Nikola founder Trevor Milton once presented himself as a visionary who would bring hydrogen-electric and battery-electric trucks to market. But a New York jury has found that he deceived investors by exaggerating claims about the company’s progress when it was under his watch.
He was found guilty of one count of securities fraud and two counts of wire fraud, but acquitted on another count of securities fraud, after a jury deliberated for about five hours in federal court.
“We’re going to keep fighting,” his lawyer Marc Mukasey told reporters outside court, signaling plans for a potential appeal.
Several of his claims about the company were previously discredited in a report by Hindenburg Research, and Milton resigned from Nikola in 2020.
Prosecutors in the court case portrayed Milton as a con man, while his lawyer presented him as a visionary who was being railroaded by overzealous prosecutors.
While Milton claimed a prototype of the Nikola One truck could be driven, a related video had been created by rolling the unit down a hill. It lacked motors and control systems. And a vehicle presented as a Badger pickup truck was also a purchased Ford F-150 with Nikola branding.
Prosecutors also cited Milton’s claims that the company was producing hydrogen fuel when it wasn’t, and his statements that Nikola was developing technology and parts when they were actually sourced through outside suppliers. Promises of “billions of dollars” in orders for Nikola trucks were ultimately identified as reservations that could be canceled.
‘Prone to exaggeration’
Nikola’s CEO Mark Russell testified during the trial that Milton was “prone to exaggeration” when pitching the venture to investors, and noted the company founder had “extraordinary control” as its chief executive and largest shareholder.
“He would sometimes exaggerate, sometimes misstate facts,” Russell said. “I explained to him that as a top executive, anything he says in public would be the equivalent of a press release or a securities filing.”
But he said Milton continued his ways, going on a “blitz” of public appearances and social media postings after the company went public.
The company paid a US $125 million settlement to the Securities and Exchange Commission last year, but did not admit any wrongdoing. It has also continued to develop its trucks.
Serial production of the battery-electric Nikola Tre began in March, and it completed pilot tests of a fuel-cell-electric alpha truck with Anheuser-Busch in April. The first phase of its manufacturing facility opened in Coolidge, Arizona, in March. And it is acquiring Romeo Power to bring battery pack engineering and production in house.
Key partnerships have also been developed. Alberta-headquartered TC Energy Corporation, for example, will develop, build, operate and own hydrogen production hubs in the U.S. and Canada.
“The lies — that is what this case is about,” prosecutor Matthew Podolsky told the jury in closing arguments Thursday.
Mukasey urged acquittal, saying there was “a stunning lack of evidence” that his client ever intended to cheat investors.
Sentencing has been set for Jan. 27.
- With files from the Canadian Press
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