Nikola (NKLA) founder Trevor Milton indicted on three counts of fraud
Struggling electric vehicle maker Nikola's stock is down on the news that founder Trevor Milton has been indicted for fraud.
Nikola founder Trevor Milton has been charged with three counts of fraud by a federal grand jury today for lying about "nearly all aspects of the business." The 39-year-old billionaire has already been under investigation for securities fraud, wire fraud, and making false statements back in September when he stepped down as chairman of the board. Making matters even worse for Milton, the Securities and Exchange Commission (SEC) filed civil securities fraud cases against him today.
“This is a very straightforward case, Milton told lies to generate popular demand for Nikola stock, Beginning at least in or about March 2020, when Nikola announced that its stock would become publicly listed, Milton became increasingly preoccupied with keeping Nikola’s stock price high,” U.S. Attorney Audrey Strauss told reporters at today's press briefing.
At one point last summer, Nikola topped Ford's market capitalization when its shares topped $93/share and a $30 billion valuation. At the time, Milton was one of the largest shareholders of the company. The grand jury says that Milton will have to forfeit all property "traceable to the commission of said offenses." Milton's gains amounted to more than $1 billion from the Nikola (NKLA) IPO. Prosecutors accuse Milton saying that he “was motivated to engage in the fraudulent scheme in order to enrich himself and elevate his stature as an entrepreneur.”
Nikola issued a statement via email in response to today's news saying that they are cooperating with authorities on these ongoing investigations.“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,” said the company. They attempted to distance themselves from Milton, stressing that these indictments are of him, and not directly related to the company.
The stock market doesn't seem to care who is at fault here. Nikola shares are currently down nearly 10 percent on today's news. The company's named after Nikola Tesla, the namesake of the much more successful Tesla electric vehicle maker. It remains to be seen if Nikola will ever ship a vehicle, or turn a profit, but today's news is bad, and they should feel bad.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
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