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Nikola Motors Accused of Massive Fraud, Ocean of Lies (electrek.co) 68

Posted by BeauHD from the beginning-of-the-end dept.
Socguy writes: Hindenburg research has released their report on Nikola motors and have taken a short position as a result of their research. During the course of their investigation, they claim to have spoken to numerous former employees, have amassed a pile of emails, text messages, contracts as well as other documents and videos showing a massive deception. Essentially, Hindenburg alleges that Nikola has no proprietary technology and vastly overstated the capabilities of their prototypes repeatedly to investors. The report paints a picture of a company that says and does whatever it takes to attract investment, such as filming semis as they roll down hills for promotional material. Nikola has obviously refuted the report but to date have not bothered to disprove any of the numerous specific allegations. Instead they've indicated they've contacted lawyers.
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Nikola Motors Accused of Massive Fraud, Ocean of Lies More

Nikola Motors Accused of Massive Fraud, Ocean of Lies

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  • Nikola Motors? (Score:4, Funny)

    by Anachronous Coward ( 6177134 ) on Friday September 11, 2020 @06:24PM (#60497718)
    That's an original name. Sort of.

  • With the amount of money and time they've been given, I could have even put forward a prototype by now.

    Expect more of this type of capitalism: The business plan is to just soak up potential investment in someone else's competition. They're probably cashing out on both ends for this. And by the time anyone capable of prosecuting them figures it out they'll all be long gone.

    • Re:Not a surprise. (Score:5, Insightful)

      by Dutch Gun ( 899105 ) on Friday September 11, 2020 @06:41PM (#60497758)

      Expect more of this type of capitalism

      You make it sound like fraud is something new.

      Law #265: "If a herdsman, to whose care cattle or sheep have been entrusted, be guilty of fraud and make false returns of the natural increase, or sell them for money, then shall he be convicted and pay the owner ten times the loss.

      Code of Hammurabi.
      1754 BC

      • Re:Not a surprise. (Score:4, Funny)

        by Narcocide ( 102829 ) on Friday September 11, 2020 @07:01PM (#60497810) Homepage

        Heh, maybe the SEC should hire this Hammurabi guy. Sounds like he's got his shit together.

        • Re: (Score:3, Insightful)

          by ElizabethGreene ( 1185405 )

          Identifying fraud* like this is incredibly profitable. 500x returns are not inconceivable if you partner with the right people with access to enough leverage.

          There is no way the SEC could afford him unless he's doing it as a hobby.

          * Assuming the analysis is correct.

      • A more recent example, that actually involves hyped up shares, is the South Sea Bubble, starting around 1720 in England. There were theoretically great riches to be had in S America. What the hype failed to mention is that Spain got there first, and England was not on friendly trading terms with Spain. In fact, I think there was a war going on. However, this did not stop greedy people getting pound signs in their eyes, and being duped into investing money. This included the English government. I believe the

      • >10x the loss

        Now THAT sounds like a compelling legal incentive to stay honest. Why don't we have laws like that anymore? These days it seems like the worst case if you get caught is that you have to pay back what you stole. Or a least a fraction of it, in the form of coupons, to any victim who specificaly requests it.

        Wait - I'm thinking corporate crime, they're talking peasants. I think I answered my question.

      • Deception from auto manufacturers is also nothing new. Can we really name a significant manufacturer in modern times who *hasn't* been deceptive?

    • Money laundering isn't new.

    • Re:Not a surprise. (Score:5, Informative)

      by Rei ( 128717 ) on Friday September 11, 2020 @07:16PM (#60497834) Homepage

      They are cashing out. Trevor sold $70M in shares even during the IPO itself, and bought himself the most expensive home in Utah (where he's from). This summer he managed to get the bylaws amended to let him cash out the rest even earlier - about a week before the big "Nikola World 2020" event they've been hyping up endlessly.

      He's incredibly slick, though - he can sweet talk anyone. He has that sort of "I'm a nice friendly moral guy" vibe, and doesn't so much as blink when flatly lying about something while looking someone in the eye. It's how he leveraged himself from one "deal" to the next his whole career, using the credibility of the previous partner to establish a "deal" with an even more credible partner before the previous partner finds out they've been had. I fully expect him to talk his way out of this, using a combination of flatly denying he ever said things that he was recorded saying and debunking arguments that nobody made, in order to portray this as a big conspiracy against him.

