Nikola Corp. Founder Trevor Milton was found guilty of fraud for deceiving investors in electric truck company, a staggering fall for the billionaire-turned-door-to-door salesman who promised to revolutionize the auto industry.
Milton, 40, was found guilty by a federal grand jury in Manhattan on one count of securities fraud and two counts of electronic fraud on Friday, boosting the U.S. Justice Department’s effort to crack down on corporate crime. Karma. He could spend years in prison.
It’s been a wild ride for the charismatic businessman, whose fortune has fallen to hundreds of millions since Nikola shares spiked when the company went public in June 2020. Milton, who remains the company’s largest individual shareholder, founding Nikola in 2014 and building it into a $34 billion company when it went public, more than Ford Motor Co. at one point.
The meteoric rise of the startup, which had no revenue at the time, came in a wave tram companies that list shares through special purpose acquisition companies, or SPACs, starting two years before investors learn about the next scene Tesla. Going the SPAC route allows them to market their company based on predictions of future performance rather than actual financial results. Some of the biggest names on Wall Street have poured money into the field.
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After Nikola went public, ordinary investors also began to pay attention to Milton’s vision, with the company being discussed as much online as Elon Muskwas. While Nikola’s original focus was on commercial truck, it has branched out to power sports and consumer electric vehicles. It was all fueled by endorsements from celebrities like the Diesel Brothers’ Heavy D, who promoted the Badger pickup, a product that never made it past the rendering stage.
Prosecutors argued that Milton enticed retail investors to buy Nikola stock by making false statements about the company’s products and capabilities during numerous podcast and TV interviews, news reports. Great powerful production capacity of Nikola truck powered by hydrogen fuel cells as well as the ability to self-produce fuel.
Assistant U.S. Attorney Jordan Estes told the jury during the closing arguments on Thursday. “His lies may have surfaced on social media, but make no mistake: This is an old-fashioned scam.”
Milton’s attorneys called the case a “misrepresentation of prosecution,” arguing that their client never intended to mislead potential investors and that in any event, his statement was irrelevant. important or important enough to influence the decisions of such investors.
Milton was generally upbeat when he arrived in court in a suit and tie to sit with his attorneys. Sometimes there were dozens of people in the courtroom, with his family and friends lining the first two lines behind the defense desk.
In his own ending, which brought his wife Milton to tears, defense attorney Marc Mukasey asked jurors to “imagine the nightmare in which Trevor, at 40, his life hangs in the balance. equal” for being excessively prosecuted.
There are also lighter moments. During the tense vigil during Friday’s jury discussion, Mukasey practiced a few golf swings with a ghost club.
During the trial that began with the opening statement on September 13, authorities called dozens of witnesses. It begins with Paul Lackey, a former Nikola contractor whose alleged fraud helped advance the criminal investigation.
Lackey, an engineer at electric powertrain company EVDrive, said he provided information to Nate Anderson’s Hindenburg Research in exchange for a share of the profits from short selling the company. The September 2020 short seller’s report called Nikola a “complicated fraud” that, among other allegations, overstated the capabilities of its first test trucks. Nikola shares plummeted.
The government called Nikola’s other insiders to the witness stand. Among them:
- Brendan Babiarz, a former designer for Nikola, who says a prototype of the startup’s proposed Badger electric car pickup truck made partly from components from a Ford F-150 Raptor
- CEO Mark Russell, who said he only learned after joining the company that its first electric truck had no natural gas turbines or fuel cells when Milton announced it.
- Chief Financial Officer Kim Brady, who said Milton was so “focused” on the company’s stock price that when the stock fell $5 on its first trading day, he thought something was wrong with the stock price. Nasdaq
The defense called Harvard Law School professor Allen Ferrell, an expert in economics and stock marketwho told the jury that traders almost exclusively denied the claims Milton made between the time his company went public and his resignation.
The lawsuit is US v. Milton, 21-cr-478, US District Court, Southern District of New York (Manhattan).
