Trevor Milton, the founder of electric car maker Nikola, was convicted last Friday of fraud for lying to the company’s investors.
Milton allegedly lied about the company’s electric and hydrogen fuel cell technology in a case in which he was found guilty.
The case
The jury found Nikola’s founder guilty of three counts: one for securities fraud and two for wire transfer fraud.
After deliberating for more than five hours, Milton was acquitted of another count of securities fraud.
As a result, he could face years in prison.
Allegations
Prosecutors say Trevor Milton made false and misleading statements about nearly every aspect of the business.
Among the allegations, Milton claimed that Nikola had a fully functional prototype, albeit inoperable.
He also claimed the company was building a hydrogen-electric pickup truck built from the ground up using Nikola parts and technology.
Prosecutors, however, believed the allegation to be a lie.
After the sentencing, U.S. Attorney Damian Williams released a statement saying:
“Trevor Milton lied to Nikola’s investors — over and over again. That’s fraud, plain and simple.”
“Let this case serve as a warning to anyone who plays fast and loose with the truth to get investors to part with their money. It won’t end well.”
In 2020, business partners who previously worked with Milton said it was hard to trust.
They also said that Nikola’s founder often exaggerated his plans and did not keep his promises.
Others shared doubt about his character and his integrity.
Nikola
The electric car maker went public in 2020, surpassing Ford in value despite never having delivered a vehicle.
That year, General Motors announced plans to invest in the company and work together to build an electric car.
The company initially planned to supply the startup with equipment for Nikola’s hydrogen fuel cell trucks.
Signs of trouble
Nikola’s statements surfaced as the company joined several technologies and electric vehicle companies in going public through Special Acquisition Vehicles (SPACs).
Milton was also charged with defrauding a Utah ranch seller.
The ranch owner accepted Nikola’s stock options as part of the purchase price, sold on what Milton said about the company.
However, the company’s shares fell when a published report called out Nikola as a complicated scam.
The report that put the company in the spotlight was Hindenburg Research, a short seller that makes money by betting against companies.
Milton’s resignation
Trevor Milton was charged in July 2021.
General Motors sold its stake in Nikola and canceled plans to produce the Badger, the company’s pickup truck.
Milton called the Nikola review a “hit job” and said the contents were lies.
He then resigned as Chairman of Nikola in September 2020.
Since then, the company’s shares are down around 95%, a far cry from their June 2020 peak.
In 2021, Nikola Miltons confirmed seven erroneous statements on the progress of business from July 2016 to July 2020.
Last year, the company agreed to pay the Securities and Exchange Commission $ 125 million to settle investor fraud allegations against Nikola.
Reference:
