Tuesday May 20 2024
Embattled hydrogen-truck maker Nikola NKLA 2.62%increase; green up pointing triangle
wants to put its convicted founder in the rearview mirror. Trevor Milton has had other plans.
Milton, whose over-the-top promotion helped make Nikola’s shares worth billions at one point, still owns a stake in the company. He has publicly criticized and tried to replace the company’s board. He is in a legal fight with Nikola over a $165 million arbitration award.
Milton is also in a spat with his neighbors and his local government over his use of a helicopter to fly to one of his mansions. Lawyers and representatives for Milton didn’t respond to several requests for comment.
The former chief executive was convicted in 2022 of three counts of fraud for repeatedly misrepresenting Nikola’s business. He was sentenced in December to four years in prison. He has appealed his conviction and remains out on bond.
Nikola delivered 40 hydrogen-powered trucks in the first quarter, posting a loss of $147 million. Its shares now trade around record lows at 53 cents, giving the company a market valuation of less than $750 million.
Milton, 42 years old, became a multibillionaire when Nikola went public in 2020 and its soaring share price made it briefly worth more than Ford Motor. Shortly after that, the company was hammered by a report from New York-based short selling firm Hindenburg Research, which focused largely on Milton’s misrepresentations, exaggerations and stunts. Most memorable was a promotional video of a Nikola truck that appeared to be driving down a road under its own power. In reality, the truck had been rolled down a hill.
Milton stepped away from the company days later. As part of his separation agreement, Milton retained a large stake but agreed not to vote his shares against the board of directors for three years.
Milton quickly turned into the company’s No. 1 antagonist. Two years in a row, he refused to vote his shares to allow the company to raise capital, which would have diluted his stake, contributing to repeated postponements of shareholder meetings.
Nikola then sued Milton late last year to collect on a $165 million arbitration judgment. An arbitration panel ruled last fall that Milton bore responsibility for 97% of Nikola’s liability from the Securities and Exchange Commission’s investigation into the short-seller’s report.
After the three-year period lapsed last year, Milton in January proposed a slate of five directors that included social-media influencer and reality-TV actor David “Heavy D” Sparks. Milton’s projects and possessions are often featured in Sparks’s truck- and mansion-related videos.
Nikola pushed back at Milton’s picks. which people familiar with the board’s thinking said they felt was an attempt to take over the company and prevent it from pursuing the arbitration award.
“The director nominees have no public company experience, add no skills or experience to the board, and indisputably lack the depth of experience that the current Nikola board members bring to the company,” the board said in a statement.
Nikola’s suits against Milton now allege that Milton fraudulently transferred a majority of his remaining Nikola stake in an effort to shield his assets from the judgment.
Milton hit back publicly, accusing the board of “potentially fraudulent transactions.” He said the company sold its hydrogen-powered pickup, called the Badger, and didn’t disclose it.
“The Board’s pattern is clear: destroy stockholder value, blame Mr. Milton for the incompetence of the Board, sell off promising assets, hide information from stockholders, take no responsibility and then initiate litigation against anyone willing to expose the truth,” Milton said in a press release.
People familiar with the matter said the Badger assets held no value on Nikola’s books. The mudfight is an unwanted distraction for Nikola, which says its business is growing. The company had $345 million in cash at the end of March.
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In New York, Milton continues to appeal his conviction on three counts of fraud relating to his conduct at Nikola. He still faces a civil trial with the SEC.
At his sentencing in December, Milton said that he never intended to deceive anyone and was innocent of the crimes for which he was convicted. In a long, teary statement, Milton compared himself to Rubin “Hurricane” Carter and the Central Park Five, defendants in two high-profile miscarriages of justice against Black and Latino men who were wrongly convicted of violent crimes and later had their convictions overturned.
Despite his conviction, Milton retains significant wealth. He sold roughly $400 million of Nikola stock. He purchased several mansions, including a $32 million ranch that set a Utah real-estate record, and aircraft including a Gulfstream private jet and a helicopter.
Milton has used a helicopter to fly to one of his mansions in Utah’s mountainous Wasatch County and landed on what neighbors complained was an unauthorized helipad. Milton filed for a permit for the pad, but it was denied by the county planning commission. The county commission then held public hearings about banning helipads entirely.
Milton joined the hearing electronically. “We don’t even have a helipad on our property,” Milton said. “We have a launchpad that we’ve landed on.”
Milton responded to residents’ comments about his criminal conviction. “Do you know how many people are charged by the government for things they didn’t even do?” Milton asked. “The government’s gone crazy, this happens all the time.”
The county board last month voted unanimously to remove language on the books authorizing private helipads in the county.
