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SALT LAKE CITY — A Massachusetts man is seeking $45 million in a lawsuit involving a large Utah ranch and the former CEO of an automotive company who was indicted on fraud charges last year.
The lawsuit, filed Monday in Utah's federal court, alleges that Trevor Milton — the founder and former CEO of Nikola, a company that produced electric and hydrogen-powered semitrucks — engaged in fraud when he used Nikola stock as part of the payment to purchase an expansive property in Morgan County. Nikola was founded by the Summit County resident in Utah in 2014 and has since moved its headquarters to Arizona.
Milton stepped down as the company's executive chairman in September 2020 after Hindenburg Research, a financial research firm, published a report alleging that Milton had misled investors and made false claims about the company. Nikola refuted some of the allegations made by Hindenburg, but the damage had been done.
Milton was later indicted on two counts of securities fraud and one count of wire fraud, according to a news release from the U.S. Attorney's Office for the Southern District of New York.
The new Utah lawsuit was filed on behalf of Peter Hicks, a Massachusetts investor who sold over 4,600 acres of land to Milton in exchange for a combination of cash and securities. The lawsuit says Hicks was given an option to purchase over 515,000 shares of Nikola Corporation stock at a price of $16.50 per share. While Nikola's stock price would peak at over $67 per share in June 2020, the stock price dropped significantly after the Hindenburg report.
Hicks alleges in the lawsuit that Milton made multiple misrepresentations of the company to him in April 2020 during the negotiation of the deal, including that Nikola had "billions and billions of committed orders" and that the trucks would be in the market by 2021.
The suit also claims that Milton pointed Hicks to videos of Nikola trucks posted on social media as a way to convince Hicks to sell him the land, named the Wasatch Creeks Ranch. The videos were later removed from the social media accounts after the Securities and Exchange Commission started an investigation, the lawsuit says.
The deal was ultimately closed on Aug. 14, 2020, and based on the Nikola share price that day, the option was worth over $15 million. On that day, the lawsuit says Milton emailed Hicks saying, "We are about to have the best four months of Nikola in history so I am excited about that as well."
Less than a month later, the Hindenburg report was published and Nikola's stock started to drop.
Hicks reached out to Milton about the stock options, leading Milton to send the following email to Hicks, according to the lawsuit: "I can't do anything as of now due to the fact we are in communication with the SEC. While I can't go into detail, I can tell you we have not done anything wrong, it was a coordinated attack to discredit us. Much like Telsa, this is a fact of life where people target you and try to hurt you. They made a reported 51 million USD on the first attack and unknown amount in the whole process. They do it for the money, not truth."
Less than a week later, Milton resigned from the company. The value of Nikola stock continued to fall, "destroying the value of the options provided to Hicks," the lawsuit alleges. After Milton was arrested, he posted a $100 million bond that was secured by putting up two pieces of Utah property, including the Morgan County ranch, according to a court filing in the fraud case.
When contacted Thursday, an attorney for Hicks declined to comment on the lawsuit, adding that the complaint speaks for itself.
In a statement Thursday, a spokeswoman for Milton told KSL.com, "This is a frivolous lawsuit with no merit, which we intend to demonstrate through our response."
The New York fraud case against Milton was still ongoing as of Thursday. Milton is tentatively set to go to trial in July.
Correction: An earlier version incorrectly stated that Milton purchased a part of the Wasatch Peaks Ranch instead of the Wasatch Creeks Ranch.
