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Trevor Milton has been accused of bragging about nonexistent generation to inflate the inventory value of Nikola, an electric truck manufacturer.
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By Jack Ewing
A federal jury on Friday found Trevor Milton guilty of defrauding investors by mendacity about the alleged technical achievements of Nikola, the truck maker he discovered.
Mr. Milton was convicted of one count of securities fraud and two counts of wire fraud, the serious maximum of which carries a maximum criminal sentence of 20 years. He was acquitted of an additional fee for securities fraud. The jury in U. S. District Courtin Manhattan the verdict returned after about 4 weeks of testimony and about six hours of deliberation.
Prosecutors portrayed Milton, 40, as a manufacturer who wrongly claimed investors were about to produce long-haul trucks capable of running emission-free on reasonable hydrogen.
“Trevor Milton is a con man,” Assistant U. S. Attorney Jordan Estes said Thursday, summarizing the government’s case. “He lied to investors to get their money, and simply. “
The defense suggested that Mr. Milton did not intend to defraud and that his statements were not to blame for the drop in Nikola’s inventory value that wiped out billions of dollars in value.
Marc Mukasey, a defense attorney, said Mr. Milton spoke in the provided verb tense of the things Nikola hoped to accomplish in the future. “I enjoyed Nikola,” Mukasey told jurors Thursday, appearing before lawmakers. He brags about his son.
On Friday, Mukasey said: “We respect the verdict, we will continue to fight.
Mr. Milton, who had given the impression of being cheerful for much of the trial, shook his head in obvious disbelief after hearing the verdict. His wife, Chelsey Milton, leaned her head against the back of a bench in the courtroom and sobbed.
U. S. District Judge U. S. Edgardo Ramos, who presided over the trial, conceded that Mr. Milton will remain free on $100 million bail until sentencing in January.
The case provided a lesson in the risks of making an investment in young “pre-income” electric vehicle brands that have limited or non-existent concepts but sales. With the exception of Tesla, new automakers have encountered production problems.
In a recent example, Rivian, a maker of electric pickup trucks, said last week that it is recalling nearly every vehicle it has produced because a small number of them have loose fasteners that can lead to a guide malfunction.
Milton’s trial was also a test of prosecutors’ ability to hold publicly traded corporate executives accountable for statements they make on social media and other public forums that can cause inventory costs to skyrocket. Milton was a prolific Twitter user and made the impression on podcasts and business news programs.
M. Milton, who dropped out of college with no formal engineering training, founded Nikola in 2015 in the basement of his home in Salt Lake City. The company went public on Nasdaq in 2020 by merging with a special purpose acquisition company, or SPAC, called VectoIQ Acquisition Corporation. VectoIQ is controlled by Stephen Girsky, a former top executive at General Motors. The deal with the so-called blank check company allowed Nikola to avoid some of the regulatory scrutiny implemented in initial takeover bids.
After the inventory exchange directory made him rich, Mr. Milton, who owned 25% of Nikola’s shares, went crazy about expenses, bought luxury goods, added a Gulfstream jet and a multimillion-dollar house in the Turks and Caicos Islands. In about six months in 2020, according to testimony, Mr. Milton spent more than $80 million.
Nikola shares peaked at nearly $80 in June 2020, when the company was worth more than Ford Motor. Soon after, investment corporation Hindenburg Research released a report accusing Milton of making false claims about the company’s technology, pointing to a video in which a truck rolled down an incline to make it look like a working prototype.
Mukasey the video mere “special effects”.
“In fact, it is not a crime to use special effects,” Mr. Mukasey told jurors. “Otherwise, the government rates the Energizer rabbit. “
Milton resigned as president weeks after the Hindenburg Report. Nikola shares closed Friday at $3. 06.
Last year, Nikola agreed to pay a $125 million civil penalty to settle a fraud investigation through the Securities and Exchange Commission. The company admitted any wrongdoing as part of the settlement.
Nikola aspired to be the Tesla of the trucking industry; either corporation answered the call from Nikola Tesla, a pioneer in the advancement of AC technology. Nikola planned to build trucks that would run on emission-free hydrogen fuel cells. a network of hydrogen filling stations along major roads, as Tesla has built a network of charging stations.
During the trial, prosecutors aired video interviews in which Mr. Milton claimed that Nikola was already generating “green” hydrogen with renewable energy for less than the diesel load, a major milestone. “The game is over for diesel,” M. Milton on Twitter.
In fact, Nikola hadn’t produced “a single molecule” of hydrogen, Estes said. Others in the fledgling green hydrogen industry are still struggling to produce fuel at a price low enough as diesel.
Milton also said he has billions of dollars in binding contracts with trucking corporations to buy Nikola vehicles. The “contracts” were just bookings that could be cancelled without problems, prosecutors argued.
Among the witnesses was Scott Damman, a senior General Motors executive, who planned to build a battery-powered pickup truck, Badger, with Nikola. Badger’s announcement in February 2020 sent Nikola’s percentage value skyrocketing.
Damman testified that G. M. would have built the truck and provided all the engineering and technology, while Nikola contributed some of the design and marketing.
However, according to testimonies, Mr. Milton said on Twitter and other forums that Nikola is guilty of “100%” Badger’s technology, portraying G. M. as nothing more than a support player. G. M. se retired from society some time after the Hindenburg Report, and Badger never produced.
Other Nikola executives, who added Mark Russell, the lead executive, and Kim Brady, the lead monetary official, warned Milton that his statements could backfire, prosecutors argued. The leaders even staged an “intervention” in which they tried, unsuccessfully, to get Mr. Milton to tell the truth, according to witnesses.
Mukasey, the defense attorney, pointed to Nikola’s internal emails in which executives praised Mecaya’s media appearances. Milton. ” They were telling Trevor what a smart task he was doing,” Mukasey said.
The convictions come with a rate that Mr. Milton scammed a guy who sold him a ranch in Utah. Milton paid for the ranch partly with features to buy Nikola shares that turned out to be worthless.
The acquittal of one of the securities fraud charges has relieved Mr. Milton. Such a conviction would have exposed him to a 25-year sentence.
Phoenix-based Nikola continues to operate, generating a limited number of battery-powered trucks in cooperation with established companies, adding IVECO, an Italian truck manufacturer that makes Nikola cars in Germany. Michael Lohscheller, an auto industry veteran who was once chief executive of German automaker Opel, was named Nikola’s chairman in August.
Stefan Hartung, chief executive of German electronics maker Bosch, said in an interview this month that he still believes in Nikola. Bosch, one of the world’s largest automotive parts brands, supplies mobile fuel generation for Nikola truck development.
“We are now a long way off in terms of industrialization capacity,” Mr. Hartung. “This vehicle can be built. “
Julie Creswell and Neal E. Boudette contributed to the report.
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