{"id":33732,"date":"2022-10-15T00:03:47","date_gmt":"2022-10-15T04:03:47","guid":{"rendered":"https:\/\/autosector.com\/?p=33732"},"modified":"2022-10-15T00:03:47","modified_gmt":"2022-10-15T04:03:47","slug":"nikola-trevor-milton-found-guilty-fraud-investors","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=33732","title":{"rendered":"Nikola founder Trevor Milton guilty of defrauding investors"},"content":{"rendered":"

Nikola Corp<\/a>. founder Trevor Milton was convicted of fraud for misleading investors in the electric truck<\/a> company, a stunning downfall for the door-to-door salesman turned billionaire who promised to revolutionize the auto industry.\u00a0<\/p>\n

Milton, 40, was found guilty Friday of one count of securities fraud and two counts of wire fraud by a federal jury in Manhattan, in a boost to the U.S. Justice Department\u2019s efforts to crack down on corporate crime. He faces the possibility of years in prison.<\/p>\n

It\u2019s been a wild ride for the charismatic entrepreneur, whose fortune has declined to the hundreds of millions since the surge in Nikola shares when the company listed its shares in June 2020. Milton, who remains the company\u2019s biggest individual shareholder, founded Nikola in 2014 and built it into a company valued at $34 billion when it went public, more than Ford<\/a> Motor Co. at one point.\u00a0<\/p>\n

The meteoric rise of the startup, which had no revenue at the time, came amid a wave of electric vehicle<\/a> companies going public through special purpose acquisition companies, or SPACs, starting two years ago as investors scoured the landscape for the next Tesla<\/a>. Going the SPAC route allowed them to market their companies based on future projections of performance rather than actual financial results. Some of the biggest names on Wall Street poured money into the sector.\u00a0<\/p>\n

Celebrity Endorsements<\/h2>\n

After Nikola\u2019s listing, ordinary investors started to take notice of Milton\u2019s vision as well, with the company much discussed online just as Elon Musk<\/a>\u2019s has been. While Nikola\u2019s initial focus was on heavy commercial trucks<\/a>, it branched out to power sport and consumer EVs. It was all supercharged by celebrity endorsements from the likes of the Diesel Brothers\u2019 Heavy D, who promoted the Badger pickup, a product that never made it beyond the renderings stage.<\/p>\n

Prosecutors argued that Milton enticed retail investors to buy Nikola shares by making false statements about the company\u2019s products and capabilities in numerous interviews on podcasts and TV, sharply exaggerating Nikola\u2019s capacity to manufacture trucks<\/a> powered by hydrogen fuel cells<\/a> as well as its ability to produce the fuel itself.\u00a0<\/p>\n

It was \u201clie after lie after lie,\u201d Assistant US Attorney Jordan Estes told the jury in her closing argument on Thursday. \u201cHis lies may have been on social media, but make no mistake: This was an old-fashioned fraud.\u201d<\/p>\n

Milton\u2019s lawyers called the case a \u201cprosecution by distortion,\u201d contending that their client never meant to deceive potential investors and that, in any case, his statements weren\u2019t material, or important enough to influence those investors\u2019 decisions.<\/p>\n

Milton was generally upbeat as he arrived at court in a suit and tie to sit with his lawyers. At times there were dozens of people in the courtroom, with his family and friends packing the first two rows behind the defense table.\u00a0<\/p>\n

In his own closing, which brought Milton\u2019s wife to tears, defense attorney Marc Mukasey asked the jurors to \u201cimagine the nightmare it is for Trevor, at 40 years old, to have his life hang in the balance\u201d because of an overzealous prosecution.\u00a0<\/p>\n

There were lighter moments, too. In the tense vigil during jury deliberations on Friday, Mukasey took a few practice golf swings with a phantom club.<\/p>\n

During the trial, which kicked off with opening statements on Sept. 13, the government called a dozen witnesses. It started with Paul Lackey, a former Nikola contractor whose allegations of fraud helped spur the criminal probe.\u00a0<\/p>\n

Lackey, an engineer at the electric-drive systems company EVDrive, said he gave Nate Anderson\u2019s Hindenburg Research information in exchange for a share of its profits from shorting the company. The short-seller\u2019s September 2020 report called Nikola an \u201cintricate fraud\u201d that, among other allegations, overstated the capabilities of its earliest test trucks. Nikola shares tumbled.<\/p>\n

The government called other Nikola insiders to the witness stand. Among them:<\/p>\n