told a New York federal jury Monday that he had concerns about joining the electric-truck company because he believed its founder,
“was prone to exaggeration in public statements.”
Testifying in Mr. Milton’s securities-fraud trial, Mr. Russell said that before coming on board in 2019 as president of Nikola, he and Mr. Milton reached an agreement that Mr. Russell would become the chief executive officer if Nikola became a publicly traded company. Mr. Russell said he sought the arrangement because as head of a public company, statements from the CEO needed to be accurate.
“Anything he said in public was the equivalent of a press release or securities filing,” Mr. Russell said of his concerns about Mr. Milton making misstatements as the company head.
Monday marked the second week of Mr. Milton’s trial on charges of securities fraud and wire fraud. Prosecutors alleged that before and after Nikola went public in June 2020, Mr. Milton repeatedly lied to investors about the status of his company’s trucks and technology, including on social media, television and podcast interviews. As he made the company sound more successful than it was, its stock price soared, making Mr. Milton a billionaire, prosecutors said.
Mr. Milton, who resigned from the company in 2020, has pleaded not guilty. His lawyers have called the case “a prosecution by distortion” and argued that prosecutors cherry picked portions of Mr. Milton’s interviews and social media postings. Mr. Milton’s statements were part of the company’s marketing plan, they said. The founder’s defense team also said Nikola employees didn’t stop Mr. Milton from making the statements in question, and then abandoned Mr. Milton in the face of government investigations.
Mr. Russell, who is set to retire as CEO on Jan. 1, testified that before Nikola went public, he discussed with Mr. Milton the need to speak accurately. The company’s bankers also wanted Mr. Milton to stop attending investor meetings after he didn’t stick to what was on a slide-deck presentation in a meeting with SoftBank, Mr. Russell said.
“I think he felt that the slides were insufficient in being persuasive,” Mr. Russell said, recalling that Mr. Milton believed the company’s bankers “don’t know how to sell.”
After Nikola went public, Mr. Milton became executive chairman of Nikola’s board, a position that still left him in charge of the company.
“That was totally against what I was bargaining for,” Mr. Russell told jurors. “I wanted to be the chief executive officer in terms of leading the company and making public statements.”
Nikola has said it cooperated with government inquiries. It settled an investigation by the Securities and Exchange Commission for $125 million. The company didn’t admit or deny wrongdoing.
Over the past week, federal prosecutors have called current and former Nikola employees as witnesses, who have testified that they raised concerns to co-workers and to management about Mr. Milton’s statements in podcasts and on social media. Mr. Milton’s lawyers have challenged those accounts, saying that top executives didn’t take action after employees alerted them to his public statements.
—Ben Foldy contributed to this article.
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Appeared in the September 20, 2022, print edition as ‘Nikola CEO Had Concerns on Milton.’