Nikola founder Trevor Milton was convicted by a US jury on Friday of fraud in a case that alleged he lied to investors about the electric and hydrogen fuel cell company̵[ads1]7;s 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 could potentially face years in prison.
Prosecutors had alleged that Milton made false and misleading statements about “virtually every aspect of the business,” including that Nikola had a fully functioning prototype despite Milton knowing it was unusable. Milton had also claimed that Nikola had built an electric and hydrogen-powered pickup from the ground up using Nikola parts and technology, despite the fact that he had not, according to prosecutors.
“Trevor Milton lied to Nikola’s investors – over and over and over again. It’s fraud, plain and simple,” says US Attorney Damian Williams so in a statement after the verdict was handed down. “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 difficult to trust, with a tendency to exaggerate and not follow through on promises. Some had questions about his character and integrity.
Nikola went public in 2020, briefly surpassing Ford in value that year despite never delivering a vehicle. General Motors announced in 2020 that it planned to invest in Nikola and work together on an electric truck. GM had also planned to supply the startup with equipment for its hydrogen fuel cell vehicles.
Milton’s comments about Nikola came as the company joined the growing number of technology and electric car companies going public through special purpose acquisition vehicles, or SPACs. He was also accused of defrauding the seller of a ranch in Utah, who accepted Nikola stock options as part of the purchase price based on Milton’s claims about the company.
But Nikola’s shares fell sharply after a scathing report alleged the company was an “intricate fraud.” The report was published by Hindenburg Research, a short-seller that profits from betting against companies.
Milton, of Oakley, Utah, was indicted in July 2021.
GM later gave up its stake in Nikola and ended plans to produce the pickup truck, the Badger.
Milton, who called the report criticizing Nikola a “hit job” and “liar”, stepped down as Nikola chairman in September 2020.
Nikola’s stock has fallen about 95% since it peaked in June 2020. The company acknowledged in 2021 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 allegations that it defrauded investors.