NEW YORK (AP) — Trevor Milton, the founder of the automaker Nikola Corp., went on trial Monday on charges that he whipped up an investor frenzy for the startup company with false claims about its ability to produce trucks that run on electricity or hydrogen fuel cells.
Nikola’s stock price crashed and many investors suffered heavy losses in 2020 after reports emerged questioning Milton’s rosy claims about the company’s ability to produce cutting-edge vehicles.
In one example, the company put out a video that appeared to show a prototype truck driving down a desert highway. Prosecutors said that in reality, the truck wasn’t operational and had been rolled down a hill for the commercial.
The company’s promotional campaign won over many smaller investors. Nikola shares reached a price of close to $66 in June of 2020, briefly giving the company a market valuation that exceeded some major, established automakers. The stock now trades at under $5.50 per share.
Milton, who lives in Oakley, Utah, was indicted last year on charges of securities fraud and wire fraud. Jury selection began Monday at a federal court in New York.
He pleaded not guilty, and has been free on $100 million bail.
Milton’s lawyers have said they intend to argue at trial that he had no intention of deceiving anyone about the company’s products or technology.
Milton started Nikola in 2015 and announced that its stock would be publicly listed in 2020. He resigned in September of that year after the company had signed a $2 billion agreement with General Motors but following a report making allegations of fraud.
At that time, Nikola said the report was filled with misleading statements and accusations.
The company paid $125 million last year to settle a civil case against it by the Securities and Exchange Commission. Nikola didn’t admit to any wrongdoing in making that agreement.
The company continues to operate from a headquarters in Arizona. It has begun delivering some vehicles to customers and says it has been ramping up toward a capacity of making thousands of trucks per year.