The founder of electrical semitruck maker Nikola Motor is standing trial on fraud fees associated to statements he made in regards to the firm’s know-how and merchandise, statements that federal prosecutors allege have been exaggerated and deceptive.

The U.S. Legal professional’s Workplace in Manhattan has alleged that Trevor Milton, who based Nikola in 2014, lied about “practically all points of the enterprise” throughout his time as chairman and CEO of the corporate. These lies have been supposed to bolster gross sales of the startup’s inventory, prosecutors alleged in indictments launched in 2021 and earlier this yr. Milton has denied the fees.

“He lied to dupe harmless buyers into shopping for his firm’s inventory,” Assistant U.S. Legal professional Nicolas Roos stated in opening statements in U.S. District Courtroom in New York Tuesday. “On the backs of these harmless buyers taken in by his lies, he turned a billionaire nearly in a single day.”

The trial started with jury choice on Monday and obtained underway on Tuesday. Prosecutors informed potential jurors that the proceedings have been more likely to final about 5 weeks.

The trial caps a surprising rise and fall of Nikola below Milton.

The corporate’s inventory value briefly surged to greater than $90 per share in June 2020, days after it went public by way of a merger with a special-purpose acquisition firm (SPAC). The inventory run-up made Nikola – an organization that did not but have income on the time – extra precious than Ford Motor.

However its shares fell sharply after Milton was compelled out of the corporate in September of that yr, following fraud allegations made by short-seller Hindenburg Analysis. Each the Securities and Change Fee and the U.S. Division of Justice opened investigations following Milton’s departure; he was indicted on three counts of fraud by a grand jury in July 2021. Prosecutors added a fourth depend in June.

Nikola’s shares closed at $5.03 apiece on Tuesday.

Milton is going through two counts of securities fraud and two counts of wire fraud, all associated to statements he made about Nikola’s enterprise whereas he was chairman and CEO of the corporate. If convicted, he may resist 25 years in federal jail.

Milton’s legal professional, Marc Mukasey, stated Tuesday that Milton sought to convey a imaginative and prescient for the way forward for trucking, to not mislead buyers. Mukasey has indicated that the protection plans to argue different executives at Nikola, together with the corporate’s normal counsel, signed off on Milton’s statements.

Nikola itself is not going through fees on this case. The SEC introduced associated civil fees in opposition to the corporate final yr, however that case was settled in December after Nikola agreed to pay a $125 million wonderful. Milton nonetheless owns Nikola inventory, however the firm has in any other case reduce ties with its founder.

Prosecutors allege that Milton made “false and deceptive statements concerning Nikola’s product and know-how improvement” as a part of a “scheme” supposed to induce retail buyers to purchase shares of Nikola. Prosecutors allege:

• Milton stated that the corporate’s first semitruck prototype, referred to as the Nikola One, was “absolutely useful” – nevertheless it wasn’t.
• A video displaying the prototype truck apparently driving below its personal energy was created by rolling the truck — which could not drive by itself — down a hill.
• Individually, Milton claimed that Nikola had engineered and constructed an electrical pickup truck referred to as the Badger, solely by itself, after years of labor. However, prosecutors say, the Badger was little greater than “idea sketches and renderings” on the time of Milton’s preliminary statements.
• Whereas the corporate finally confirmed a prototype Badger, the present truck was in reality constructed by third-party distributors and primarily based on a truck from a big automaker.
• Milton additionally informed buyers that Nikola was producing hydrogen gasoline — wanted to refuel its fuel-cell-powered vehicles — at a lowered price; that Nikola had developed electric-vehicle batteries in-house; and that Nikola had binding orders representing “billions in income” for its electrical vehicles. All of these statements have been false, in response to prosecutors.

Milton can also be accused of creating comparable misrepresentations to the vendor of a ranch he bought in 2020, in an try to get the vendor to just accept Nikola inventory as half cost for the acquisition.

Prosecutors are anticipated to start presenting their full case in opposition to Milton to jurors on Wednesday.

—Reuters contributed to this report.