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Mullen Automotive: Unraveling Allegations of a Historic Stock Market Scam

In the volatile world of small-cap stocks, few companies have sparked as much controversy as Mullen Automotive (NASDAQ: MULN). Once hailed as a promising player in the electric vehicle (EV) sector, Mullen has faced intense scrutiny, with some critics alleging that its leadership—CEO David Michery, investor Michael Wachs, and financier Terren Peizer—has orchestrated "the longest running fraud and wealth transfer scam of any small-cap company in stock market history." This bold claim, circulating among investors and on platforms like X, paints a damning picture of financial misconduct. But how much of this holds up under scrutiny? Let’s dive into the saga of Mullen Automotive, exploring its rise, fall, and the allegations that have left investors reeling.

The Rise and Fall of Mullen Automotive

Mullen Automotive burst onto the public markets in 2021 through a reverse merger with Net Element, a move that allowed the EV startup to bypass the traditional IPO process. Promising affordable electric vehicles like the Mullen FIVE crossover and touting partnerships with companies like Randy Marion Automotive Group, Mullen initially captured the imagination of retail investors. At its peak, the stock saw significant buzz, with a 500% surge in a single month in early 2022, fueled by social media hype on platforms like Reddit’s r/WallStreetBets .

[](https://investorplace.com/2022/03/ceo-david-michery-just-sold-muln-stock-heres-why/)

However, the enthusiasm quickly faded. By mid-2022, MULN stock had plummeted from $12 to below $1, flirting with penny stock territory and raising concerns about potential delisting from the Nasdaq . Today, Mullen’s market capitalization hovers around a mere $13 million, a stark contrast to its earlier promise . The company has reported significant losses—$186.8 million by late 2021—and has struggled to deliver on its ambitious EV production goals . For many investors, these financial woes are just the tip of the iceberg.

[](https://investorplace.com/2022/03/after-mulling-muln-stock-youll-surely-choose-to-avoid-it/)[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)[](https://investorplace.com/2022/03/after-mulling-muln-stock-youll-surely-choose-to-avoid-it/)

The Allegations: A Grand Scam?

At the heart of the controversy is the claim that Mullen’s leadership, specifically David Michery, Michael Wachs, and Terren Peizer, has engineered a sophisticated scheme to enrich themselves at the expense of retail investors. According to critics, this trio has allegedly used Mullen as a vehicle for wealth transfer through stock dilution, questionable financing deals, and insider enrichment. Let’s break down the key figures and the accusations leveled against them.

David Michery: The Controversial CEO

David Michery, Mullen’s CEO, is a central figure in these allegations. Critics point to his lack of experience in the automotive industry, noting his background in entertainment with a string of failed ventures, including a music company that merged with a defunct gold mining operation . Michery’s compensation has also raised eyebrows. Between 2022 and 2023, he received nearly $47 million in stock-based awards, placing him above the CEOs of Microsoft and General Motors in reported compensation for 2023, despite Mullen’s dire financial state . This payout, tied to milestone-based incentives, has been criticized as a mechanism to dilute shareholder value, with the company’s share count ballooning from 17 million to 16 billion pre-splits due to financing and compensation schemes .

[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)

Investors on platforms like X have expressed outrage, with one user claiming to have lost $750,000 due to reverse splits and dilution, calling Michery a “fraud CEO” who uses Mullen as his “personal cash register” . While these sentiments reflect deep frustration, they remain anecdotal and unproven in a court of law.

Terren Peizer: The Financier with a Checkered Past

Terren Peizer, associated with Acuitas Group Holdings, is another key figure in the allegations. Peizer has been linked to Mullen through financing deals that critics argue have further diluted shareholders. His past, however, draws significant scrutiny. In 2021, Peizer was charged with insider trading at Ontrak, a healthcare company, raising questions about his credibility . Additionally, his investment vehicle, Socius Capital Group, employed Richard Josephberg, who served four years in prison for tax fraud . Critics argue that Peizer’s involvement with Mullen, combined with his history, suggests a pattern of questionable financial dealings.

[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)

Michael Wachs: The Shadowy Investor

Less is known about Michael Wachs, but his business ties to Peizer and prior investments in Mullen have drawn suspicion. Critics allege that Wachs, alongside Peizer, facilitated financing arrangements that prioritized insider gains over shareholder value . However, specific details about Wachs’ role are sparse, and much of the criticism relies on his association with Peizer rather than direct evidence of misconduct.

