Nikola Corp. founder Trevor Milton was found guilty of three federal counts of fraud on Friday following a 3 1/2-week trial in the U.S. District Court for the Southern District in Manhattan, New York. Prosecutors called Milton a liar and “con man” who intentionally defrauded investors in the electric truck startup.
Milton, 40, was convicted on one count of securities fraud and two counts of wire fraud, including the acquisition of a Utah ranch partially paid for with Nikola stock options that ended up being worthless.
The jury of nine men and three women deliberated for less than a day after receiving instructions from Judge Edgardo Ramos on Friday morning.
“Have to keep fighting,” Milton said outside court. “I did nothing wrong.”
His defense attorneys offered no comment.
The Justice Department did not immediately discuss a recommendation for sentencing scheduled for Jan. 27. Each of the three counts carries a maximum prison sentence of up to 20 years.
“Trevor Milton lied to Nikola’s investors — over and over and over again,” U.S. Attorney Damian Williams said in a statement. “That’s fraud, plain and simple, and this office has no patience for it. Never has, never will. 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.”
Nikola ‘pleased to close this chapter’
Nikola petitioned to intervene in the case and received a protective order barring Milton’s defense from using internal company communications. The company said it was “pleased to close this chapter” and focus on the business of building battery-electric and hydrogen-powered fuel-cell electric trucks.
“We appreciate the court’s and jury’s attention to this matter,” Nikola said in a statement. “It is important to remember that this trial was related to statements that Mr. Milton made several years ago.”
Those claims included:
- The ability to produce hydrogen at less than $4 a kilogram, about a quarter of the price of hydrogen at the time.
- The existence of a battery- and fuel-cell power pickup truck called the Badger that never existed beyond drawings and computer images. Nikola accepted $5,000 deposits it later refunded.
- Exaggerations about Nikola’s technology accomplishments, which the government claimed intended to draw in unwitting retail investors.
Prosecution witnesses, including CEO Mark Russell and CFO Kim Brady, suggested the company was unable to stop Milton from appearing on podcasts and regularly tweeting, even though Milton was repeatedly warned his statements could hurt the company. Russell spoke of “an intervention” with Milton by himself, Brady and corporate counsel Britton Worthen.
Milton became a nemesis to Nikola
Nikola has weathered multiple machinations by Milton, most recently his “no” vote on a proposal to increase the number of authorized shares in the company. The proxy fight finally ended after Nikola spent millions of dollars on a proxy solicitation firm to chase down unvoted shares.
Nikola will use the new shares, which dilute other shareholders including Milton, to raise capital to scale the business.
In addition to the blemish that followed Milton’s resignation as executive chairman in September 2020, Milton sold massive amounts of company stock valued in the hundreds of millions of dollars since December 2020 when a lockup expired.
Most recently, he resumed purchasing Nikola shares at prices far below where he sold them. The additional shares could offset the dilution of his roughly 11% stake.
Milton founded Nikola in 2015 in his home basement in Utah. He later moved the company to its present location in Phoenix. His repeated bids failed to move his trial to one of those locations and out of New York.
The jury sent one question regarding hydrogen pricing around midday Friday. Ramos told prosecutors and defense attorneys to be able to be back in court within five minutes. Milton was 20 minutes late returning to court.