Nikola CEO tells jury his concerns about the founders' fraudulent exaggerations

Nikola executives are stepping back from the founders' original claims of functionality for its EV truck.

Video transcript

RACHELLE AKUFFO: Now, for my pick, it's the EV truck maker Nikola, and it was one of our top trending tickers today. Currently, though, it's still in negative territory. We had new allegations coming to light today in the ongoing federal fraud trial of former founder Trevor Milton.

Now, according to a letter from prosecutors to the judge, CEO Mark Russell is prepared to testify that he, along with chief financial officer and general counsel, had threatened to quit in 2020 over Milton's risky promises about the company if Milton refused to step down. Now, Russell testified, saying Milton, quote, "would sometimes exaggerate, sometimes misstate facts, I explained to him that as top executive, anything he says in public would be the equivalent of a press release or a securities filing," end quote.

Now, whether investors were misled about the functionality of certain products, technology, partnerships, valuations, and preorders amid their 2020 IPO, that will be at the center of these allegations. Milton has denied any wrongdoing, with his defense arguing he was following the marketing plan and never said anything that he didn't believe to be true, Seana. But obviously, putting some pressure on the stock, though.

Now, it bounced back a little bit, though, but still relatively flat, about half a percent, there.

SEANA SMITH: You know, that's hard to believe, that he said that he doesn't believe he said anything that doesn't believe to be true. Because remember when we had that promotional video of the truck going down the hill? It was rolling down the hill. And his exact quote after that was, quote, "this thing fully functions." So that right there shows that he was definitely exaggerating.

Now, of course, he's accused of duping investors of exaggerating about the technology, exaggerating, lying about partnerships here. So it's week two of the trial. It's going to be interesting to see what other headlines come out about this. But I don't know. It's hard to see Trevor Milton really getting away with this. But only time will tell.