Nikola Founder Trevor Milton Found Guilty Of Defrauding Investors After Jury Deliberates For Less Than A Day
A jury found Nikola founder Trevor Milton guilty of defrauding investors on Friday afternoon after less than a full day of deliberating.
Inner City Press had been following the trial and reported shortly after 4pm EST that "Trevor Milton, founder of hydrogen vehicle company Nikola has just been found guilty on 3 of 4 counts (1 of 2 securities fraud charges)."
They live Tweeted the verdict as it happened:
Jury entering!
— Inner City Press (@innercitypress) October 14, 2022
Judge Ramos: Do you have a verdict? Ms. Rivera?
[Milton is running his hands together].
Ms. Rivera: As to Count 1? Guilty.
Count 2? Not Guilty.
Count 3: Guilty.
Count 4: Guilt.
Short seller Hindenburg Research, whose findings led to the eventual charges against Milton, tweeted: "After deliberating for less than a day, the jury has found Nikola founder Trevor Milton guilty on 3 counts of fraud."
BREAKING: After deliberating for less than a day, the jury has found Nikola founder Trevor Milton guilty on 3 counts of fraud. $NKLA https://t.co/tgMYWeyiDG
— Hindenburg Research (@HindenburgRes) October 14, 2022
Recall, Milton was charged with three counts of fraud last year. Milton was charged with making false claims regarding “nearly all aspects of the business" according to the DOJ.
"Prosecutors say that when Milton unveiled their tractor trailer truck it had to be plugged into the wall, the headlamps were activated by remote by a staffer, and air had to be pumped in because there was a slow leak in the air lines of the truck," a CNBC report from 2021 report continued.
"And yes, prosecutors do say part of Milton's conduct was video of the Nikola truck in the Super Bowl ad was not in fact of a working truck but was towed to the top of a hill. Brakes were released and it rolled downhill."
An SEC complaint filed last year revealed that footage of the truck "had been sped up two-to-three times" and that the video was "ultimately approved" by Milton. The DOJ complaint against Milton had alleged he "repeatedly made false and misleading statements about core aspects of Nikola’s products, technological advancements, and commercial prospects" including
- (a) Falsely claiming that Nikola’s first semi-truck prototype, the Nikola One, could be driven under its own power, and using a misleading video to create the false impression that the Nikola One was, in fact, driving under its own power
- (b) Falsely claiming that Nikola was producing hydrogen, that it was doing so at a cost that was four times less than the prevailing market rates, and that it had obtained electricity at costs that made hydrogen production profitable
- (c) Falsely claiming that Nikola had significantly developed or already completed a prototype of an electric pickup truck, the Badger, and that this vehicle used primarily Nikola’s proprietary components
- (d) Falsely claiming that Nikola had obtained “billions and billions and billions and billions” of dollars of committed truck orders
- (e) Falsely claiming that Nikola had developed a “game-changing” battery technology and that Nikola was manufacturing and developing multiple key vehicle components “in-house”; and
- (f) Falsely claiming that the total cost of ownership of Nikola’s trucks was 20-30 percent below that of diesel vehicles.
The complaint said that Milton would regularly take action to try and stop declines in Nikola's share price:
"On days when Nikola’s stock price declined, Milton regularly attempted to direct Nikola’s senior executives to take actions to stop the price decline. Senior executives received frantic phone calls or text messages from Milton on such days in which he urged the executives to “do something.” Milton also spoke of needing to put out “good news” or some kind of announcement “to get people excited” as a way to counteract price declines or maintain support for the stock price."
The complaint also said that "Milton tracked the daily number of new Robinhood users who held Nikola stock" and apparently was excited that retail stockholders were buying the stock:
The senior executive responded, in part, by expressing his amazement at how many calls he received “from retail investors today that have no clue about Nikola, other than their friends told them to buy. A lot of hype out there with retail investors,” to which Milton replied: “That’s how you build a foundation. Love it.”
Milton pleaded not guilty and was ultimately freed on a $100 million bond before taking to trial. His bail was initially secured by two properties in Utah owned by Milton, "one worth $36 million, the other worth $4 million."
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