Electric-Truck Maker Nikola Founder & Ex-CEO Trevor Milton Sentenced to 4 Years Jail & Fined $1 Million for Securities Fraud & Misleading Investors with False Claim of Electric & Hydrogen Powered Pickup Truck, Nikola Corporation Paid $125 million to United States SEC to Resolve Fraud Charges in 2021
21st December 2023 | Hong Kong
Electric-truck maker Nikola founder & ex-CEO Trevor Milton had been sentenced to 4 years jail and fined $1 million for securities fraud and misleading investors with false claim of electric & hydrogen powered pickup truck. In 2021, Nikola corporation had paid $125 million to the United States SEC (Securities & Futures Commission) to resolve fraud charges. United States Department of Justice: “MILTON made these false and misleading statements regarding Nikola’s products and capabilities to induce retail investors to purchase Nikola stock. MILTON took advantage of the fact that Nikola went public by merging with a Special Purpose Acquisition Company or “SPAC,” rather than through a traditional IPO, by making many of his false and misleading claims during a period where he would have not been allowed to make public statements under rules that govern IPOs. … … MILTON made false claims regarding nearly all aspects of Nikola’s business, including: (i) false and misleading statements that the company had early success in creating a “fully functioning” semi-truck prototype known as the “Nikola One,” when MILTON knew the prototype was inoperable; (ii) false and misleading statements that Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as “the Badger” from the “ground up” using Nikola’s parts and technology, when MILTON knew that was not true; (iii) false and misleading statements that Nikola was producing hydrogen and was doing so at a reduced cost, when MILTON knew that in fact no hydrogen was being produced at all by Nikola, at any cost; and (iv) false and misleading claims that reservations made for the future delivery of Nikola’s semi-trucks were binding orders representing billions in revenue, when the vast majority of those orders could be cancelled at any time.” See below for more info:
“ Electric-Truck Maker Nikola Founder & Ex-CEO Trevor Milton Sentenced to 4 Years Jail & Fined $1 Million for Securities Fraud & Misleading Investors with False Claim of Electric & Hydrogen Powered Pickup Truck, Nikola Corporation Paid $125 million to United States SEC to Resolve Fraud Charges in 2021 “
U.S. Attorney Damian Williams: “Trevor Milton lied to investors again and again — on social media, on television, on podcasts, and in print. But today’s sentence should be a warning to start-up founders and corporate executives everywhere — ‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price.”
Electric-Truck Maker Nikola Founder & Ex-CEO Trevor Milton Sentenced to 4 Years Jail & Fined $1 Million for Securities Fraud & Misleading Investors with False Claim of Electric & Hydrogen Powered Pickup Truck
18th December 2023 – Damian Williams, the United States Attorney for the Southern District of New York, announced today that TREVOR MILTON was sentenced by U.S. District Judge Edgardo Ramos to four years in prison for engaging in securities and wire fraud in connection with his scheme to defraud and mislead investors about the development of products and technology by the company he founded, Nikola Corporation (“Nikola”). MILTON was previously convicted after a one-month trial before Judge Ramos. According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial:
- From at least in or about November 2019 up through and including at least in or about September 2020, TREVOR MILTON engaged in a scheme to defraud investors by inducing them to purchase shares of Nikola Corporation, the electric- and hydrogen-powered vehicle and energy company that MILTON founded, through false and misleading statements regarding Nikola’s product and technology development. MILTON’s scheme targeted individual, non-professional investors — so-called “retail investors” — by making false and misleading statements directly to the investing public through social media and television, print, and podcast interviews.
- MILTON made these false and misleading statements regarding Nikola’s products and capabilities to induce retail investors to purchase Nikola stock. MILTON took advantage of the fact that Nikola went public by merging with a Special Purpose Acquisition Company or “SPAC,” rather than through a traditional IPO, by making many of his false and misleading claims during a period where he would have not been allowed to make public statements under rules that govern IPOs.
- MILTON made false claims regarding nearly all aspects of Nikola’s business, including: (i) false and misleading statements that the company had early success in creating a “fully functioning” semi-truck prototype known as the “Nikola One,” when MILTON knew the prototype was inoperable; (ii) false and misleading statements that Nikola had engineered and built an electric- and hydrogen-powered pickup truck known as “the Badger” from the “ground up” using Nikola’s parts and technology, when MILTON knew that was not true; (iii) false and misleading statements that Nikola was producing hydrogen and was doing so at a reduced cost, when MILTON knew that in fact no hydrogen was being produced at all by Nikola, at any cost; and (iv) false and misleading claims that reservations made for the future delivery of Nikola’s semi-trucks were binding orders representing billions in revenue, when the vast majority of those orders could be cancelled at any time.