      BTW, as a side note: here's a video of Trevor being kicked in the genitals by a sasquatch [youtube.com] ;)

      (Yes, it's really him, though much younger. The guy next to him is Morgan Mackelprang, who Linkedin will tell you is Nikola's CIO, though he was nominally fired and replaced after a dangerous incident with a buggy ATV. Helped him launder IP out of the being-sued dHybrid into the newly established dHybrid Systems, then was later brought on as CIO at Nikola, until the aforementioned event. Trevor rewards his old friends well. BTW, the actual current CIO is Isaac Sloan, who was a web designer at one of Trevor's earlier companies (uPillar, a failed eBay clone). )

      • He sounds like a typical corporate psychopath.

      • Re: (Score:1, Insightful)

        by trawg ( 308495 )

        I fully expect him to talk his way out of this, using a combination of flatly denying he ever said things that he was recorded saying and debunking arguments that nobody made, in order to portray this as a big conspiracy against him.

        This behaviour only works if you are the President of the United States.

    • Re: (Score:2)

      by rtb61 ( 674572 )

      Based upon this information, I can guess where a lot of money went, to a PR=B$ agency to attack Tesla Motors, the more effective the attacks the better it makes the Nikola Motors con look. There have been a bunch of clearly PR=B$ attacks on Tesla and now it is apparent why. If the FBI pulls it finger out, it can likely hit Nikola Motors and the PR=B$ agencies it used with RICO act charges for the attacks on Tesla.

  • Weird, seems to me they already had a short position and were upset about the GM partnership raising its price.

    If the timing is what it seems, the SEC is going to be upset with Hindenburg. This should be interesting.

    • The SEC won't do shit. They stopped caring about securities fraud about 15 years ago by my count.

      • Agreed. I've seen several cases over the past couple of years which they did nothing about. As to Hindenburg, well even their about us page seems like it is one guy. Only one name is put forward but "we" is used in the rest of their about us page. Autoline also speculated one person.

        • Agreed. I've seen several cases over the past couple of years which they did nothing about. As to Hindenburg, well even their about us page seems like it is one guy. Only one name is put forward but "we" is used in the rest of their about us page. Autoline also speculated one person.

          I'm pretty sure "Hindenburg Research" is a troll company created soley to make jokes about hyrogen-related companies (Nikola uses hydrogen fuel cells).

          If anyone knows about problems with hydrogen -- it's Hindenburg.

    • Comment removed based on user account deletion
    • Wouldn't it be more profitable to have the hit piece article ready, then wait for the stock price to jump (thanks to the GM 'partnership'*) and short sell during the price spike, and then publish the article to tank the stock?

      *Some partnership, it looks like Nikola had to give GM a tenth of their stock for the privilege of paying them to put their Badger name onto GM's car, EV drivetrain, and battery technology.

    • Re:Weird (Score:5, Interesting)

      by Rei ( 128717 ) on Friday September 11, 2020 @07:49PM (#60497890) Homepage

      Facts stand for themselves. Exactly what do you think is false?

      For example, you don't even have to rely on the fact that you can match up background features to geolocate where the "NikolaOne driving" video was filmed and realize that it was going down a hill steep enough that it'd easily move just under it's own weight. Here's the company's CEO refusing to deny the claim that they just rolled the truck down the hill [ft.com].

      Nikola faked a video of one of its trucks by making it look like the vehicle was driving under its own power when it was really only rolling downhill, according to Hindenburg’s report — a claim backed up by FT reporting this week.

      “It was built to be a working prototype,” Mr Russell insists of the truck.

      But did it actually work? His answer, after a long pause: “I wouldn’t comment on that.”

      The funny thing is that all of this fakery is just about the prototypes alone - which were mostly just contracted out. Making prototypes is the easy part.

  • Inconceivable!

  • Hindenburg? (Score:4, Funny)

    by Quakeulf ( 2650167 ) on Friday September 11, 2020 @06:49PM (#60497784)

    Oh, the huge manatee.

  • Better have your ducks in a row (Score:5, Insightful)

    by onyxruby ( 118189 ) <onyxruby@ c o m c a s t . net> on Friday September 11, 2020 @06:56PM (#60497798)

    If you call a company out for commiting fraud like that you had damn well better have your ducks in a row. Especially when you are openly shorting the stock. That's just begging the SEC to investigate. That means they are pointedly saying they expect to withstand SEC legal scrutiny of their claims.

    In other words these guys either have evidence in spades, or these guys or going to get sued into oblivion. I don't know enough about either to say one way or another, but I've got a hunch that there's got to be something to the accusation.

    The simple fact that they haven't produced hard evidence (that I know of) to refute the accusations speaks volumes. This is the kind of accusation that you clear everyone's calendars to refute. Why haven't they produced evidence showing the accusations are false? Even something as simple as engineers notes about the test of the semi from the test where they were accused of rolling it down the hill. They should be able to excerpt something they can provide to clearly show the accusation were false without giving away their trade secrets.

