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Nikola Founder Quits Amid Fraud ClaimsBoston, William; Foldy, Ben. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]22 Sep 2020: A.1. Nikola Corp. founder and Executive Chairman Trevor Milton is leaving the electric-truck startup in the wake of allegations from a short seller that he misled investors. The company said Mr. Milton would be succeeded by Stephen Girsky, a former General Motors Co. executive who already sits on the truck company's board. The Phoenix-based startup, which has ambitions to make electric and hydrogen-powered trucks, has come under scrutiny since short seller Hindenburg Research released a report earlier this month accusing the company and Mr. Milton of making exaggerated claims about the readiness of Nikola's technology and how much of it is proprietary. Nikola has called the Hindenburg report false. As a short seller, Hindenburg stands to gain financially from a decline in Nikola's share price. Mr. Milton, whose resignation was effective immediately, offered to step down so the company could better focus on the business, and the board accepted, the company said. Mr. Milton added in a statement posted on his Twitter account early Monday that he intended to defend himself against "false allegations leveled against me by outside detractors." Doubts about the company's readiness to produce vehicles and questions about its claim to own proprietary technology have prompted U.S. securities regulators and the Justice Department to investigate whether Nikola misled investors, The Wall Street Journal reported earlier this month, citing people familiar with the matter. The company's stock has lost more than a third of its value since the Hindenburg report was released. The stock closed down 19% Monday. Nikola went public in June with the help of Mr. Girsky, a well-known figure in the auto industry who helped lead GM out of the 2008-09 financial crisis. Mr. Girsky introduced Nikola to GM and helped broker a partnership between the two companies that led to GM taking an 11% stake in the startup. GM CEO Mary Barra, in promoting the collaboration earlier this month, called Nikola "one of the most innovative companies in the world." On Monday, GM said it would continue to work with Nikola to close the transaction and reiterated that the collaboration will help it further expand its battery and hydrogen fuel-cell business. Nikola is taking aim at the commercial trucking industry, with plans to sell and lease battery and hydrogen-powered semi-trucks to businesses. The company has said it has orders for its future trucks from beer giant Anheuser-Busch InBev SA and refuse hauler Republic Services Inc. Mr. Milton, 39 years old, founded Nikola in 2015 and owns nearly one-quarter of the Phoenix-based company's shares, according to FactSet. He served as chief executive until the company went public, at which point he became executive chairman and Mark Russell was appointed as CEO. Investors have seen Mr. Russell as a calming influence over the ebullient behavior of Mr. Milton, who has frequently vented frustrations and shared ideas via Twitter. Mr. Milton grew up in Nevada and Utah, according to his LinkedIn page, and originally founded Nikola in Salt Lake City, before moving the company to Phoenix. He has said on Twitter he didn't finish high school, earning an equivalency certification instead, and dropped out of college, as well. He has described himself as a serial entrepreneur, and was involved in a string of businesses, including an alarm and security company, an e-marketplace and another heavy-truck startup focused on compressed natural gas before founding Nikola. His purchase of a $32.5 million Utah ranch last year set a record as the most expensive in the state's history, according to the listing agent. He planned to use the 2,670-acre property, complete with helipad, to raise organic beef, vertically farm organic produce and provide a habitat for wildlife, he told The Wall Street Journal at the time. Most of the allegations in the short seller's report directly involved Mr. Milton, who has served as the face of the company and spent years tweeting and live streaming many of the statements now under examination. On Monday, new allegations about Mr. Milton's conduct emerged when a woman accused him on Twitter of sexually assaulting her when the two were younger. When reached by phone, Ms. Smith confirmed to The Wall Street Journal that she had made the posts on Twitter and said she wanted to go public now as other questions about Mr. Milton's conduct have surfaced. Another family member also confirmed Mr. Milton is her cousin. The Wall Street Journal spoke with two people who said that Ms. Smith told them about the alleged incident months afterward. One person, as well as Ms. Smith, said that religious authorities were also made aware of the allegations but no charges were filed. Through a spokesman, Mr. Milton denied the allegations. A Nikola spokeswoman declined to comment. Mr. Girsky joined Nikola's board in June, when the startup combined with a publicly traded special purpose acquisition vehicle, VectoIQ Acquisition Corp., which he led and part owned. He was a longtime automotive analyst at Morgan Stanley and later an executive at private-equity firm Centerbridge Partners before joining GM's board in 2009, after the auto maker emerged from a government-led bankruptcy. He was a top lieutenant of then-Chief Executive Dan Akerson, taking on responsibility for everything from GM's connected-car strategy to fixing its unprofitable European operations. Mr. Girsky was on the shortlist to replace Mr. Akerson before Ms. Barra was picked in late 2013. The allegations against Nikola and its founder came just months after it gained its listing. The move made Mr. Milton a billionaire and highlighted the appeal of electric-vehicle stocks as investors search for the next Tesla Inc. Within a week of trading, Nikola was valued at $30 billion. Credit: By William Boston and Ben Foldy |
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Msg # | Subject | Author | Recs | Date Posted |
123150 | Re: Nikola Founder Quits Amid Fraud Claims | MikeyHorse | 0 | 9/22/2020 7:10:09 AM |