Nikola founder Trevor Milton faces new federal charge of ranch fraud

CEO and founder of US Nikola, Trevor Milton speaks during the presentation of his new fully electric and hydrogen fuel cell battery cars in collaboration with CNH Industrial, at an event in Turin, Italy on December 2, 2019.

Massimo Pinca | Reuters

The founder of the electric truck startup Nikola Motors, who has already been charged with fraud, faces a new charge related to the purchase of a ranch in Utah – a purchase he partially paid for with an option to buy Nikola shares.

Federal prosecutors in the southern district of New York on Wednesday accused Trevor Milton of re-counting wire fraud for misrepresenting Nikola’s business to convince the seller of the Wasatch Creek Ranch to accept an option to buy the Nikola share. as partial payment for the ranch around April 2020.

The new count is the fourth federal indictment against Milton. In July 2021, a federal grand jury accused Milton of three counts of criminal fraud for allegedly lying about “almost every aspect of the business” to bolster the sale of the electric car company’s shares.

The alternative to buying Nikola shares would have allowed the seller of the ranch, Peter Hicks, to buy more than 500,000 shares in the company at what was then a discounted price of $ 16.50 per share.

Nikola’s share price briefly rose to more than $ 60 in June 2020, but fell sharply after Milton was forced out of the company due to allegations of fraud in September of that year. The company’s shares were traded at $ 5.60 late Wednesday.

Lawyers for Milton did not immediately respond to a request for comment.

Prosecutors said Milton built an intricate scheme designed to pump up the company’s shares for personal gain by lying about Nikola’s products, technology and future sales prospects. They accuse him of using Nikola’s deal to be advertised through a special purpose acquisition company to target amateur retail investors, some of whom lost hundreds of thousands of dollars.

In his civil lawsuit against Milton, Hicks claimed that Milton came with similar representations to convince him to accept the stock option as payment for the ranch.

Many of the allegations regarding Milton’s allegedly false and misleading statements were first uncovered by shorts seller Hindenburg Research.

Milton, who is still awaiting trial, has maintained his innocence. He pleaded not guilty to the criminal charges in a New York courtroom last year.

However, following an internal investigation, Nikola said in February that it found Milton making several inaccurate statements from 2016 through the company’s IPO that misled investors in June 2020.

In December, Nikola agreed to pay the Securities and Exchange Commission $ 125 million to settle allegations that it defrauded investors by misleading them about products, technical capabilities and business prospects.

Nikola was the catalyst for the start-up of electric cars to become public through SPAC agreements. Investor interest in such companies increased after Tesla’s shares soared, making it the world’s most valued carmaker by market value in 2020.