- For example, when Nikola’s stock was publicly traded in 2020, MILTON claimed that Nikola had defied expectations as a young, disruptive company when it managed to build its prototype hydrogen-powered semi-truck, the Nikola One, which Nikola unveiled on or about December 1, 2016, at a large event that was filmed and broadcast on the internet. During that event and later, MILTON claimed that the prototype Nikola One “fully functions and works, which is really incredible.” In fact, the Nikola One prototype was never completed and never functioned. Rather, the prototype was wholly missing significant parts, including gears and motors, and the control system (i.e., the system that communicates the driver’s directions to the vehicle) and other significant systems were missing or incomplete. Later, in or about January 2018, and despite the fact that the Nikola One prototype was never completed or operational, MILTON published on Twitter and also published on his own Twitter account a video in which the Nikola One appeared to be driving on its own power down a road with no incline. In fact, to film these clips, the Nikola One was towed to the top of a hill, at which point the “driver” released the brakes, and the truck rolled down the hill until being brought to a stop in front of the stop sign.
- Also in 2020, at the same time he was spreading misinformation to investors generally to increase Nikola stock price, MILTON also made false and misleading statements about Nikola’s business and technology to a particular individual as part of an effort to use Nikola stock to make purchases, even when MILTON was subject to a lockup and so could not yet sell his stock. Specifically, MILTON made misrepresentations about Nikola’s business to an individual in order to induce that individual to accept options to purchase Nikola stock (the value of which had already been inflated by MILTON’s scheme to defraud retail investors) in lieu of cash for the purchase of a substantial ranch in Utah.
- In addition to the prison sentence, MILTON, 41, of Alpine, Wyoming, was sentenced to three years of supervised release, ordered to forfeit a property in Utah, and ordered to pay a fine of $1 million. Judge Ramos will set restitution in a future proceeding.
Mr. Williams praised the outstanding work of the U.S. Postal Inspection Service, which jointly conducted the investigation in this case with special agents from the U.S. Attorney’s Office. Mr. Williams further thanked the U.S. Securities and Exchange Commission, which filed a parallel civil action, for its cooperation.
The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Matthew Podolsky and Nicolas Roos are in charge of the case.
Electric-truck Maker Nikola to Pay $125 million to Resolve Fraud Charges, Delivers First Electric Truck
24th December 2021 – Electric-truck maker Nikola Corporation will pay $125 million to the United States Securities and Exchange Commission (SEC) to resolve fraud charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects. The settlement follows the SEC’s litigated action filed earlier this year against Trevor Milton, the company’s founder and former Chief Executive Officer and Executive Chairman. On 17th December 2021, Nikola announced the deliver of 2 electric trucks to Total Transportation Services Inc. (TTSI), a trucking company operating at the Los Angeles and Long Beach ports. The Nikola Electric Truck, Tre BEV has a claimed range of 350 miles and a total of 645 horsepower with a top speed of 75 mph.
“ Electric-truck Maker Nikola to Pay $125 million to Resolve Fraud Charges, Delivers First Electric Truck “
United States SEC Official Statement
The Securities and Exchange Commission today announced that Nikola Corporation, a publicly traded company created through a special purpose acquisition company transaction, has agreed to pay $125 million to settle charges that it defrauded investors by misleading them about its products, technical advancements, and commercial prospects. The settlement follows the SEC’s litigated action filed earlier this year against Trevor Milton, the company’s founder and former Chief Executive Officer and Executive Chairman.
According to the SEC’s order, before Nikola had produced a single commercial product, Milton embarked on a public relations campaign aimed at inflating and maintaining Nikola’s stock price. Milton’s statements in tweets and media appearances falsely gave investors the impression that Nikola had reached certain product and technological milestones. The order finds that Milton misled investors about Nikola’s technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook. The order also finds that Nikola further misled investors by misrepresenting or omitting material facts about the refueling time of its prototype vehicles, the status of its headquarters’ hydrogen station, the anticipated cost and sources of electricity for its planned hydrogen production, and the economic risks and benefits associated with its contemplated partnership with a leading auto manufacturer.
“As the order finds, Nikola Corporation is responsible both for Milton’s allegedly misleading statements and for other alleged deceptions, all of which falsely portrayed the true state of the company’s business and technology,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.”
The Commission’s order finds that Nikola violated the antifraud and disclosure control provisions of the federal securities laws. Without admitting or denying the Commission’s findings, Nikola agreed to cease and desist from future violations of the charged provisions, to certain voluntary undertakings, and to pay a $125 million penalty. Nikola also agreed to continue cooperating with the Commission’s ongoing litigation and investigation. The order also establishes a Fair Fund to return the penalty proceeds to victim investors.
Rebecca Fike, Sarah Mallett, and Ty Martinez of the SEC’s Fort Worth Regional Office conducted the investigation, which is ongoing, under the supervision of Scott Mascianica and Eric Werner. Nikolay Vydashenko and Keefe Bernstein provided trial assistance under B. David Fraser’s supervision. The SEC appreciates the assistance from the United States Attorney’s Office for the Southern District of New York and the U.S. Postal Inspection Service.
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