    If the claims were false they could fund their startup with money from the accusers for malicious defamation. If they are false than heads need to roll at the investing companies for failing to perform proper due diligence.

    • Tesla shorts have been spreading thousands of outright lies over the years, the SEC never moved a finger. There should not be any difference in this case, with the added bonus that everything they state was public knowledge and they just made a list. If they investigate someone it should be Nikola and why they changed from "we have an amazing proprietary technology" to "we will have everything built by someone else and just put our badge on the vehicle". This is going to be the next Theranos. I wonder if t
      • I don't know much about Tesla shorts. But if they are individuals with very small short positions they may simply be under the radar. Also as I mentioned in response to the OP, it's not market manipulation if your disclosure of your short position is proper. The lies would still be actionable if somebody wanted to sue but they wouldn't necessarily trigger regulatory enforcement.
    • In general, I agree with you. Short and distort will bring pretty serious repercussions. Just like pump and dump. However, there is some cover provided by disclosure. If the publishers disclose that they are short the stock as part of the report, that doesn't trigger the same type of market manipulation rules. Of course they can still get sued for the content. But there may not be a violation for the SEC to pursue.

      • Interesting point, they were upfront in disclosing the short. I'm used to being careful to being careful with things with regards to the SEC as certain activities seem to attract their attention. Better not to poke the bear.

  • SEC? (Score:2)

    by msauve ( 701917 )
    1. Short sell.
    2. Publish negative "research report."
    3. Profit!!

    Perhaps those gnomes should invest in underpants next.
    • There's a disclosure at the end of their report. You don't suddenly lose your freedom of speech when you invest in the stock market.

      • Re: (Score:1)

        by msauve ( 701917 )
        >You don't suddenly lose your freedom of speech when you invest in the stock market.

        No, but you lose that freedom do when said speech has an effect on the markets you're in. Make your claim to any CEO of a publicly traded company. Tell Elon Musk. Yell "Fire!" in a theater. Hell, you can get in trouble for just _hearing_ stuff (which is the other side of "free speech") and acting on it, it's called "insider trading." Putting a "what we just said might be bullshit" disclaimer in fine print is, well, bulls
        • They didn't put a "what we said is bullshit" disclaimer. The let everybody know that they were short the stock. The statement is essentially "I'm short this stock and here's why." That's allowed. Arguably they would be more culpable if they didn't publish their report. They collected emails and talked to former employees. Some of that might be "material inside information" which you aren't allowed to use when trading. But since they published all of the information, it's now public and wouldn't qualify
        • I don't think you understand anything you typed there. Elon Musk can't make false claims about his company. He can say anything about his company he wants to say if it's true, whether it affects the market or not. The company is, in fact, *required* to say an awful lot of things that affect its share price. They're called disclosures.

          If any of the factual claims made by Hindenburg are untrue, they would also be in trouble. However, publishing information and opinions about publicly held corporations, prov
  • https://www.ff.com/ [ff.com] What does the future hold for Faraday? The same as Nikola I fear.

  • Why is it always "overstated" or "mis-spoke" instead of what it actually is: LYING.

    sacks of shit

    If one wants to be honored then maybe they should be honorable. Respect is earned, not given. And that begins with being honest in all one's dealings, regardless of anything else.

  • A depressing sign of the times (Score:3, Insightful)

    by LeeLynx ( 6219816 ) on Friday September 11, 2020 @07:56PM (#60497912)
    After reading the comments on the articles surrounding this, I'm sadly reminded of just how flawed our perception of reality has become. Apparently no matter how much factual evidence you have to demonstrate someone is a con man, including tweets, audio, and video of statements made by the subject, an alarmingly large number of people are under the impression that responding 'this is just a biased hit job' somehow makes all of it just go away.

    • There appears to be a current business model, where you hype up some idea, get investors to pour in money, then spend that money on more hype, instead of actual product development. It looks very much like a Ponzi scheme. There are companies that attract millions in investment, while saying they have no prospect of making a profit. This does not seem to put people off.

      This looks entirely perverse from a traditional economics viewpoint, where buyers and sellers make rational decisions, to further their inter

  • Can we take a moment to appreciate the irony of a company named Hindenburg taking on a company purportedly focusing on hydrogen vehicles?

  • Ocean of Lies (Score:3)

    by yassa2020 ( 6703044 ) on Saturday September 12, 2020 @01:38AM (#60498380)
    Is that a quote? If so it should be in quotes. If not, it should not be in a headline.

  • There's almost no place left on the Tesla-Killer cemetery.

  • Nikola has obviously refuted the report but has failed to disprove anything..."sigh"

  • It's not "refuting" a claim if you didn't actually provide evidence against it.

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