Nikola Corp.(NKLA) founder Trevor Milton was found guilty Friday on one count of securities fraud and two counts of wire fraud. He faces the possibility of multiple years in prison.
Prosecutors had argued in a Manhattan courtroom that Milton misrepresented the truth on multiple occasions to generate interest in the zero-emissions trucks and technology company he created in 2015. After the company went public, it came to be worth some $34 billion and for a time had a larger value than Ford Motor Co.
Among the allegations were that he made claims regarding the technological capabilities of his trucks that were beyond exaggerations and, in fact, were outright lies.
He also would wildly fabricate the number of orders pending for the trucks in order to create a false perception that business was booming and the company was a solid bet for investors.
The jury deliberated for about five hours.
Milton resigned from Nikola in 2020 as public awareness of his falsifications began to spread. The company was forced to settle a Securities and Exchange Commission investigation for $125 million.
The Government Makes Its Case
During the trial, a video advertisement posted to Nikola's Twitter account — at Milton's direction, prosecutors said — showed a semi-truck driving on a road in the desert. "In reality, said prosecutors, the truck, with its door taped shut and batteries removed, was towed to the the top of a hill and rolled down it," reported the Wall Street Journal.
The prosecutors said one such truck was really a General Motors Corp. truck with a Nikola logo on it.
A man who sold Milton a ranch in Utah testified about an ill-fated real estate transaction. "Mr. Milton convinced him to accept Nikola stock as payment by telling lies about the company’s hydrogen-fuel production and other technology," the Journal wrote.
Prosecutors argued repeatedly that Milton was a con man while the defense said he was an inspirational entrepeneur and was being hounded unnecessarily.
"Prosecution witnesses included ordinary investors and current and former Nikola employees," wrote the Journal. "Company executives testified that they had concerns about Mr. Milton’s public statements and interviews. Nikola Chief Executive Mark Russell testified that at one point executives staged an intervention and changed corporate social-media account passwords in an attempt to deny Mr. Milton use of them."
The Defense Weighs In
Only one witness was called by the defense. Allen Ferrell, a Harvard Law School professor, testified about stock trader behavior and said Milton's statements between when his company went public and when he resigned were generally ignored by investors.
The defense also referred to the use of video to pump Nokila's products. "It’s not a crime to use special effects in a commercial,” Milton's lawyer, Marc Mukasey, said. “Otherwise the government would have to indict the Energizer Bunny."
The real story, argued Milton's lawyers, was that overzealous prosecutors were exceedingly selective when picking through his comments on podcasts, social media and television.
Mukasey seemed to indicate an appeal was forthcoming. "We're going to keep fighting," he told reporters outside court, according to National Public Radio.
Milton's sentencing is scheduled for Jan. 27.
