Founder of zero-emissions truck venture Nikola found guilty of $1b fraud
Verdict in for trial where promo vid showed gravity rather than batteries or fuel cells keeping electric truck moving
A federal jury has found the founder of eco-truck outfit Nikola, Trevor Milton, guilty of deceiving investors with exaggerated claims about how close his company was to producing working prototypes of zero-emission 18-wheelers.
Prosecutors say the exec lied about company tech on podcasts, TV, and Twitter as Nikola Corp prepared for its 2020 debut on the Nasdaq, making "deceptive, false, and misleading" claims that the company was much further along in the process of building zero-emission "Nikola One" semi-trucks than it actually was.
Nikola Corp makes both battery electric vehicles and hydrogen fuel cell electric vehicles.
Prosecutors also claim Milton fibbed about several features of Nikola's flagship "Badger" pickup, saying the building of the prototype vehicle – which was said to use a combination of hydrogen and fuel cells with a 600-mile range – was complete when it wasn't, and that the company had designed the trucks from the "ground up" when he was seeking an OEM partner to do the build.
The indictment notes that "Nikola's stock peaked in the wake of announcements by Milton about the Badger, the market value of Milton's stock was at least approximately $8.5 billion," meaning the alleged lies would have earned him $1 billion.
According to the July 2021 indictment [PDF], filed under seal but unsealed the next day, Milton pumped stock by making claims in 2019 and 2020 that increased Nikola's share value, leading prosecutors to charge him with fraudulently earning $1 billion.
Milton stepped down as Nikola's CEO in September 2020.
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Truck was moving in promo video – because of gravity
The complaint also claimed there was evidence that Milton shared details on social media hiding the truck's flaws, and that Milton asked a Nikola employee to upload footage from a commercial shoot where the truck had been towed to the top of a hill before the brakes were released.
Included among court docs is a video showing a truck in motion "where the Nikola One appears to be driving down a road with no incline... on its own power, notwithstanding that the Nikola One could not do so and has never done so." The indictment also shows a tweeted post of the same video on the company's Twitter account, stating: "Behold, the 1,000 HP, zero emission Nikola semi-truck in motion."
Milton's lawyers filed a motion last week including text messages between the Nikola founder and its chief legal officer where Milton was asking about acceptable social media language. His defense team said short sellers – betting on decreases in the company's stock price – had launched a campaign to discredit him and that he was just an enthusiastic salesperson who never intended to defraud anyone.
The company ultimately delivered its first electric semis in December 2021.
The jury found Milton guilty on three of the four counts [PDF] late last week – one count of securities fraud and two counts of wire fraud – after a trial that started in early September. He was found not guilty on one count of wire fraud under the Securities Exchange Act of 1934.
Milton continues to deny guilt and appears to plan to file an appeal, with his defense attorney Marc Mukasey telling reporters outside the court last week: "We're going to keep fighting." ®