The founder and former CEO of Nikola, a manufacturer of electric heavy trucks, Trevor Milton, was found guilty on three of four charges of fraud relating to false statements he made to increase the value of Nikola’s stock on Friday in federal court.
Two counts of securities fraud and two counts of wire fraud were brought against Milton in connection with remarks he made regarding Nikola’s company while serving as the company’s chairman and CEO. On one allegation of securities fraud and both counts of wire fraud, the jury found him guilty.
On January 27, Milton will be sentenced. If found guilty on all four counts, he could have spent up to 25 years in prison.
“Trevor Milton repeatedly and flagrantly misled to Nikola’s investors. Simply put, that is fraud, according to U.S. Attorney Damien Williams for the Southern District of New York. Williams stated that anyone who misrepresent investors should “heed the warning” provided by the prosecution against Milton.
It won’t go well, he predicted.
Williams’ Manhattan office said that Milton made false statements about “virtually all areas of the business” he formed in 2014 while serving as its CEO. Prosecutors claimed that those lies were told to get investors to bid up the price of Nikola’s stock.
Assistant U.S. Attorney Nicolas Roos stated in his opening statement in September that the man “made a billionaire practically overnight on the backs of those innocent people drawn in by his lies.”
Just days after becoming public through a merger with a special purpose acquisition company, Nikola’s stock price momentarily soared to above $90 per share in June 2020. Nikola, a non-profit organisation, briefly outperformed Ford Motor, a firm that had been around for a century.
That high estimate didn’t hold up. After the business’s board of directors determined that some of the fraud claims made by short-seller Hindenburg Research had merit, Milton was made to resign from the company in September 2020, which caused a dramatic decline in the value of Nikola’s shares.
In the months that followed Milton’s departure, both the Securities and Exchange Commission and the U.S. Department of Justice launched inquiries. Milton was charged with three charges of fraud by a grand jury in July 2021, and a fourth count was added in June 2022.
No charges were brought against Nikola in this situation. Last year, the SEC filed related civil accusations against the business. In December, those allegations were resolved after Nikola consented to pay a $125 million penalty. The corporation had severed its relations with Milton, despite the fact that he continues to control Nikola stock.