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The US Department of Justice has indicted the founder of Nikola Motors for fraud. In that indictment, we learn that among other things Trevor Milton is being accused of, that he tweeted Nikola’s Badger pickup would have “nice cold, clean, pure drinking water.” Nikola engineers scrambled after the tweet to figure out if they had missed that memo, and if it was possible to even do so.

Nikola engineers were caught off guard after Milton’s drinking water tweet

Nikola EV Motors logo
Nikola EV Motors | Nikola

A drinking fountain inside of the Badger is just one of many claims he had about Nikola products. He also said that the Badger would make its own windshield washer fluid. The prosecutors say that after making the clean water tweet, Milton went online to see if it was even possible to pull off. Recovered evidence from his computer exposed the search, “can you drink water from a fuel cell?” 

During the peak of Nikola’s stock popularity, Milton was one of the top 100 wealthiest persons on earth. Telling investors Nikola had over $10 billion in pre-orders, the value of the company surpassed that of Ford Motor Company. And it hadn’t built a single production vehicle at that point. In fact, it still hasn’t. 

Now the Department of Justice says between November 2019 and September 2020, Milton defrauded investors. Through false statements about Nikola’s technology, vehicles, and pre-orders he enticed potential investors to fork over millions of dollars. He left the company in September 2020. 

The Nikola founder is accused of lying about “nearly every aspect of the business”

Nikola truck on mountain road
Nikola EV Motors | Nikola

Milton pleaded not guilty last Thursday to fraud by lying to investors about “nearly every aspect of the business,” according to the US Department of Justice. Other EV companies the feds are looking into misleading investors include Lordstown Motors and Canoo. Both have acknowledged they’re being investigated.

A third EV maker funded through a SPAC or Special Purpose Acquisition Company listing on the stock exchange is also being investigated according to CNBC. The target of this third look by the feds was not revealed. One of the differences between a regular listing and a SPAC is that a “quiet period” is not required with a SPAC. Milton is accused of using this difference to make false claims and spread false info about Nikola. 

“In carrying out his fraudulent scheme, Milton exploited features of the SPAC structure that are different from a traditional initial public offering or IPO,” U.S. Attorney Audrey Strauss told CNBC. But federal securities laws still don’t allow corporate officers to lie about aspects of the company.

SPAC investments are riskier because the companies have no products or assembly plants

Nikola front
Nikola EV truck | Nikola

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SPACs raise capital to buy something that doesn’t have a product or operations. They’re a quicker way to be publicly traded in spite of not selling anything. Their only asset is cash from these investments. 

So far the heads of Nikola, Lordstown Motors, and Canoo have been ousted after inquiries from the feds. All of those companies are working with the SEC. Meanwhile, the SEC is pouring more resources into SPAC investigations. 

Other EV manufacturers leaning on SPAC deals include Fisker, Faraday Future, Arrival, and Electric Last Mile. At least some of these companies are heartily using social media to hype technology, products, and investments. Some, like Fisker, even shill $30 T-shirts and $100 sweatshirts.