Nikola founder Trevor Milton faces new federal fraud charge tied to ranch purchase

The founder of electric-truck start-up Nikola Motors, already under indictment for fraud, is facing a new charge related to his purchase of a Utah ranch – a purchase he paid for in part with an option to buy Nikola stock.

Federal prosecutors in the Southern District of New York on Wednesday charged Trevor Milton with a new count of wire fraud for misrepresenting the state of Nikola’s business to convince the seller of the Wasatch Creek Ranch to accept an option to buy Nikola stock as partial payment for the ranch around April 2020.

The new count is the fourth federal charge against Milton. In July 2021, a federal grand jury charged Milton with three counts of criminal fraud for allegedly lying about “nearly all aspects of the business” to bolster sales of the electric vehicle company’s stock.

The option to buy Nikola stock would have allowed the seller of the ranch, Peter Hicks, to buy more than 500,000 shares of the company at what was then a discounted price of $16.50 per share.

Nikola’s stock price briefly surged to more than $60 in June 2020, but fell sharply after Milton was forced out of the company amid allegations of fraud in September of that year. The company shares were trading at $5.60 late Wednesday.

Attorneys for Milton did not immediately respond to a request for comment.

Prosecutors said Milton built an intricate scheme designed to pump up the company’s stock for his own gain by lying about Nikola’s products, technology, and future sales prospects. They accuse him of using Nikola’s deal to go public via a special purpose acquisition company to target amateur retail investors, some of whom lost hundreds of thousands of dollars.

In his civil suit against Milton, Hicks alleged that Milton made similar representations to convince him to accept the stock option in payment for the ranch.

Many of the allegations regarding Milton’s allegedly false and misleading statements were first uncovered by short-seller Hindenburg Research.

Milton, who’s still awaiting trial, has maintained his innocence. He pleaded not guilty to the criminal charges in a New York courtroom last year.

However, following an internal investigation, Nikola said in February that it found Milton made several inaccurate statements from 2016 through the company’s IPO that misled investors in June 2020.

In December, Nikola agreed to pay the Securities and Exchange Commission $125 million to settle charges it defrauded investors by misleading them about its products, technical capacity and business prospects.

Nikola was the catalyst for electric vehicle start-ups to go public through SPAC deals. Investor interest in such companies soared after Tesla’s stock skyrocketed to make it the world’s most valued automaker by market cap in 2020.