The founder and one-time executive chair of Nikola Corp. was freed on $100 million bail Thursday after pleading not guilty to charges alleging he lied about the electric and hydrogen-powered truck startup, duping novice investors including some financially struggling people looking for income during the pandemic.
Trevor Milton, 39, of Oakley, Utah, resigned from Nikola in September amid allegations of fraud. At the time, Milton said he would defend himself against accusations that the company made false claims about its vehicles, allegations Nikola rejects.
In an unsealed indictment Manhattan federal court, Milton was charged with securities and wire fraud.
At an arraignment, Milton pleaded not guilty. He was released on $100 million bail, secured by two Utah properties, including one that a prosecutor said was recently appraised at $36 million. Magistrate Judge Sarah Netburn ordered him not to contact investors unless he had an independent relationship with them.
Marc Mukasey, one of Milton's attorneys, alerted the judge that some financial information in the court record would have to be revised, including a statement that some Milton bank accounts contained $50 million.
Mukasey said it was "a lot less than that as we understand it.”
As he left the courthouse in a suit and purple tie, Milton declined to answer questions.
His lawyers issued a statement through a spokesperson saying justice “was not served by the government's action today, but it will be when Mr. Milton is exonerated.”
The statement called the case "a new low in the government’s efforts to criminalize lawful business conduct. Every executive in America should be horrified.”
“Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry. Mr. Milton has been wrongfully accused following a faulty and incomplete investigation in which the government ignored critical evidence and failed to interview important witnesses,” it added.
Manhattan U.S. Attorney Audrey Strauss said Milton from November 2019 through last September “brazenly and repeatedly used social media, and appearances and interviews on television, podcasts, and in print, to make false and misleading claims about the status of Nikola’s trucks and technology.”
She told a news conference that the charges were “where the rubber meets the road” after repeated public lies by Milton, including his claim that one of the company's early prototypes — Nikola One — could be driven when the closest it ever came was when some Nikola engineers rolled it down a hill for a television commercial.
A video of it was included in the indictment, along with Milton’s explanation that the truck did not drive under its own power because motors and gears were removed for safety reasons and that Milton “never deceived anyone.”
“He even claimed that Nikola was developing the technology for a new line of pickup trucks called the Badger, when in fact the Badger was going to be little more than another company’s truck with Nikola branding on top,” Strauss said.
“At the bottom, this case is very straightforward,” the prosecutor said. “Milton told lies to generate popular demand for Nikola’s stock.”
The Securities and Exchange Commission filed separate civil charges.
Shares of Nikola Corp., headquartered in Phoenix, Arizona, finished Thursday down over 15%.
Milton's claims were aimed at retail investors lacking professional experience in the securities markets, including people with no experience who began trading stocks during the coronavirus pandemic to replace or supplement lost income or to occupy time during the lockdown, the indictment said.
Some, it said, suffered hundreds of thousands of dollars in losses, including the loss of retirement savings or funds they had borrowed to invest in Nikola.
Meanwhile, Milton was motivated to mislead investors to “enrich himself and elevate his stature as an entrepreneur,” the indictment said, noting that his holdings in Nikola were valued at $8.5 billion at one point, moving him closer to his dream of being listed among the world's 100 wealthiest people.
Milton was described in the indictment as a “serial entrepreneur from Utah with no formal background in engineering” when he started Nikola in 2015. After Nikola announced in March 2020 that its stock would be publicly listed, Milton “became increasingly preoccupied” with its stock price and keeping it high, it said.
Nikola issued a statement distancing itself from its founder, saying he hadn't been involved in the company's operations and communications since his September resignation.
“Today’s government actions are against Mr. Milton individually, and not against the company,” the statement said. “Nikola has cooperated with the government throughout the course of its inquiry. 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.”