Nikola Corp. Founder Trevor Milton has been found guilty of fraud for defrauding investors in an electric truck company, a stunning fall for the billionaire turn-of-the-door salesman that promised to revolutionize automotive industry.
Milton, 40, was found guilty Friday of one count of securities fraud and two counts of electronic fraud by a federal grand jury in Manhattan, in a push to the US judicialefforts to crack down on corporate crime. He could spend years in prison.
It’s been a wild ride for the charismatic businessman, whose fortune has fallen into the hundreds of millions since Nikola shares skyrocketed when the company went public in June 2020. Milton, who remains a the company’s largest individual shareholder, founded Nikola in 2014 and built it into a $34 billion company when it went public, more than Ford Motor Company at a time.
The meteoric rise of the startup, which had no revenue at the time, came amid a wave of electric vehicle companies going public through special purpose acquisitions, or SPAC, starting two years ago when investors looked around 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.
Celebrity endorsement
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 Musk was. While Nikola’s initial focus was on heavy-duty commercial trucks, it has branched out to power electric sports and residential 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. greatly enhanced Nikola’s capacity in the production of hydrogen fuel cell trucks as well as the company’s fuel production capabilities. it’s him.
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. At one point there were dozens of people in the courtroom, and his family and friends lined up the first two rows behind the defense desk.
In his own ending, bringing Milton’s wife to tears, defense attorney Marc Mukasey asked jurors to “imagine the nightmare for Trevor, at the age of 40, to let his life hang” for being over-indicted.
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, the government called dozens of witnesses. It starts with Paul Lackeya former contractor Nikola with alleged fraud helped advance the criminal investigation.
Lackey, an engineer at electric powertrain company EVDrive, said he gave Nate Anderson Hindenburg’s study information in exchange for a share of the profits from short selling the company. Short sellers September 2020 report Nikola has 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 Babiarza former designer for Nikola, who says a prototype of the electric vehicle startup’s proposed Badger pickup is made in part from Ford F-150 Raptor parts
- 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.
- CFO 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 is wrong with Nasdaq
The defense called the Harvard Law School professor Allen Ferrellan economic and stock market expert who told the jury that traders had mostly denied the claims Milton made in the period between his company’s listing until until he resigned.
The lawsuit is US v. Milton, 21-cr-478, US District Court, Southern District of New York (Manhattan).
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