Mullen Automotive: Autopsy of an EV Stock Fraud
Video: A review of a stock market fraud, and what the red flags were.
Transcript
The first video I made on Mullen Automotive was back in July of 2023, I outlined the various ways the company had actively lied about its fundamentals. Which we’ll get into in this video. Adjusting for dilution, at the time, the share price was at $162, and now the stock sits around $0.20.
With the company at a $13 million market cap, it seems like it’s finally on the brink of going bust.
In this video, we’ll talk about the variety of red flags that might’ve tipped off investors that this stock was a scam from the beginning.
Everything this company does is designed to trick inexperienced, retail investors.
But first, let’s talk about the people running the show. In particular, the CEO, David Michery…quite frankly, none of the other executives matter.
David Michery is a con artist, plain and simple.
He lists no educational experience in engineering or any field that would benefit him in running an automotive business, and he has no experience working in the industry.
His background is in the entertainment sector, where he was the CEO or founder of at least five different failed businesses.
In 1999, he was the CEO of American Music Corporation, which later merged with a gold mining company that let its corporate registration lapse.
In 2004, he was the CEO of American Southwest Music Distribution, which underwent legal litigation because Michery allegedly transferred the assets of the company to one that he personally controlled.
In 2012, Seven Arts Entertainment appointed David Michery as a Director and the CEO of a subsidiary… the stock fell 99% after Michery got involved and then terminated its securities registration in 2015.
In 2013, Primco Management performed a reverse merger with a company that Michery controlled, made a variety of random and failed investments, then had its securities registration revoked by the SEC.
And the same thing happened again with Shades Holdings in 2014, a luxury sunglasses company that Michery was the CEO of.
Just this track record alone, and total lack of automotive industry experience, should’ve been enough to turn anyone off from investing in this company. But this is just the tip of the iceberg.
Not only was David Michery’s past incredibly questionable, but the same could be said for several different large investors in Mullen.
Mullen Automotive performed a reverse merger with Net Element to go public in 2021. At which point, Terren Peizer of Acuitas Group Holdings was already involved with the company. They’ve also been providing funding to Mullen in various deals.
Well, turns out Terren Peizer was previously charged with insider trading at the healthcare company Ontrak, in 2021. So he is a white collar criminal.
Additionally, one of the investment vehicles Peizer manages is Socius Capital Group, who hired Richard Josephberg. The guy went to jail for four years in 2007 serving 16 counts of tax fraud. So Peizer was a criminal, and hired criminals.
That isn’t all though, Peizer also has close business ties to another previous investor in Mullen, Michael Wachs. We know Wachs has ties to Peizer since he was listed as a representative for Crede Capital Group, which is a company owned by Peizer.
Michael Wachs owns Esousa Holdings, which has also provided financing to Mullen in the past. Wachs served jail time for defrauding Chase Bank for $20 million in 1996.
So that’s two white collar criminals involved in Mullen, but to top it off, we have a third. Milton Alt, who is the CEO of Ault Global Holdings, was just charged by the SEC with misleading disclosures and reporting at the company. The CFO was also charged with falsifying records.
So that’s at least three different criminal-affiliated organizations that have owned Mullen stock, and provided financing.
All of these institutions have owned preferred stock that doesn’t get affected by reverse splits. So once a reverse split happens, these institutions would own a larger percentage of the float and then proceed to dump those shares…
The financing agreements that Mullen entered with these firms led to significant dilution, but the CEO award incentives plan was another way that shareholders were diluted just to provide a massive payout for David Michery.
Every time the company hit a milestone of some kind, the CEO was given 1 to 3% of the current outstanding number of shares as an award. So, just from the end of 2022 to the end of 2023, Michery received nearly $47 million in stock-based compensation.
For 2023, David Michery was the 23rd highest paid CEO according to the AFL-CIO. That is just above the CEO of Microsoft, by the way.
The CEO of General Motors was paid nearly $28 million. It’s egregious.
Pre splits, in my video I made on the company a year ago, I mentioned the dilution caused by all of the financing and share-based comp, among other reasons, caused the share count to go from 17 million to 16 billion. They started at an even lower share count than I thought when I made the video.
They’ve done three reverse splits at this point, and the rate of dilution is only growing. As of 16 days ago, the share count pre reverse splits would’ve been 1.5 trillion. They went from 17 million shares to 1.5 trillion in less than 3 years. So, if this company even did anything positive for shareholders, it wouldn’t matter anyway. This level of dilution cannot be stopped.
And by the way, as I was making this video, Mullen put out a new SEC filing where they outline how there could potentially be another 350 million share dilution incoming. As of August 28th, Mullen was back to around 159 million shares, so the outstanding share count could be tripled again, which it certainly will.
If the involvement of a variety of convicted criminals and their endless dilution schemes wasn’t enough to make this company untrustworthy, don’t worry, their track record is just as bad.
If you would assume that these types of people might lie to enrich themselves, you would be right.
I’d argue the worst lie, and one that the entire company was built on, is that their cars are made in America. The CEO was proud to make this claim on many occasions, and it still says their vehicles are made in America on their website. The Made in America slogan.
