Nikola founder Trevor Milton stands trial on fraud charges, capping a stunning rise and fall

The laminitis of electrical semitruck shaper Nikola Motor is lasting proceedings connected fraud charges related to statements helium made astir the company's exertion and products, statements that national prosecutors allege were exaggerated and misleading.

The U.S. Attorney's Office successful Manhattan has alleged that Trevor Milton, who founded Nikola successful 2014, lied astir "nearly each aspects of the business" during his clip arsenic president and CEO of the company. Those lies were intended to bolster income of the startup's stock, prosecutors alleged successful indictments released successful 2021 and earlier this year. Milton has denied the charges.

"He lied to dupe guiltless investors into buying his company's stock," Assistant U.S. Attorney Nicolas Roos said successful opening statements successful U.S. District Court successful New York Tuesday. "On the backs of those guiltless investors taken successful by his lies, helium became a billionaire virtually overnight."

The proceedings began with assemblage enactment connected Monday and got underway connected Tuesday. Prosecutors told prospective jurors that the proceedings were apt to past astir 5 weeks.

The proceedings caps a stunning emergence and autumn of Nikola nether Milton.

The company's banal terms concisely surged to much than $90 per stock successful June 2020, days aft it went nationalist via a merger with a special-purpose acquisition institution (SPAC). The banal run-up made Nikola – a institution that didn't yet person gross astatine the clip – much invaluable than Ford Motor.

But its shares fell sharply aft Milton was forced retired of the institution successful September of that year, pursuing fraud allegations made by short-seller Hindenburg Research. Both the Securities and Exchange Commission and the U.S. Department of Justice opened investigations pursuing Milton's departure; helium was indicted connected 3 counts of fraud by a expansive assemblage successful July 2021. Prosecutors added a 4th count successful June.

Nikola's shares closed astatine $5.03 apiece connected Tuesday.

Milton is facing 2 counts of securities fraud and 2 counts of ligament fraud, each related to statements helium made astir Nikola's concern portion helium was president and CEO of the company. If convicted, helium could look up to 25 years successful national prison.

Milton's attorney, Marc Mukasey, said Tuesday that Milton sought to convey a imaginativeness for the aboriginal of trucking, not to mislead investors. Mukasey has indicated that the defence plans to reason different executives astatine Nikola, including the company's wide counsel, signed disconnected connected Milton's statements.

Nikola itself isn't facing charges successful this case. The SEC brought related civilian charges against the institution past year, but that lawsuit was settled successful December aft Nikola agreed to wage a $125 cardinal fine. Milton inactive owns Nikola stock, but the institution has different chopped ties with its founder.

Prosecutors allege that Milton made "false and misleading statements regarding Nikola's merchandise and exertion development" arsenic portion of a "scheme" intended to induce retail investors to bargain shares of Nikola. Prosecutors allege:

• Milton said that the company's archetypal semitruck prototype, called the Nikola One, was "fully functional" – but it wasn't.
• A video showing the prototype motortruck seemingly driving nether its ain powerfulness was created by rolling the motortruck — which couldn't thrust connected its ain — down a hill.
• Separately, Milton claimed that Nikola had engineered and built an electrical pickup motortruck called the Badger, wholly connected its own, aft years of work. But, prosecutors say, the Badger was small much than "concept sketches and renderings" astatine the clip of Milton's archetypal statements.
• While the institution yet showed a prototype Badger, the amusement motortruck was successful information built by third-party vendors and based connected a motortruck from a ample automaker.
• Milton besides told investors that Nikola was producing hydrogen state — needed to refuel its fuel-cell-powered trucks — astatine a reduced cost; that Nikola had developed electric-vehicle batteries in-house; and that Nikola had binding orders representing "billions successful revenue" for its electrical trucks. All of those statements were false, according to prosecutors.

Milton is besides accused of making akin misrepresentations to the seller of a ranch helium purchased successful 2020, successful an effort to get the seller to judge Nikola banal arsenic portion outgo for the purchase.

Prosecutors are expected to statesman presenting their afloat lawsuit against Milton to jurors connected Wednesday.

—Reuters contributed to this report.