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Grand jury expenses Nikola founder with fraud in three instances

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

Massimo Pinca | Reuters

Trevor Milton, founder of EV startup Nikola, has been charged with three criminal fraud charges by a federal grand jury for allegedly lying about “almost every aspect of the business,” according to the indictment, which was unsealed on Thursday .

The US Attorney’s Office in Manhattan charged the billionaire, who resigned as chairman, in two cases of securities fraud, including misstatements about the company, and wire fraud.

Prosecutors said Milton had come up with an intricate plan to increase the company’s stock for its own benefit by lying about the company’s products, technology, and future sales prospects. They accuse him of using Nikola’s deal to go public through a special acquisition company (SPAC) to target amateur individual investors, some of whom have lost hundreds of thousands of dollars.

“Milton’s scheme aimed at individual, non-professional investors – so-called small investors – by making false and misleading statements directly to the investing public via social media, television, print and podcast interviews,” says the 49-page publication Indictment.

Nikola shares fell as much as 11% to less than $ 13 per share during Thursday’s early trading.

Nicholas Biase, a US attorney general, said Milton has surrendered to authorities and is expected to be tried in New York today.

Milton, the company’s largest shareholder, held approximately $ 8.5 billion in Nikola stock at its peak.

The grand jury said Milton would forfeit all property “traceable to the commission of these crimes,” which would likely include the more than $ 1 billion he made when Nikola went public in June 2020.

Prosecutors said Milton was “motivated to join the fraudulent system in order to enrich himself and improve his position as an entrepreneur”.

A Milton spokesman did not immediately comment on the indictment.

Nikola said in a statement emailed that it “worked with the government throughout the investigation”. The company stressed that the allegations were directed against Milton and not against the company itself.

“We are sticking to our previously announced milestones and schedules and are focused on getting Nikola Tre’s battery-electric trucks out of the company’s manufacturing facilities later this year,” the company said.

Many of the allegations of false and misleading information were first uncovered in September by the short seller Hindenburg Research.

Hindenburg accused Milton of making false statements about Nikolas technology to grow the company and partner with auto companies. The report, titled “Nikola: How to Partner an Ocean of Lies with America’s Largest Auto OEM,” was released two days after the announcement of a deal with General Motors that boosted both companies’ stocks. It characterized Nikola as “an intricate scam based on dozens of lies” by Milton.

According to an internal investigation, Nikola said in February that Milton made several inaccurate statements from 2016 due to the company’s IPO last year that misled investors.

This is the latest news. Please check again for updates.

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