly narrowed its targets. In February, Nikola interrupted its planned electric ATV and motorboat, a decision that cost the company $ 14 million under the regulations.