Nikola founder faces ranch forfeiture following fraud conviction

Trevor Milton bought it for cash and stock options, and he wants the cash back

Try not to weep into your morning coffee, but convicted fraudster Trevor Milton might lose a ranch that a fresh filing claims he bought after lying to its owner "about Nikola's business" to persuade the man to sell to him.

Ultimately, yesterday's order contends, Utah landowner Peter Hicks was indeed persuaded, and sold it in exchange for Nikola stock options and cash.

Milton was sentenced to four years in prison in December after being found guilty of fraud the year before.

Described in the original indictment [PDF] as a "serial entrepreneur from Utah with no formal background in engineering," prosecutors said, among other things, that Milton asked a Nikola employee to upload footage from a commercial shoot where the truck had been towed to the top of a hill before the brakes were released; fibbed about several features of Nikola's flagship "Badger" hydrogen fuel cell pickup; said the building of the prototype was complete when it wasn't; and pumped stock by deceiving investors with exaggerated claims about how close his company was to producing working prototypes of zero-emission 18-wheelers.

Milton continues to deny guilt, with his legal team claiming he was just an enthusiastic salesperson who never intended to defraud anyone.

Wasatch Creeks Ranch is a sprawling 4,700-acre (0.9155 MilliWales in Reg standards) ranch about 19 km (12 miles) outside Salt Lake City, featuring "pristine fishing streams."

Formerly known as Wasatch Back Ranch, according to a civil case Hicks filed against Milton in 2022, the undeniably breathtakingly beautiful piece of land includes around 8 km (five miles) of private fishing streams flowing "directly through the property," containing brown trout and native Bonneville Cutthroat trout as well as free-roaming deer and elk. Ownership of the land includes "trophy" rights to hunt nine bucks a year.

Milton's representation had earlier argued that the court should deduct the cash he paid for the ranch from the forfeiture order and that the forfeiture was "grossly disproportionate." But district judge Edgardo Ramos disagreed [PDF], saying that by "allowing Milton to recover the $8.5 million in cash he paid Hicks would essentially put him in the same position he was in prior to the transaction: he would give up the ranch but regain the cash he paid for it."

He added:

Milton would lose only the inflated stock options, whose value was substantially diminished anyway after the revelation of his misstatements. As Milton concedes, forfeiture is a punitive measure that serves a deterrent function whose purposes would not be served by allowing Milton to effectively reverse the outcome of a fraudulent transaction following a jury conviction.

The judge told Milton's legal team that he denied its objection to the proposed order that requires him to forfeit the Wasatch Creeks Ranch, but allowed a stay of the execution of the order so that Milton can again appeal.

Milton resigned from the automaker in 2020, and the company has since gone on to deliver its first battery-electric trucks, which drove out on December 2021. After a run of loss-making quarters last year, Nikola was was forced to recall approximately 209 Class 8 Tre BEV semi trucks, and had to stop selling the vehicles temporarily.

The company said at the time that a single supplier component within its Tre battery packs was the likely source of coolant leaks that caused a Tre to catch on fire at Nikola's HQ in Phoenix, Arizona.

The company reported its Q4 and full year results last week, saying that while the number of trucks it had produced dropped, the number shipped had risen.

It said it had delivered 35 hydrogen fuel cell electric trucks in North America in fiscal 2023, with more in the pipeline, and was "on track to deliver the first re-worked battery-electric trucks with new battery packs back to end users by the end of Q1 (2024)."

While the annual compares look dreadful, the most recent quarter showed doubling of revenues to $10.4 million and a net loss of $156.3 million, shrinking from the $222.1 million of the prior Q4.

Nikola is pinning its hopes on an expected up to $170 million in truck revenue for 2024 with a target to sell as many as 450 trucks this year, including its hydrogen fuel cell electric trucks. ®

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