NEW YORK -- The founder and one-time executive chair of Nikola Corp. was freed on US$100 million bail Thursday after pleading not guilty to charges alleging he lied about the electric and hydrogen-powered truck startup, duping novice investors including some financially struggling people looking for income during the pandemic.
Trevor Milton, 39, of Oakley, Utah, resigned from Nikola in September amid allegations of fraud. At the time, Milton said he would defend himself against accusations that the company made false claims about its vehicles, allegations Nikola rejects.
In an unsealed indictment Manhattan federal court, Milton was charged with securities and wire fraud.
At an arraignment, Milton pleaded not guilty. He was released on $100 million bail, secured by two Utah properties, including one that a prosecutor said was recently appraised at $36 million. Magistrate Judge Sarah Netburn ordered him not to contact investors unless he had an independent relationship with them.
Marc Mukasey, one of Martin's attorneys, alerted the judge that some financial information in the court record would have to be revised, including a statement that some Milton bank accounts contained $50 million.
Mukasey said it was "a lot less than that as we understand it."
As he left the courthouse afterward in a suit and purple tie, Milton declined to answer questions.
His lawyers issued a statement through a spokesperson saying justice "was not served by the government's action today, but it will be when Mr. Milton is exonerated."
The statement called the case "a new low in the government's efforts to criminalize lawful business conduct. Every executive in America should be horrified."
"Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry. Mr. Milton has been wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses," it added.
Manhattan U.S. Attorney Audrey Strauss said Milton from November 2019 through last September "brazenly and repeatedly used social media, and appearances and interviews on television, podcasts, and in print, to make false and misleading claims about the status of Nikola's trucks and technology."
She told a news conference that the charges were "where the rubber meets the road."
The Securities and Exchange Commission filed separate civil charges.
Shares of Nikola Corp., headquartered in Phoenix, Arizona, tumbled 7% before the opening bell Thursday. By 2 p.m., it had fallen by 10 percent.
Milton's claims were aimed at retail investors lacking professional experience in the securities markets, including people with no experience who began trading stocks during the coronavirus pandemic to replace or supplement lost income or to occupy time during the lockdown, the indictment said.
Some, it said, suffered hundreds of thousands of dollars in losses, including the loss of retirement savings or funds they had borrowed to invest in Nikola.
Meanwhile, Milton was motivated to mislead investors to "enrich himself and elevate his stature as an entrepreneur," the indictment said, noting that his holdings in Nikola were valued at $8.5 billion at one point, moving him closer to his dream of being listed among the world's 100 wealthiest people.
Milton was described in the indictment as a "serial entrepreneur from Utah with no formal background in engineering" when he started Nikola in 2015. After Nikola announced in March 2020 that its stock would be publicly listed, Milton "became increasingly preoccupied" with its stock price and keeping it high, it said.
The indictment cited numerous public statements Milton made as false and misleading, including his claims that the company had early success at creating a "fully functioning" semitruck prototype known as the "Nikola One." Milton knew the prototype was inoperable, it said, and was missing key parts, including gears and motors.
Last year, a report from Hindenburg Research said Nikola's success was "an intricate fraud" and based on "an ocean of lies" including a video showing a truck rolling downhill to give the impression it was cruising on a highway, and stenciling the words "hydrogen electric" on the side of a vehicle that was actually powered by natural gas.
The video was included in the indictment, along with Milton's explanation that the truck did not drive under its own power because motors and gears were removed for safety reasons and that Milton "never deceived anyone."
Milton also misled investors when he said Nikola had engineered and built an electricity- and hydrogen-powered pickup truck known as "the Badger" from the "ground up" using Nikola's parts and technology when he knew that wasn't true, the indictment said.
The indictment alleged he misled investors as well when he said Nikola was producing hydrogen at a reduced cost "when Milton knew that in fact no hydrogen was being produced at all by Nikola, at any cost."
