Nikola’s Stock Down After Sexual Abuse Allegations Against Company Founder

By Adriaan Brits Wednesday, September 30, 2020

Nikola’s shares dropped over 7% on Tuesday after a report on sexual abuse accusations against founder and former executive chairman Trevor Milton. This occurred amid discussions between the electric truck maker and General Motors over a $2 billion deal, scheduled for completion before Wednesday.

More Troubles for Milton

Two women sued Trevor Milton in a filing with Utah authorities over sexual abuse when both of them were 15 years old. The allegations come after Milton’s resignation as executive chairman on September 21, after Hindenburg Research published a report including fraud allegations against Nikola.

The report was accompanied by shock accusations from Milton’s cousin Aubrey Ferrin Smith on September 21, who publicly accused the billionaire over social media platforms of groping her bare breasts following a family funeral near Salt Lake City in 1999. At the time, she said, Smith was 15, and Milton was 17 years old.

The second sexual assault allegedly happened back in 2004 when Milton was 22 and hired a then 15-year-old girl to work as an office assistant for a security firm he owned in St. George, Utah, said Craig Johnson, a former prosecutor who is representing both women.

“The allegation by my client is that he digitally penetrated her vagina with his fingers, which under Utah law constitutes object rape, and that is the charge the police will be investigating, in addition to forcible sexual abuse, which includes any ancillary touching of the vagina during the assault,” Johnson told CNBC.

The victim, who is now a 32-year-old lawyer, said she’s been trying to forget what happened for the last 16 years. At the time, she didn’t inform anyone about what happened and quit her job shortly after the assault.

Brandon Messina, Milton’s spokesperson, denied the allegations in a statement for CNBC. “Mr. Milton strongly denies these false allegations. At no point in his life has Mr. Milton ever engaged in any inappropriate physical contact with anyone.”

GM Deal in Jeopardy

On September 8, General Motors (GM) announced a deal with Nikola to supply its electric trucks with their technology and build them in a partnership that companies valued at $2 billion. Two days later, Hindenburg Research published their report and triggered inquiries into Nikola and Milton by the SEC.

GM declined to comment on whether it had information about any fraud or sexual abuse accusations against Milton. Mary Barra, Chief Executive of GM, defended their agreement with Nikola and said it carried out “appropriate diligence” before announcing the deal.

The deal between the two companies is scheduled to close Wednesday; however, a spokesperson said to CNBC that it isn’t a done deal yet.

“Our transaction with Nikola has not closed,” a GM spokesperson wrote in an email to CNBC. “We are continuing our discussions with Nikola and will provide further updates when appropriate or required.”

“Both sides are still negotiating. As soon as we have something to report, we will. But it is definitely still continuing,” Colleen Robar, Nikola spokesperson, said yesterday.

Nikola’s stock plummeted by 60% since the agreement was announced, significantly losing its appeal from GM’s perspective. If the deal isn’t closed before December 3, both companies have a right to terminate the agreement upon the deal announcement, according to a public filing.

The communication between GM and Nikola was established by Steve Girsky, the former VC of GM, who then became executive chairman of Nikola after Milton’s resignation. Girsky is also a managing partner at VectoIQ, the special purpose buyout company that helped Nikola go public. Girsky joined the board of the truckmaker after the deal closed.

He said earlier that his company “showed up with an army of people to diligence this thing,” referring to Nikola.

“We really crawled all over these guys. It wasn’t pleasant at times,” Girsky said and added that he didn’t “doubt there are going to be twists and turns here, but I did put my reputation on the line for this thing.”

Summary

Electric truck maker Nikola saw its shares slip over 7% on Tuesday after two women filed complaints against Nikola’s founder Trevor Milton, accusing him of sexually assaulting them back in 1999 and 2004.

The allegations come shortly after a Hindenburg Research report that accused Milton and Nikola of fraud and amid discussions between Nikola and General Motors over a $2 billion partnership.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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