Nikola (NASDAQ: NKLA) founder Trevor Milton is facing a new wire fraud charge after allegedly misrepresenting Nikola's success to a third party.
Milton already faces a slew of similar charges for misleading shareholders and regulators after a federal indictment last year. According to prosecutors, Milton misrepresented "nearly all aspects of the business" to inflate the company's stock and coerce additional sales. Prosecutors at the time claimed that the EV startup founder possessed a detailed plan to mislead targeted individuals to gain additional shareholders.
The new wire fraud charge alleges that Milton used similar methods to mislead Nevada resident Peter Hicks while the two negotiated the sale of Hicks' ranch. Per Hicks' civil suit, Milton allegedly talked up the success of Nikola to convince him to purchase shares at a discounted price as part of the transaction.
Hicks purchased 500,000 shares for $16.50, according to filings made by prosecutors. With Nikola shares sitting at $5.83 at the time of writing, Mr. Hicks faces a steep loss of over $5,300,000.
While federal prosecutors and lawyers for Milton have yet to make any comments to the press, the increasing evidence against the startup founder doesn't bode well with a rapidly approaching trial beginning on July 18.
Earlier this week, Milton asked a federal judge to block evidence tied to his "wealth, lifestyle or spending habits" at the trial. Milton's lawyers have also reportedly asked for evidence of the circumstances surrounding retail investors to be excluded from trial, claiming that these circumstances did not affect Milton's decision-making.
As for Nikola, the startup hasn't had many positive developments even after its embattled CEO and founder resigned. In December, the company paid the Securities and Exchange Commission a $125 million fine to settle charges of misleading shareholders. The settlement followed much of Nikola's promising contracts and partnerships drying up, leaving it with an increasingly smaller slate of offerings for customers that had stuck by the firm.
BP plc (NYSE: BP) was the first partner to back away in September 2020, canning a partnership to create hydrogen fueling stations for Nikola's trucks. General Motors (NYSE: GM) revised its partnership in November, still providing necessary fuel-cell technology, but pulling out of manufacturing Nikola's Badger truck (which was subsequently canceled), as well as acquiring an 11% stake. Republic Services (NYSE: RSG) terminated a partnership to develop zero-emission garbage trucks in December.