Nikola founder Trevor Milton was found guilty by a US jury on Friday of fraud in a case alleging he lied to investors about the company’s electric and hydrogen fuel cell technology.
The jury found Milton guilty of one count of securities fraud and two counts of wire fraud after deliberating for about five hours. Milton was acquitted of another count of securities fraud. Milton potentially faces years in prison.
Prosecutors had alleged that Milton made false and misleading statements about “nearly every aspect of the business”, including that Nikola had a fully functional prototype that Milton knew was inoperable. Milton had also claimed that Nikola had built an electric and hydrogen-powered pickup truck from the ground up with Nikola parts and technology, although he did not, according to prosecutors.
“Trevor Milton lied to Nikola investors – over and over and over again. This is fraud, plain and simple,” said U.S. attorney Damian Williams. said in a statement after the publication of the verdict. “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.
Business partners who worked with Milton before Nikola described him to CNN Business in 2020 as hard to trust, with a tendency to overdo it and break promises. Some had questions about his character and integrity.
Nikola went public in 2020 and briefly overtook Ford in value that year despite never delivering a vehicle. General Motors announced in 2020 its intention to invest in Nikola and work together on an electric truck. GM also planned to provide the startup with equipment for its hydrogen fuel cell trucks.
Milton’s statements about Nikola came as the company joined the growing number of technology and electric vehicle companies going public through special purpose acquisition vehicles, or SPACs. He was also accused of defrauding the seller of a Utah ranch, who accepted Nikola’s stock options as part of the purchase price based on Milton’s claims about the ‘company.
But shares of Nikola fell sharply after a scathing report alleged the company was a ‘complex fraud’. The report was released by Hindenburg Research, a short seller who profits by betting against companies.
Milton, of Oakley, Utah, was charged in July 2021.
GM then exited its stake in Nikola and ended production plans for its pickup truck, the Badger.
Milton, who called the report criticizing Nikola “trouble” and “lies”, resigned as Nikola chairman in September 2020.
Nikola’s stock has fallen about 95% since hitting a high in June 2020. The company admitted in 2021 to seven “inaccurate” statements made by Milton about the company’s progress from July 2016 to July 2020 .
Last year Nikola agreed to pay the Securities and Exchange Commission $125 million to settle charges of defrauding investors.