[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)

The Mechanics of the Alleged Scam

The allegations suggest that Mullen’s leadership employed several tactics to orchestrate what some call a “wealth transfer scam”:

• Stock Dilution: Mullen’s share count exploded due to financing deals and executive compensation, diluting existing shareholders’ stakes. This practice, while common in cash-strapped startups, has been criticized as excessive, with some investors losing nearly their entire investment after multiple reverse splits .
[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)
• Questionable Partnerships: Mullen’s ties to entities like DRIVEiT Financial Group and Arra, allegedly connected to Michery and other insiders, have been flagged as potential shell companies used to funnel funds . For example, a Reddit post detailed how DRIVEiT, linked to Mullen, paid 1 million shares to a former executive for “no apparent reason,” raising suspicions of financial maneuvering .
[](https://www.reddit.com/r/Muln/comments/1ey38bx/driveit_financial_group_david_micherys_next_penny/)[](https://www.reddit.com/r/Muln/comments/1ey38bx/driveit_financial_group_david_micherys_next_penny/)
• Misleading Promises: Mullen’s press releases often touted ambitious goals, such as the Mullen FIVE or solid-state battery technology, which have yet to materialize commercially. Critics argue these announcements were designed to inflate stock prices and lure retail investors .
[](https://www.reddit.com/r/Muln/comments/1ey38bx/driveit_financial_group_david_micherys_next_penny/)

These tactics, if true, align with patterns seen in historical stock scams, such as pump-and-dump schemes or Ponzi-like structures where early investors are paid with funds from new ones . However, no legal convictions have confirmed these allegations against Mullen’s leadership.

[](https://www.investopedia.com/articles/00/100900.asp)

The Counterargument: A Struggling Startup or Deliberate Fraud?

Not everyone agrees that Mullen is a scam. Supporters argue that the company is simply a struggling EV startup facing the same challenges as other small-cap firms in a capital-intensive industry. Mullen has secured legitimate orders, such as a $263 million deal with Randy Marion Automotive Group for Class 3 trucks, and has invested in manufacturing facilities in Mississippi and Indiana . The company also reported $116.1 million in cash reserves as of April 2023, suggesting some operational runway .

[](https://investorplace.com/2023/05/muln-stock-alert-3-key-takeaways-from-mullens-company-update/)[](https://investorplace.com/2023/05/muln-stock-alert-3-key-takeaways-from-mullens-company-update/)

Furthermore, insider buying activity—1.7 million shares purchased versus 799,568 sold in 2022—suggests some confidence among executives . Defenders argue that dilution is a common strategy for cash-poor companies, and Michery’s optimistic statements reflect a CEO trying to rally support, not deceive investors.

[](https://investorplace.com/2022/03/ceo-david-michery-just-sold-muln-stock-heres-why/)

The Bigger Picture: Lessons from Financial Fraud

The Mullen saga echoes broader patterns in financial fraud, from Enron’s accounting manipulations to Bernie Madoff’s Ponzi scheme . The SEC and FINRA warn that small-cap stocks, especially those trading on volatile markets like the OTC, are prime targets for fraudsters due to limited transparency . Investors are urged to research companies thoroughly, verify claims independently, and be wary of promises of guaranteed returns or urgent opportunities .

[](https://www.investmentnews.com/guides/10-biggest-investment-frauds-in-recent-history/257857)[](https://en.wikipedia.org/wiki/Madoff_investment_scandal)[](https://www.aura.com/learn/investment-fraud)

For Mullen, the lack of concrete legal action against Michery, Wachs, or Peizer leaves the allegations unproven. However, the company’s financial struggles, combined with the questionable backgrounds of key figures, fuel skepticism. Investors who lost significant sums, like the X user claiming a $750,000 loss, highlight the real-world impact of Mullen’s decline .

What’s Next for Mullen and Its Investors?

With a market cap of just $13 million and ongoing dilution, Mullen’s future looks bleak unless it can deliver on its EV promises . The company faces a shareholder lawsuit targeting Michery and other executives, which could shed light on the allegations . Meanwhile, investors are left grappling with losses and unanswered questions.

[](https://www.greeninvesting.eco/p/mullen-automotive-autopsy-of-an-ev-stock-fraud)[](https://www.reddit.com/r/Muln/comments/1ey38bx/driveit_financial_group_david_micherys_next_penny/)

For those considering small-cap investments, Mullen serves as a cautionary tale. The SEC advises checking the registration status of investment professionals and researching companies using tools like FINRA’s BrokerCheck or Investor.gov . Above all, if an opportunity sounds too good to be true, it probably is.

[](https://consumer.ftc.gov/articles/investment-scams)

Disclaimer: The allegations discussed in this article are unproven and based on public sentiment and reports. Always conduct your own due diligence before investing. For more information on investment fraud, visit Investor.gov or contact the SEC at (800) 732-0330.

Reddit post on the subject