By Matthew Russell Lee, Patreon Maxwell book
BBC - Honduras - CIA Trial book - NY Mag
SDNY COURTHOUSE, Sept 28 – The trial of Nikola founder Trevor Milton for wire and securities fraud moved, on September 28, through the cross examination of CFO Kim Brady to Utah land seller Peter Hicks. Inner City Press was there, and live tweeted. Thread:
Milton's lawyer Marc Mukasey: Let me show you the VectoIQ - Nikola document. Are these the board of directors?
Brady: Yes.
Mukasey: This was intended to educate about the SPAC process, a relatively new thing, right? Brady: Yes.
Mukasey: And here an example is given, of Virgin Galactic, a space travel company (chuckles), some form of space travel, right?
Brady: It's tourist flights. Mukasey: It's owned by a guy named Richard Branson, right? Brady: He was the majority shareholder, not involved in the day to day management.
Mukasey: And this is "Cowen's thoughts on proper strategy" for SPACs, right? Brady: Yes. Mukasey: And in this document, Nikola wrote that "Behind the Meter" option is available at certain locations, right? Brady: That's what it says.
Mukasey: Let's turn to publicity. You and your colleagues discussed using Virgin Galactic as a model, for publicity of a SPAC, right? Brady: I don't remember that. Mukasey: Let me show you this email from Jeff Ubben [from valueact dot com], saying that Trevor should follow the example of Richard Branson. Do you see it?
Brady: I do. Mukasey: And here is a list of Branson's promotion activities from July to October 2019, right? It weaves them through with SEC filings... Brady: Is that a question? Mukasey: Am I reading it correctly? Brady: Yes. [sidebar] Mukasey: And here in an email with Vince Caramella, Mr. Milton wrote, We need a good SEC attorney to help with tweets, right? Brady: That's what is says. Mukasey: Then Nikola reached out to Rystad Energy, right? Brady: Who?
Mukasey: Let me refresh your recollection. There was a time Mr. Milton asked for a researcher, to fact check, right? Let me show only you, not the jury, this spreadsheet...
Brady: I see Rystad. But the rest, I don't remember.
Mukasey: Later, but before Nikola went public, Jeff Ubben bought stock from Trevor Milton, right? Brady: Yes. Mukasey: And it was arms-length, in a stock purchase agreement that you signed, correct? Brady: Yes. Mukasey: So effectively, Jeff Ubben paid $10 a share for the Nikola shares, right?
Brady: Correct. Mukasey: There's been a lot of talk in the courtroom about the Badger. You understood it would not be built without an OEM partner, right? Brady: Yes. Mukasey (proffering a document) Your Honor, I'm going to move to admit this under FRE 803(6). AUSA: Hearsay! Judge Ramos: Let's have a sidebar.
[Whispering, with white noise turned up]
Mukasey shows a Nikola purchase order, to Robert Bosch LLC, approved by Kim Brady CFO.
Brady: My name went on everything.
Mukasey: But I am assuming you would not allow your name on something you were not approving, right?
Brady: I don't know what you are suggesting.
Mukasey: Let's talk about SEC filings... Here on Nikola's website as it existed in 2020 you are listed as a contract, for "Sell-Side and Buy-Side Analysts," right?
Brady: Yes.
Mukasey: But you didn't want retail investors reaching out to you, correct?
Brady: Correct. I did not.
Mukasey: But this guy (pointing at Milton) he wanted to engage with the average Joe, right?
Brady: It's highly unusual for anyone to be in contact with retail investors.
Mukasey: But unusual can be OK --
AUSA: Objection!
Mukasey: You've made clear how you and Mr. Milton differed, in who you wanted to speak to --
AUSA: Objection!
Brady: Retail investors tend to believe--
Mukasey: Move to strike.... There is nothing wrong with communicating with retail investors, right?
Brady: As I said, you have to be careful...
Mukasey: It's not legal, correct?
Brady: It's not illegal, but it's highly usual.
Mukasey: Nothing improper, yes or no? A: Yes
Mukasey: Let's be clear - high frequency traders are mostly not individuals, yes?
Brady: They trade frequently. Mukasey: As to retail investors, you don't know what they read, because you don't talk to them, right? Judge Ramos: That question is compound. Try again
Mukasey: You think retail investors are too lazy or stupid to read SEC filings? You make filings to educate them -
Brady: It's required by law.
Mukasey: You don't know what the average retail investors reads. Brady: I know, based on the ones I've spoken with
Mukasey: Here, you called the Hindenburg report a hit job and character assassination against Trevor Milton, correct?
Brady: If you say so. Mukasey: It's right here.... Nikola got a grand jury subpoena on Sept 19, correct? Brady: If you say that's the date
Mukasey: And Nikola provided many documents and cooperated and your testimony here today is part of that... Nothing further.
Judge Ramos: Re-direct. AUSA: May we approach? [Another whispered sidebar]
AUSA: Mr. Brady, you were asked for the basis of your conclusion about retail investors, and said it was based on your experience, right?
Brady: Yes. AUSA: Did you convey your concerns to Mr. Milton in 2020? Brady: Many times.
AUSA: Were Mr. Milton's representations that Nikola's reservations were binding contracts true or false? Brady: False.
Re-cross: Mukasey: In the summer of 2020, Mr. Brady, you knew that Trevor Milton was tweeting, right?
Brady: Yes. Mukasey: You knew that before the Hindenburg / short report, right? Brady: I knew some. But more from the report.
Mukasey: You got paid more, if more institutional investors invested in Nikola, right? Brady: In the private round.
Mukasey: But you didn't get the $250,000 bonus for every $10 million put in - but not from retail investors, right? Nothing further.
They've back from the break. On the stand, Utah land-seller Peter Hicks. AUSA: When did you sell land to Trevor Milton?
A: It went into contract in June 2020, and closed in August, including for Nikola stock options. AUSA: How big was the land? A: 1/3 the size of Manhattan.
AUSA: What price was suggested to you? Peter Hicks: Mr. Anderson said Mr. Milton was thinking of $5 million. I was not interested in taking a loss. I wanted cash, not stock options.
AUSA: Was there a recorded call? Peter Hicks: Yes. My son recorded it. AUSA: How old was he? Hicks: 23. He was home for COVID and I had him on the call with Trevor Milton, in April 2020. AUSA: Did you know he was recording? Hicks: No.
AUSA: Did you know that it can be a crime in some circumstances to record without consent in Massachusetts, where you were?
Hicks: Yes. AUSA: And did your son get a commitment he will not be prosecuted, for turning this recording over? Hicks: Yes, he did.
Tape is played: Trevor Milton talking about hydrogen stations, on LA to Phoenix route.
AUSA: Did you tell you they were already gobbling up the land for this?
Hicks: Yes.
It continues...
The case is US v. Milton, 21-cr-478 (Ramos)
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