Nikola Founder Trevor Milton Charged With Lying to Investors

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Trevor Milton,

the founder of

Nikola Corp.


NKLA -9.65%

and onetime executive chairman of the electric-truck startup, was indicted Thursday on securities-fraud charges for what prosecutors said was a scheme to mislead investors about the company’s product and technology development.

Mr. Milton faces two counts of securities fraud and one count of wire fraud, according to the indictment. The U.S. attorney’s office in Manhattan, which brought the charges, is set to make an announcement about the indictment on Thursday morning.

A spokesman for Mr. Milton didn’t immediately comment. Last year, Mr. Milton said on Twitter that he intended to defend himself against “false allegations.” He resigned from Nikola in September as concerns mounted about the startup darling that had attracted backing from some of the industry’s biggest names.

Nikola wasn’t charged. The company said that Mr. Milton hasn’t been involved in the company’s operations or communications since his resignation. “Nikola has cooperated with the government throughout the course of its inquiry,” the company’s statement said. “We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities.”

Prosecutors said that from November 2019 through September 2020, Mr. Milton engaged in a scheme to defraud individual, nonprofessional investors by making false statements through social media, television and podcast interviews. Some of the investors that bought the shares suffered hundreds of thousands of dollars in losses, prosecutors said.

Mr. Milton’s false statements included those about Nikola One, a semi-truck prototype, the indictment said. Prosecutors said that Mr. Milton knew the prototype was inoperable, yet called it fully functioning. He also misled investors about an electric- and hydrogen-powered pickup truck known as the Badger, the indictment said.

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The Nikola founder also made false claims that reservations for future delivery of the semi-trucks were binding orders that represented billions in revenue, according to the indictment. Prosecutors said that in reality, most of the orders could be canceled at any time.

Mr. Milton founded Nikola in 2015 with the ambition of disrupting the commercial-trucking industry by selling and leasing big semi-trucks powered by batteries and hydrogen fuel. He served as chief executive until the company went public last year, at which point he became executive chairman and

Mark Russell

was appointed as CEO.

The Phoenix-based startup was one of several automotive-focused firms to go public last year, capturing the attention of Wall Street as investor enthusiasm intensified for electric vehicles and other alternative propulsion systems.

At one point, last summer, Nikola’s valuation briefly surpassed

Ford Motor Co.

in June, topping $31 billion before retreating.

In September, Nikola was rocked by claims raised in a report by New York-based short seller Hindenburg Research. The report accused Nikola and Mr. Milton of making deceitful statements and exaggerating the progress on some of its technology, including on hydrogen-powered semi trucks.

Nikola had denied the allegations of fraud outlined in the report. Mr. Milton shortly after left the company. According to Nikola, he offered to step down so the company could better focus on the business and the board accepted.

Nikola launched an internal review of the short seller’s report, and earlier this year said that it found a video of its electric truck in motion gave a misleading impression it was drivable, and that Mr. Milton had made several inaccurate statements.

In particular, the company said that it found nine statements by the company or Mr. Milton were wholly or partially inaccurate.

Nikola didn’t directly address other allegations in the short seller’s report other than to say: “In other respects, the Hindenburg article’s statements about the company were inaccurate.”

Write to Corinne Ramey at Corinne.Ramey@wsj.com

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