Well, their Class 1 van and Class 3 truck are actually the Wuling van and Yuejin EC302 listed here. They’re both made by Chinese auto manufacturers.
These are the same models that Electric Last Mile Solutions (ELMS) was selling when they went bankrupt and were later acquired by Mullen.
This netted Mullen their existing inventory as well as their manufacturing facility in Mishawaka, Indiana.
The other manufacturing plant Mullen has is in Tunica, Mississippi, was acquired from another failed company called GreenTech Automotive. According to the Mississippi State Auditor at the time, that facility had never actually managed to produce a car.
Neither of these facilities can actually make anything. They’re just centers where Mullen strips the logos off of Chinese vans and slaps their own on top of it.
If they do anything at all, it’s just assembling the parts together at these plants, but they’re definitely not building anything of their own.
Another continuous lie this company has made has been with battery technology.
First, Mullen lied that they had a joint venture in place with NextMetals, a Ukrainian company, to produce solid-state batteries. There was never a JV in place.
The quote on quote prototype that Michery showed NextMetals was acquired from a Chinese company, of course, and it clearly had dents in it. Which is a big problem for solid-state batteries. So, it was clearly not going to work.
Then they had the nerve to form a real joint venture called Mullen Advanced Energy Operations with another criminal, Lawrence Hardge. I’m not sure where this court case is at, but Hardge was going to be sentenced to twenty years in prison for eight counts of securities fraud. The court originally expunged his criminal record since he repaid his debts, but Hardge then bragged about getting out of it, so the court then rescinded his expungement order…
So, according to Fast Company, that is yet another criminal that Mullen has been involved with. He claimed to have developed revolutionary battery technology, while the only invention he was known for was making a fire extinguisher. I don’t think those correlate.
Inevitably, a few months later, Mullen terminated its JV with Hardge for refusing to test his technology at an approved facility, among other reasons. They can give any reason they wish, but in reality, this was just another ploy to continue to mislead shareholders.
And to top it all off, Mullen acquired battery pack production assets from Romeo Power in September 2023. I made a video about this at the time, but it seems like another acquisition of failed assets since Romeo Power was involved with Nikola and seemingly caused fires at their facilities. So, the assets clearly have production issues.
Everything this company has acquired has been through ripping off IP, bankruptcy, or at the very least, financial troubles.
The vehicle models are from China, both of their manufacturing facilities were from bankrupt companies, their battery production assets from Romeo Power came from Nikola liquidating them…
Mullen also acquired a controlling interest in Bollinger Motors, yet another company that has continually failed to produce anything. The only “progress” this business has ever made has been through acquiring other assets, Mullen hasn’t produced any results on its own.
You can see this in their financials. Since December 2020, Mullen has announced purchase orders for their vehicles to the tune of over $1 billion including a recent press release with a company called Volt Mobility.
By contrast, the company has only realized $465,000 in revenues.
How is that possible? Because these purchase orders are from small companies that couldn’t possibly order that many vehicles, or just from shell companies that don’t even really have any existing operations.
Take MGT Lease for example, the $15 million purchase order… according to Mullen, this company supposedly had annual revenues of $70 million in 2022.
Meanwhile, their website domain was registered in October that same year, and this website looks like it was made in five minutes in a website editor. The products page still lists 2022 Mullen vehicles as new arrivals…
Another example is Volt Mobility, a company that is supposedly ordering $210 million worth of electric vehicles. The press release claims the company was founded in 2020, but yet their domain was registered this year. And if you look at the page source code for the website, it’s a straight rip off of BMW’s website in many places. So, yet again, it’s questionable this company does anything it claims.
I wouldn’t be surprised if essentially all of the deals that Mullen has announced were fake. Every press release this company puts out is designed to trick retail investors that don’t know any better.
When this company had their reverse merger with Net Element in 2021, electric vehicles were still all the rage in the stock market. They could’ve raised hundreds of millions, if not billions of dollars like Nikola or Rivian or Lucid… if they were a legitimate business. But the architects behind Mullen never had any intentions of producing vehicles.
As far as I can tell, the only vehicles that Mullen has managed to sell have been existing inventory they received from acquiring ELMS out of bankruptcy.
So, to summarize, we had:
A CEO with no experience in this industry, and a history of running failed companies.
At least four different people with criminal ties are involved with the company in one form or another.
Egregious compensation packages and other insane dilution ploys.
Lies about producing their own vehicles.
Lies about being able to make sophisticated batteries.
Lies about purchase orders.
I didn’t feel a need to go over these in much detail because you can assume why it’s happening, but Mullen has been or is currently involved in at least 9-10 different lawsuits as well. Just another sign to stay away.
And this video certainly didn’t cover everything, there’s a lot more that could be discussed, but this is many of the major red flags. I’m sure you get the point.
With the market cap of approximately $13 million, Mullen shouldn’t be able to keep this charade up for much longer. They’re running out of investors to scam, and every effort to dilute will raise less and less money. I’m looking forward to seeing this stock finally go away, as they managed to run a cash grab for far too long.