The founder of a prominent electric semi truck manufacturer has been indicted on multiple fraud charges for allegedly making false claims about the truck to deceive investors.
According to indictment documents unsealed on Thursday morning, Nikola founder Trevor Milton has been charged with two counts of securities fraud and one count of wire fraud after he “engaged in a fraudulent scheme to deceive retail investors about Nikola’s products, technical advancements, and commercial prospects for his own personal benefit in violation of the federal securities laws.”
Prosecutors specifically point to a video used to promote the Nikola One semi truck prototype that falsely claimed that the electric truck was fully functional and operating under its own power.
In the complaint filed against Milton by the U.S. Securities and Exchange Commission, authorities allege that the prototype truck was filmed rolling down a hill:
“For the commercial shoot, the non-functioning Nikola One prototype truck was hauled to the shooting location by a lowboy semi-truck trailer. At this time, and more than a year after the unveiling event, the Nikola One still could not run under its own power. It was towed to the top of an inclined stretch of road and then filmed rolling down the incline. This towing-and-rolling process was repeated three times to have sufficient footage for Company 1’s commercial.“
Court documents claim that the video clip was sped up and edited, then shared to Nikola’s Twitter with the caption “Behold, the Nikola One in motion. Pre-production units to hit fleets in 2019 for testing. The Nikola Hydrogen Electric trucks will take on any semi-truck and outperform them in every category: weight, acceleration, stopping, safety and features – all with 500-1,000 mile range!”
Authorities said that the “misleading video” “was material to investors … because it purported to show that as early as January 2018, Nikola had a truck that could drive.”
Milton is also accused of leveraging his social media accounts and television and podcast appearances to target “individual, non-professional investors.”
— Hindenburg Research (@HindenburgRes) September 10, 2020
Milton resigned as chairman of Nikola last September after short-selling firm Hindenburg Research accused the company of fraud.
Nikola says that they have cooperated with the investigation and that they “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.”
Milton surrendered himself to police custody on Thursday morning and is expected to appear in court later in the day on Thursday.