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Trevor Milton, the founder of the electric car manufacturer Nikola, was convicted last Friday of fraud for lying against the company’s investors.
Milton is said to have lied about the company’s electric and hydrogen technology in a case in which he was declared guilty.
The case
The jury found the Nikola founder guilty of three counts: one of securities fraud and two of wire fraud.
After more than five hours of deliberation, Milton was acquitted on another count of securities fraud.
As a result, he faces years of imprisonment.
Allegations
Prosecutors say Trevor Milton made false and misleading statements about nearly every aspect of the company’s operations.
Among the allegations, Milton claimed that Nikola had a fully working, albeit non-working, prototype.
He also claimed the company was building a hydrogen-electric pickup truck built from the ground up using Nikola parts and technology.
The prosecution, however, dismissed the claim as a lie.
Following the sentencing, U.S. Attorney Damian Williams released a statement stating:
“Trevor Milton lied to Nikola’s investors — over and over again. That’s fraud, plain and simple.”
“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. It won’t end well.”
In 2020, business partners who had previously worked with Milton said it was hard to trust the founder.
They also said that the Nikola founder often overstated his plans and didn’t deliver on his promises.
Others shared doubts about his character and integrity.
Nikola
The electric car maker went public in 2020, surpassing Ford in value despite failing to present a working vehicle.
That year, General Motors announced plans to invest in the company and help them build an electric car.
Initially, the company planned to supply the startup with equipment for Nikola’s hydrogen fuel cell trucks.
Signs of trouble
Nikola’s statements surfaced when the company joined several technologies and electric vehicle companies to go public through special acquisition vehicles (SPACs).
Milton was also charged with defrauding a ranch seller in Utah.
The ranch owner accepted Nikola’s stock options as part of the purchase price, sold on what Milton said about the business.
However, the company’s shares fell when a published report called Nikola a complicated scam.
The report that put the company in the spotlight was Hindenburg Research, a short seller that makes money by betting against companies.
Milton’s resignation
Trevor Milton was charged in July 2021.
General Motors sold its stake in Nikola and canceled plans to produce the Badger, the company’s pickup truck.
Milton called Nikola’s review a “hit job” and said the contents were lies.
He then resigned as Chairman of Nikola in September 2020.
Since then, the company’s shares are down around 95%, a far cry from their June 2020 peak.
In 2021 Nikola confirmed Milton’s seven false statements on the company’s affairs from July 2016 to July 2020.
Last year, the company agreed to pay the Securities and Exchange Commission $125 million to settle investor fraud allegations against Nikola.
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