CEO Mark Russell told a federal jury in New York on Monday that he was concerned about joining the electric truck company because he believed its founder, Trevor Milton, was “likely to exaggerate in public statements.”
Testifying in Mr. Milton’s securities fraud trial, Mr. Russell said that before he came on board in 2019 as Nikola’s president, he and Mr. Milton had agreed that Mr. Russell would be chief executive officer if Nikola was traded in public. company. Mr Russell said he sought the settlement because as the leader of a public company, statements from the Chief Executive needed to be accurate.
“Anything he said publicly was the equivalent of a press release or a securities filing,” Mr. Russell said of his concerns about Mr. Milton misrepresenting himself as the company’s leader.
Monday was the second week of Mr. Milton’s trial on securities fraud and wire fraud charges. Prosecutors allege that before and after Nikola went public in June 2020, Mr. Milton repeatedly lied to investors about the status of his company’s trucks and technology, including in interviews on social media, television and podcasts. As he made the company sound more successful than it was, the stock price soared, making Mr. Milton a billionaire, prosecutors said.
Mr Milton, who resigned from the company in 2020, pleaded not guilty. His lawyers called the case “a prosecution by distortion” and argued that prosecutors cherry-picked some of Mr. Milton’s interviews and social media posts. Mr Milton’s remarks were part of the company’s marketing plan, they said. The founder’s defense team also said Nikola’s employees did not stop Mr. Milton from making the statements in question, and then abandoned Mr. Milton in the face of government investigations.
Mr Russell, who is due to retire as CEO on January 1, said he had discussed with Mr Milton the need to be precise before Nikola went public. The company’s bankers also wanted Mr. Milton to stop attending investor meetings after he failed to comply with what was on a slide presentation at a meeting with SoftBank, Mr. Russell said.
“I think he felt the slides weren’t enough to be persuasive,” Mr. Russell said, recalling that Mr. Milton believed the company’s bankers “don’t know how to sell.”
After Nikola went public, Mr. Milton became executive chairman of Nikola’s board, a position that still left him at the helm of the company.
“That was completely against what I bargained for,” Mr Russell told jurors. “I wanted to be the chief executive officer in terms of leading the company and making public statements.”
Nikola said he cooperated with government inquiries. He settled an investigation by the Securities and Exchange Commission for $125 million. The company neither admitted nor denied wrongdoing.
In the past week, federal prosecutors called current and former Nikola employees as witnesses, who testified that they raised concerns with co-workers and management about Mr. Milton’s statements in podcasts and on social media. Mr. Milton’s lawyers disputed those accounts, saying top executives failed to take action after employees alerted them to his public statements.
—Ben Foldy contributed to this article.
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Appeared in the September 20, 2022 print edition as ‘Nikola CEO Had Concerns on Milton.’