General SPAC
July 29, 2021
6 minutes read

Alert: Nikola Founder Trevor Milton Indicted On Fraud Charges

The founder of embattled electric car startup Nikola Corp. has been formally indicted on fraud charges by the US Justice…

The founder of embattled electric car startup Nikola Corp. has been formally indicted on fraud charges by the US Justice Department months after resigning from the company. Trevor Milton by name, he’s been accused of securities and wire fraud in connection with a scheme to defraud and mislead investors.

Milton is accused of misleading investors by making false statements regarding Nikola’s products and capabilities. Notably, most of the investors allegedly misled were on the retail side. The DOJ alleges that Milton made false claims regarding “nearly all aspects” of Nikola’s business.

Milton founded Nikola in 2014 and led it through a public listing via a merger with a special-purpose acquisition company (SPAC) last year. The DOJ threw an apparent jab at SPACs in his indictment, asserting that he made ‘many’ of his false and misleading claims during a period where he would not have been allowed to do so under rules that govern traditional IPOs were he to take that route.

After its SPAC merger, Nikola was hit with fraud accusations first from a short-seller and then formal law enforcement inquiries that culminated in Milton’s resignation last September. Now, it appears that the US Justice Department saw it fit to formally indict him on serious fraud charges.

Since its public market debut, Nikola has been somewhat signaled to be a sham and a company built on excessive hype. There’s factually been many red flags regarding its business, such as its conceptual Badger pickup truck (later canceled) that Milton said was engineered from the “ground up” by Nikola, but it later appeared that the company was outsourcing that work to General Motors, a strategic partner.

Milton’s formal indictment is quite long, with many allegations of false claims. He’s been indicted on two counts of securities fraud and one count of wire fraud. In a Manhattan (New York) court room on Thursday, he pled not guilty and got freed on a $100mn bail after being taken into custody.

With an estimated net worth of over $1bn, Milton can definitely afford a large bail of $100mn and then expensive lawyers to battle a serious legal case.