Nikola Founder Trevor Milton Charged with Fraud

• Nikola truck EV start-up founder Trevor Milton charged with two counts of securities fraud and one count of wire fraud.

• DOJ claims Milton made false claims about the company's technology and vehicles, including the Nikola One, in an effort to drive up stock value.

• GM took a $2 billion stake in Nikola nearly a year ago, but the Detroit automaker's plans to produce the Nikola Badger pickup later fell apart.

Nikola electric truck start-up founder Trevor Milton was arrested on Thursday morning after a federal grand jury indicted the executive on three counts of criminal fraud. Prosecutors allege that the 39-year-old billionaire devised a scheme to drive up the company's stock value while making false and misleading statements about the company's technology and development progress. The indictment claims that Milton targeted retail investors in an effort to encourage them to buy the stock, including those who had no prior experience in the market.

Prosecutors also allege that Milton promoted an exaggerated and false narrative about the Nikola One semi truck, which was unveiled back in 2016, which Milton claimed to be fully functional at the time. Additionally, the indictment alleges that the Nikola One prototype was, in fact, not finished at the time of the unveiling, and also did not feature gears or motors.

"Instead, for the purpose of the unveiling event, tablet computers or other computer screens were mounted into the areas where the screens for the infotainment would be, and the screens were set to display images created to have the appearance of infotainment screens, with speedometers, maps, and other information displayed," the U.S. Attorney's Office for the Southern District of New York said in a statement.

A parallel civil action was also filed by the U.S. Securities and Exchange Commission this week, which participated in the investigation along with the U.S. Attorney's Office for the Southern District of New York.

In the criminal indictment, the U.S. Attorney's Office claims that Milton that "made false claims regarding nearly all aspects of Nikola’s business" for a number of years, including those that concerned the Badger pickup. Prosecutors allege that he claimed that the Badger was made from the ground up with Nikola's technology and parts, when he knew that that wasn't true, and also that he falsely claimed that Nikola itself as a company was producing hydrogen fuel for use in vehicles. The indictment also alleges that he made false claims about battery development at Nikola, and that the company had binding orders for the trucks representing billions in revenue.

The indictment paints a timeline of the company from the early days of the start-up and the first appearance of the Nikola One semi truck, to the period of the past year.

Notably, almost a year ago short-seller Hindenburg Research published a report about the company, in which it made a number of very similar allegations about Milton and the company's vehicle projects and technology. The lengthy report titled Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America, detailed a number of alleged actions that included Nikola's technology and financial activities.

"We think Trevor Milton, through dozens of outright lies, was able to form partnerships with some of the largest legacy auto companies in the world in their desperation to catch up to Tesla’s EV leadership status," Hindenburg said in the report at the time.