Founder of Nikola Corp. Trevor Milton linked his social media posts to a rise in the stock price of the newly public maker of electric trucks, CFO Kim Brady said Friday in support of the government’s fraud case against Milton.
Milton faces up to 25 years in prison if convicted of the most serious of four federal fraud charges. The government alleges that Milton defrauded investors by lying about the company’s technological advances and promising future products in order to boost the stock’s value.
Brady joined Nikola in 2017 after a 20-year career in investment banking,. Assistant U.S. Attorney Matthew Podolsky asked him if Milton’s statements about the company he founded in 2015 were accurate.
“No,” Brady replied. “They may be inaccurate or exaggerated.”
CFO: Nikola – “stock of stories”
Brady said he spoke to Milton about his habit of tweeting and appearing on social media podcasts, warning him about courting retail investors.
“We were concerned. Nicola was history,” Brady said. “So we had to be careful. Retail investors don’t have experience.”
He later explained that the story’s action has no financial basis.
“So there’s speculation caused by what management might say,” Brady said. “I told Trevor it had to be accurate.”
Podolski asked Brady if Milton was tying his statements to the company’s stock price.
“He would point to an increase in what he said,” Brady said.
Nikola’s share price has soared in the weeks since it went public in June 2020, thanks to the sponsorship of VectoIQ’s special buyout campaign. In testimony earlier this week, CEO Mark Russell said Milton was unhappy with the company’s bankers’ effectiveness in attracting qualified investors to Nikola.
Milton inprepared’ be the CEO of a public company’
Brady said institutional investors expressed concern that Milton “wasn’t ready to be the CEO of a public company.” They wanted to lock up Milton’s stock to prevent him from selling immediately if the company went public. Milton owned about 25% of Nikola at the time.
Milton sought and received board approval to cash in $70 million worth of his shares prior to the completion of the SPAC business combination, resulting in a Nasdaq listing of Nicola. Milton used some of that money, along with Nikola stock options, to buy a ranch in Utah.
The use of stock options in real estate deals is at the heart of a fourth indictment against Milton filed in June.
On cross-examination, Mukasey asked Brady about his statement investor Hanwha Groupa South Korean solar panel maker that is “building Nikola” in an apparent reference to its $30 million purchase of electrolyzers from Norway’s Nel ASA, a Norwegian fuel cell maker.
Throughout the trial, the defense tried to show the jury on cross-examination that the prosecution’s witnesses against Milton had made false statements about Nicola’s achievements and prowess.