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Nikola Corporation (NASDAQ: NKLA) founder and former executive chairman Trevor Milton has been charged with securities and wire fraud for allegedly making false and misleading statements regarding the company's products and technological accomplishments.'

The stock price of Nikola declined more than 15% to $12.03 per share.

The Securities and Exchange Commission (SEC) filed a civil lawsuit against Milton in a federal court in New York on Thursday. The Manhattan U.S. Attorney's Office filed a parallel criminal complaint against him.

Milton surrendered to law enforcement authorities on Thursday morning. He pleaded not guilty was released on a $100 million bail.

The SEC and the Manhattan U.S. Attorney's Office alleged that Milton defrauded investors by repeatedly misleading them about the development of Nikola's products and technology. Milton allegedly used social media, print, and his appearances and interviews on television and podcasts to carry out his scheme to defraud investors by persuading them to buy Nikola shares. Milton is the largest stockholder of Nikola.

Milton sold a version of Nikola that was far from reality

In the SEC complaint, the federal securities regulator alleged the Milton promoted and sold a version of Nikola that was far from reality. He targeted a group of investors whom he referred to as "Robinhood investors."

"From approximately November 2019 through September 2020, Milton’s
statements in tweets and media appearances, individually and taken together, painted a picture of Nikola that diverged widely from its then-current reality. Milton sold a version of Nikola not as it was – an early-stage company with a novel idea to commercialize yet-to-be-proven products and technology – but rather as a trail-blazing company that had already achieved many groundbreaking and game-changing milestones," according to the SEC.

On the other hand, the Manhattan U.S. Attorney's Office alleged that Milton "promoted a false and exaggerated narrative that Nikola was a first mover in the zero-emissions-trucking business." He allegedly repeatedly made false and misleading statements about the company to boost and support its stock price.

Milton committed his scheme to defraud investors starting at least in or around November 2019 until around September 2020. A short-seller, Hindenburg Research released a report that accused Milton of fraud. Milton stepped down as executive chairman of Nikola.  The allegations prompted investigations by the SEC and the Department of Justice (DOJ). The results of those investigations led to the filing of a civil and a criminal complaint against the Nikola founder.

In a statement, SEC Division of Enforcement Director Gurbir Grewal said, “Having chosen to promote Nikola through social media, Milton was obligated under the securities laws to communicate completely, accurately, and truthfully. “That obligation exists for all public company officials, even those whose companies have only recently entered the public markets through SPAC transactions.”

On the other hand, Manhattan U.S. Attorney Audrey Strauss said the "criminal charges against Milton are where the rubber meets the road, and he now will be held accountable for his allegedly false and misleading statements to investors.”

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