Nikola CEO testifies that company’s founder misstated facts

Sep 19, 2022, 3:00 PM | Updated: 3:43 pm

NEW YORK (AP) — Nikola Corp.’s top executive testified at the trial of the truckmaker’s founder on Monday, saying he repeatedly tried without success to rein in a man prone to exaggeration and misstating facts while trying to elevate his company’s share price with promises he couldn’t keep.

Chief Executive Officer Mark Russell told jurors in federal court in Manhattan that Nikola founder Trevor Milton had “extraordinary control” at Nikola as the company’s chief executive and largest shareholder, as it tried to create zero-emission trucks that run on electricity or hydrogen fuel cells.

Milton, 40, has pleaded not guilty to securities and wire fraud charges two years after resigning from the company. His lawyers insist at a trial entering its second week that their client never intended to defraud or deceive anyone. Milton is charged with whipping up an investor frenzy for the startup company with false claims about its production capabilities.

Nikola, which continues to operate from an Arizona headquarters, didn’t admit any wrongdoing last year when it paid $125 million to settle Securities and Exchange Commission claims.

Russell, summoned to the witness stand by prosecutors, seemed to support their contention that Milton cheated investors before and after the company’s shares became publicly traded in 2020.

Russell said he insisted Milton agree he’d become chief executive officer once Nikola was publicly traded before joining Nikola’s executive team, after leaving a company in 2018 that had provided Nikola with early funding.

“It was the best business idea I’ve come across in my career,” he said.

Russell said he wanted to ensure Milton was no longer the company’s mouthpiece because he “was prone to exaggeration in making public statements.”

“He would sometimes exaggerate, sometimes misstate facts,” Russell said. “I explained to him that as top executive, anything he says in public would be the equivalent of a press release or a securities filing.”

But he said Milton continued his ways, including going on “what you’d call a blitz” of public appearances and social media postings after the company went public.

Milton also remained in control of the company by becoming an “executive board member” after Russell became CEO, meaning Russell would still report to Milton.

The board, meanwhile, had members including Milton’s father and lacked anyone with public company experience, Russell said.

When the company’s share price rose dramatically, Milton became “very excited” and claimed his publicity efforts reached small retail investors, Russell said.

“I’d say I don’t really want them,” Russell said, explaining that he sought steady, large institutional investors instead.

In one meeting in late 2019 or early 2020, a team of Nikola executives were using a deck of slides to explain the company’s plans to a prospective institutional investor when Milton began “selling” rather than using the slides — to the surprise of executives and bankers who were there, he said.

After the meeting, Russell said he told Milton it would be better if he didn’t attend meetings with prospective investors anymore.

When the company announced in March 2020 that it was going to be listed on the NASDAQ exchange, it valued itself in a press release at $3.3 billion or $10 per share, citing 14,000 in “preorders” it claimed represented over $10 billion in potential revenue. But Russell testified that the interest companies had shown in buying its products were not actual orders.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - The logo of Google is displayed on a carpet at the entrance hall of Google France in Paris, ...
Associated Press

Google appeals huge Android antitrust fine to EU’s top court

LONDON (AP) — Google is challenging a record European Union antitrust fine that took aim at the Android operating system’s role in restricting mobile competition and consumer choice. The company said Thursday that it filed the appeal against the 4.125 billion euro ($4.3 billion) penalty “because there are areas that require legal clarification from the […]
6 hours ago
An ambulance is parked outside St Thomas' Hospital, in London, Thursday, Dec. 1, 2022. Some 10000 a...
Associated Press

UK ambulance service struggles in winter health care crisis

LONDON (AP) — Thousands of patients each week are being stranded for long stretches in ambulances outside overflowing British hospitals, a growing crisis that has likely contributed to scores of deaths, health care leaders said Thursday. The U.K.’s ambulance service is seizing up in some areas as the country’s health system faces an inferno of […]
6 hours ago
Associated Press

Is now the right time for your business to buy real estate?

For small businesses hoping to establish or expand their brick-and-mortar presence, it may seem like a bad time to sink cash into a commercial property purchase. Amid predictions of an upcoming recession, the Federal Reserve increased the federal funds rate for the sixth time in 2022, citing inflation risks and global conflict. Inevitably, this will […]
6 hours ago
Associated Press

African continent finally to receive 1st mpox vaccines

NAIROBI, Kenya (AP) — Africa’s top public health body says the continent is set to receive its first batch of mpox vaccines as a donation from South Korea. The Africa Centers for Disease Control and Prevention said Thursday the 50,000 doses will be used first for health workers and people living in the hardest-hit areas. […]
6 hours ago
FILE - Russian Foreign Minister Sergey Lavrov speaks during a meeting with governors and heads of R...
Associated Press

Russian FM: US, NATO directly involved in Ukraine conflict

MOSCOW (AP) — Russia’s foreign minister on Thursday accused the West of becoming directly involved in the conflict in Ukraine by supplying it with weapons and training its soldiers. Sergey Lavrov also said that Russia’s strikes on Ukrainian energy facilities and other key infrastructure that have left millions without power, heating and water were intended […]
6 hours ago
This aerial image courtesy of Hawaii Dept. of Land and Natural Resources shows lava flows on Mauna ...
Associated Press

Prayers? Bombs? Hawaii history shows stopping lava not easy

HONOLULU (AP) — Prayer. Bombs. Walls. Over the decades, people have tried all of them to stanch the flow of lava from Hawaii’s volcanoes as it lumbered toward roads, homes and infrastructure. Now Mauna Loa — the world’s largest active volcano — is erupting again, and lava is slowly approaching a major thoroughfare connecting the […]
6 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
...
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
Nikola CEO testifies that company’s founder misstated facts