Nikola founder Trevor Milton freed on $100 million bail after fraud arrest

Trevor Milton, the founder, and former chief executive ofNikolaCorpwas freed on $100 million bailafter pleading not guilty to charges alleging that he defraudedinvestors by lying to them about the electric- and hydrogen-powered truck maker.

In an indictment, prosecutors in New York charged the 39-year-old billionaire with two counts of securities fraud and one count of wire fraud over his statements from November 2019 to September 2020 aboutNikola's products and technology.

Authorities said Milton relied on a public relations blitz of social media posts as well as TV and podcast interviews to drive upNikola's stock price, become one of the world's 100 richest people and "elevate" his stature as an entrepreneur.

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"Milton lied about nearly every aspect of the business," USAttorney Audrey Strauss in Manhattan said at a news conference. "Today's criminal charges against Milton are where the rubber meets the road."

The USSecurities and Exchange Commission filed related civil charges against Milton.

Milton was taken into custody on Thursday, and was expected to appear in Manhattan federal court later in the day.

Nikolasaid in a statement it has cooperated with the government and is focused on delivering Tre battery-electric trucks this year. The company was not charged.

In afternoon trading,Nikolashares were down $1.17, or 8.2 per cent, to $13.02, after falling as low as $12.60.

The charges mark a steep downfall for Milton, who founded Phoenix-basedNikolain 2014 and was its CEO until June 2020, when it went public after merging with a special-purpose acquisition company, or SPAC.

He stepped down last September asNikola's executive chairman, two weeks after short-seller Hindenburg Research labeled the company a "fraud" and said it made many misleading statements about its technology.

Prosecutors said Milton's improper statements included thatNikolahad built an electric- and hydrogen-powered "Badger" pickup from the "ground up," developed batteries in-house that Milton knew it was purchasing elsewhere, and had early success in creating a "NikolaOne" semi-truck he knew did not work.

Strauss said the closest theNikolaOne ever came to driving was when company engineers rolled a prototype down a hill so it could be filmed for a commercial.

Prosecutors said that upon deciding to takeNikolapublic, Milton became preoccupied with keeping its stock price high.

The indictment said that on March 2, 2020, the day beforeNikolarevealed it would go public, Milton emailed a board member that "we need to make sure we are getting retail investors on our side. That is what prevents the stock short selling. This is super important to me."

According to the SEC, Milton targeted ordinary retail investors he called "Robinhood investors," portraying himself as a "different" type of CEO who would be "transparent" about his company, portraying it as a trailblazer.

"Corporate officers cannot say whatever they want on social media without regard for the federal securities laws," SEC enforcement chief Gurbir Grewal said at the news conference.

Prosecutors said Milton'sNikolastake was worth at least $8.5 billion soon after the announcements regarding the Badger.

Milton is still worth $1.2 billion, Forbes magazine said on Thursday.

Tesla Inc is amongNikola's rivals in the electric truck sector. Both companies' names derive fromNikolaTesla, an inventor whose work included electric power, and Tesla CEO Elon Musk is now among the world's richest people.

In 2018, Musk and Tesla each agreed to pay $20 million in civil fines to settle SEC charges over a Musk tweet.

(With inputs from agencies)