Prosecutors took their final strokes Thursday at painting Nikola founder Trevor Milton as a greedy “con man” who repeatedly lied to pump up the electric truck maker’s stock price.
The defense accused Nikola executives of enabling Milton’s obsession with luring retail investors via social media and podcast interviews.
The jury of nine men and three women will begin deliberating in Manhattan, New York, on Friday. U.S. District Judge Edgardo Ramos’s instructions loom large in how they evaluate the four fraud charges Milton faces. The most serious count carries a maximum prison sentence of 25 years.
Name-calling and invective in Milton trial
In summations on Thursday, both sides resorted to name-calling and invective to make their final points in the case that began Sept. 12. Ramos suspended the trial Oct. 1 after lead defense counsel Marc Mukasey tested positive for COVID-19. It resumed Thursday with the defense resting its case without calling Milton to testify.
“Trevor Milton is a con man,” assistant U.S Attorney Jordan Estes said in opening the government’s summation. “Why did he do this? Money and power. You heard from [Nikola CFO] Kim Brady [that Milton] wanted to be in the Forbes 400. An astounding level of greed. This fraud was brazen.”
During his testimony, Brady said Milton’s statements about the company he founded in Utah in 2015 “could be inaccurate or exaggerated.” Milton, Brady said, exhibited little knowledge of how the stock market worked, asking whether the Nasdaq was “broken” when Nikola shares fell $5 on their first day of trading in June 2020.
Estes covered themes that witnesses expounded on over three weeks of testimony. He attacked Milton’s claims in media interviews and on Twitter that Nikola was producing hydrogen for less than $4 per kilogram, about 25% of the price at the time.
Milton also lied about developing a battery-electric pickup truck with a fuel-cell generator, called the Badger, and that Nikola had $14 billion in signed orders for fuel cell trucks, Estes said.
A short seller’s long influence
Short seller Hindenburg Research claimed in a Sept. 10, 2020, report that Nikola was built on “an ocean of lies” by Milton. The report surfaced two days after Nikola announced a contract manufacturing partnership for the Badger with General Motors in exchange for 11% of Nikola equity. The agreement fell apart after the Hindenburg report.
The 67-page screed also led to government subpoenas of Nikola documents and executives. The Justice Department filed three fraud charges against Milton in July 2021 and added a fourth charge in June involving a land deal Milton proposed to partially pay for in Nikola stock options. The deal went through, but the options turned out to be worthless.
“The defendant also lied to [land owner] Peter Hicks, straight out of his fraud playbook,” Estes said. “The defendant did all this intentionally. He repeated the same lies over and over again.”
‘Gossipy text messages’ in Milton trial
In his closing argument, Mukasey said the government’s case relied on “gossipy text messages between low-level [Nikola] employees.” He referred to Paul Lackey, a whistleblower who went to the Securities and Exchange Commission and worked with Hindenburg, as “a guy who set Nikola’s house on fire [and] now wants a reward.
“It is a distortion to say Trevor Milton intended to commit fraud when the statements he made were cheered on by the Nikola board of directors.”
Mukasey characterized Nikola executives as enablers of Milton’s unchecked public statements about the company.
“Remember, they wanted to put Trevor out there. They used the Nikola studio,” Mukasey said. “They were telling Trevor Milton, ‘You’re all good, bro.’ Then they changed when they got a government subpoena.”
Rather than influencing investment decisions, Milton’s comments “fell on deaf ears,” Mukasey said, referring to testimony by Allen Ferrell, a Harvard University law professor who investigated correlations between Milton’s public comments and movements in Nikola’s stock price.
“Trevor Milton loved Nikola like a child,” Mukasey said. “He did not have fraud in his heart.”
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