On Friday, a federal jury convicted Nikola, the electric vehicle manufacturer that Trevor Milton created and was responsible for, guilty of defrauding investors by lying about the alleged technological accomplishments of the company.
Mr. Milton was found guilty on one count of securities fraud and two charges of wire fraud, the most severe of which carries a potential penalty of up to twenty years in prison. An further case of securities fraud against him was dropped after he was found not guilty. After about four weeks of testimony and around six hours of discussion, the jury in the United States District Court in Manhattan reached its decision and delivered its judgement.
The prosecution described Mr. Milton, who is 40 years old, as a serial fabrication who wooed investors by falsely saying that Nikola was close to creating long-haul vehicles that could operate emission-free on inexpensive hydrogen. This was done in an effort to get investors to invest in Nikola.
Jordan Estes, an assistant United States Attorney, said on Thursday that Trevor Milton is a con artist as she was providing a summary of the government’s case. Simply put, he deceived investors in order to get control of their financial resources.
The counsel for the defence maintained that Mr. Milton had no intention of defrauding anybody and that his words were not to blame for the precipitous drop in Nikola’s stock price, which caused the company to lose billions of dollars in market worth.
An attorney for the defence named Marc Mukasey said that Mr. Milton would occasionally talk about things Nikola planned to do in the future while using the present tense. Mr. Mukasey told the jury on Thursday that Mr. Milton “loved Nikola,” comparing him to an overzealous father who brags about his kid. “He adored Nikola,” Mr. Mukasey said.
Mr. Mukasey said on Friday that although they respected the ruling, they will continue to fight anyway.
After hearing the judgement, Mr. Milton, who had maintained an upbeat demeanour for the most of the proceedings, shook his head in what looked to be disbelief. Chelsey Milton, his wife, cried her eyes out as she pressed her head against the back of a seat in the courtroom.
U.S. District Judge Edgardo Ramos, who presided over the trial, granted Mr. Milton’s request to stay free until sentence in January on the condition that he post a bail in the amount of $100 million.
This instance demonstrated the perils of investing in “pre-revenue” electric car manufacturers, which are startups with promising concepts but few or no customers who have yet to purchase their products. Problems with production have been a challenge for most new automakers, with the notable exception of Tesla.
The prosecution’s capacity to hold management of publicly listed firms liable for remarks made on social media and other public venues that might cause share prices to fluctuate was put to the test during the Milton trial. Mr. Milton was an active member of the Twitter community and regularly contributed to podcasts and television shows that covered business news.
Mr. Milton, who did not complete his education and without any kind of professional expertise in engineering, launched Nikola in the basement of his house in Salt Lake City in the year 2015. In 2020, the firm became publicly traded on Nasdaq by combining with a corporation known as VectoIQ Acquisition Corporation, which was a special purpose acquisition corporation, or SPAC. Stephen Girsky, a former high-ranking official at General Motors, is now serving as the manager of VectoIQ. By entering into an agreement with the company referred to as a blank-check business, Nikola was able to circumvent some of the regulatory scrutiny that is often associated with first public offerings.
After the stock market listing made him rich, Mr. Milton, who controlled 25 percent of Nikola shares, went on a spending binge and purchased several luxuries, such as a Gulfstream plane and a property in the Turks and Caicos Islands with a price tag of multiple millions of dollars. According to the evidence, Mr. Milton spent more than $80 million over the course of about six months in the year 2020.
When Nikola shares reached an all-time high of around $80 in June of 2020, the company’s valuation was more than that of Ford Motor. Shortly after that, an investment firm known as Hindenburg Research published a report in which it accused Mr. Milton of making numerous false assertions about the technology used by the company. As evidence, the report pointed to a video in which a truck was rolled down an incline to make it appear as though it was a working prototype.