U.S. jury convicts Nikola founder of fraud

Nikola Corp (NKLA.O) founder Trevor Milton on Friday was convicted by a U.S. jury of fraud over allegations he lied to investors about the electric vehicle company’s technology.

The jury found Milton guilty on one count of securities fraud and two counts of wire fraud after deliberating for around five hours. Milton was acquitted on an additional count of securities fraud.

During the trial in federal court in Manhattan, prosecutors depicted Milton, 40, as a “con man” who sought to deceive investors about the electric- and hydrogen-powered truck maker’s technology starting in November 2019.

Milton, wearing a blue suit and green tie, shook his head as the jurors confirmed their verdict. His attorney said he will file court papers challenging the verdict.

Milton, of Oakley, Utah, was indicted in July 2021. He left Nikola in September 2020 after a report by short seller Hindenburg Research called the company a “fraud.”

Prosecutors accused Milton of using social media and interviews on television, podcasts and in print to make false and misleading claims about Nikola’s trucks and technology.

They said Milton’s improper statements included that Nikola built an electric- and hydrogen-powered “Badger” pickup from the “ground up,” developed batteries in-house that he knew it was purchasing elsewhere and had early success in creating a “Nikola One” semi-truck he knew did not work.

Milton made the statements about Nikola as it 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.

The defense and the prosecution delivered closing arguments to the jury on Thursday in a trial that began on Sept. 13. The prosecution said Milton was obsessed with the company’s stock price and made the statements to inflate it and his own net worth. The defense said prosecutors had distorted Milton’s statements about Nikola’s plans to shake up the automotive industry.

Nikola said in a statement after Milton’s conviction that it was “pleased to close this chapter” and said it will continue to work towards creating value for shareholders.

The company agreed last year to pay $125 million to settle with the U.S. Securities and Exchange Commission’s over its representations to investors.