The founder of Nikola Corporation, Trevor Milton, has been convicted of defrauding investors with claims about the company’s technologies and planned production models.
Milton was convicted on three of the four charges he was hit with, two counts of securities fraud and two counts of wire fraud. Each count carries a maximum sentence of between 20 and 25 years.
During the trail, prosecutors alleged that Nikola had falsely claimed to have built a revolutionary new semi-truck, which was actually a General Motors product with a Nikola logo. Evidence was also presented that Nikola doctored videos of its trucks to hide their flaws.
The prosecution called more than a dozen witnesses during the five-week trial. Among those that testified against Milton were Nikola’s chief executive and chief financial officer Kim Brady who said the founder was reluctant to temper his public remarks and focused on Nikola’s stock price. Brady testified that when the company’s stock price dropped to $5 during the first day it was trading publicly, Milton thought the Nasdaq had malfunctioned.
“This was an old-fashioned fraud,” prosecutors said. “He lied to investors to get their money.”
Whereas prosecutors said Milton was a “conman,” his defense team argued he was a gifted entrepreneur. They added that there was a “stunning lack of evidence” to prove that Milton ever intended on cheating investors and signaled that they will likely appeal the decision.
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Milton’s lawyers also added that Nikola’s filings to the Securities and Exchange Commission were accurate and that “all the material facts and risks about Nikola were fully disclosed.”
“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,” US attorney for Manhattan, Damian Williams told The Financial Times. “It won’t end well.”
Milton will be sentenced on January 27, 2023.