Nikola founder Trevor Milton was convicted Friday by a U.S. jury of fraud in a case alleging he lied to investors about the electric and hydrogen fuel cell company’s technology.
The jury found Milton guilty on a count of securities fraud and two counts of wire fraud after deliberating for roughly five hours. Milton was acquitted on another count of securities fraud. Milton potentially faces years in prison.
Prosecutors had alleged that Milton made false and misleading statements about “nearly all aspects of the business,” including that Nikola had a fully functioning prototype despite Milton knowing it was inoperable. Milton had also claimed that Nikola had built an electric and hydrogen powered pickup from the ground up with Nikola parts and technology, despite not doing so, according to prosecutors.
“Trevor Milton lied to Nikola’s investors — over and over and over again. That’s fraud, plain and simple,” U.S. Attorney Damian Williams said in a statement after the verdict was released. “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.”
Business partners who worked with Milton prior to Nikola described him to CNN Business in 2020 as hard to trust, with a tendency to exaggerate and not follow through on promises. Some had questions about his character and integrity.
Nikola went public in 2020, and briefly surpassed Ford in value that year despite never having delivered a vehicle. General Motors announced in 2020 that it planned to invest in Nikola and work together on an electric truck. GM had also planned to supply the startup with equipment for its hydrogen fuel cell trucks.
Milton’s statements about Nikola came as the company joined the mounting number of tech and EV companies going public through special purpose acquisition vehicles, or SPACs. He also was accused of defrauding the seller of a Utah ranch, who accepted Nikola stock options as part of the purchase price based on Milton’s claims about the company.
But Nikola’s stock fell sharply after a scathing report alleged the company was an “intricate fraud.” The report was published by Hindenburg Research, a short-seller that profits by betting against companies.
Milton, of Oakley, Utah, was indicted in July 2021.
GM later gave up its ownership stake in Nikola and ended plans to produce its pickup truck, the Badger.
Milton, who called the report criticizing Nikola a “hit job,” and “lies,” resigned from his position as Nikola chairman in Sept. 2020.
Nikola’s stock has fallen roughly 95% since reaching a high in June 2020. The company acknowledged in 2021 seven “inaccurate” statements from Milton about the company’s progress made from July 2016 to July 2020.
Last year Nikola agreed to pay the Securities and Exchange Commission $125 million to settle charges that it defrauded investors.