Founder of zero-emissions truck venture Nikola found guilty of $1b fraud
(2022/10/19)
- Reference: 1666203308
- News link: https://www.theregister.co.uk/2022/10/19/nikola_founder_fraud/
- Source link:
A federal jury has found the founder of eco-truck outfit Nikola, Trevor Milton, guilty of deceiving investors with exaggerated claims about how close his company was to producing working prototypes of zero-emission 18-wheelers.
Prosecutors say the exec lied about company tech on podcasts, TV, and Twitter as Nikola Corp prepared for its [1]2020 debut on the Nasdaq , making "deceptive, false, and misleading" claims that the company was much further along in the process of building zero-emission "Nikola One" semi-trucks than it actually was.
Nikola Corp [2]makes both battery electric vehicles and hydrogen fuel cell electric vehicles.
[3]
Prosecutors also claim Milton fibbed about several features of Nikola's flagship "Badger" pickup, saying the building of the prototype vehicle – which was said to use a combination of hydrogen and fuel cells with a 600-mile range – was complete when it wasn't, and that the company had designed the trucks from the "ground up" when he was seeking an OEM partner to do the build.
[4]
[5]
The indictment notes that "Nikola's stock peaked in the wake of announcements by Milton about the Badger, the market value of Milton's stock was at least approximately $8.5 billion," meaning the alleged lies would have earned him $1 billion.
According to the July 2021 [6]indictment [PDF], filed under seal but unsealed the next day, Milton pumped stock by making claims in 2019 and 2020 that increased Nikola's share value, leading prosecutors to charge him with fraudulently earning $1 billion.
[7]
Milton stepped down as Nikola's CEO in September 2020.
[8]Bitcoin energy consumption a feature, not a bug, says crypto-miner
[9]Prison inmate accused of orchestrating $11m fraud using cell cellphone
[10]How do you protect your online systems? Cultivate an insider threat
[11]Broker-dealers can stop burning records to CD, but they don't have to, says SEC
Truck was moving in promo video – because of gravity
The complaint also claimed there was evidence that Milton shared details on social media hiding the truck's flaws, and that Milton asked a Nikola employee to upload footage from a commercial shoot where the truck had been towed to the top of a hill before the brakes were released.
Included among court docs is a video showing a truck in motion "where the Nikola One appears to be driving down a road with no incline... on its own power, notwithstanding that the Nikola One could not do so and has never done so." The indictment also shows a tweeted post of the same video on the company's Twitter account, stating: "Behold, the 1,000 HP, zero emission Nikola semi-truck in motion."
Milton's lawyers filed a motion last week including text messages between the Nikola founder and its chief legal officer where Milton was asking about acceptable social media language. His defense team said short sellers – betting on decreases in the company's stock price – had launched a campaign to discredit him and that he was just an enthusiastic salesperson who never intended to defraud anyone.
The company ultimately [12]delivered its first electric semis in December 2021.
[13]
The jury [14]found Milton guilty on three of the four counts [PDF] late last week – one count of securities fraud and two counts of wire fraud – after a trial that started in early September. He was found not guilty on one count of wire fraud under the Securities Exchange Act of 1934.
Milton continues to deny guilt and appears to plan to file an appeal, with his defense attorney Marc Mukasey [15]telling reporters outside the court last week: "We're going to keep fighting." ®
Get our [16]Tech Resources
[1] https://capital.com/nikola-ipo-and-the-future-of-the-green-truck-stock
[2] https://nikolamotor.com/press_releases/nikola-hosts-truck-showcase-in-nations-capital-to-underscore-market-readiness-of-zero-emissions-commercial-transportation-technology-183
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[6] https://storage.courtlistener.com/recap/gov.uscourts.nysd.564175/gov.uscourts.nysd.564175.1.0_1.pdf
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2022/10/14/bitcoin_energy_consumption/
[9] https://www.theregister.com/2022/10/13/prison_11m_schwab_fraud/
[10] https://www.theregister.com/2022/10/10/opinion_infosec/
[11] https://www.theregister.com/2022/10/14/sec_cloud_records_update/
[12] https://www.ft.com/content/621cb553-d7f2-4cf6-a86b-f8cf9bd073c7
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://regmedia.co.uk/2022/10/18/jury_verdict_usa_v_milton.pdf
[15] https://apnews.com/article/business-new-york-manhattan-general-motors-co-nikola-corp-87a2e0e2614db6fbf613948fd19f1ee2
[16] https://whitepapers.theregister.com/
Prosecutors say the exec lied about company tech on podcasts, TV, and Twitter as Nikola Corp prepared for its [1]2020 debut on the Nasdaq , making "deceptive, false, and misleading" claims that the company was much further along in the process of building zero-emission "Nikola One" semi-trucks than it actually was.
Nikola Corp [2]makes both battery electric vehicles and hydrogen fuel cell electric vehicles.
[3]
Prosecutors also claim Milton fibbed about several features of Nikola's flagship "Badger" pickup, saying the building of the prototype vehicle – which was said to use a combination of hydrogen and fuel cells with a 600-mile range – was complete when it wasn't, and that the company had designed the trucks from the "ground up" when he was seeking an OEM partner to do the build.
[4]
[5]
The indictment notes that "Nikola's stock peaked in the wake of announcements by Milton about the Badger, the market value of Milton's stock was at least approximately $8.5 billion," meaning the alleged lies would have earned him $1 billion.
According to the July 2021 [6]indictment [PDF], filed under seal but unsealed the next day, Milton pumped stock by making claims in 2019 and 2020 that increased Nikola's share value, leading prosecutors to charge him with fraudulently earning $1 billion.
[7]
Milton stepped down as Nikola's CEO in September 2020.
[8]Bitcoin energy consumption a feature, not a bug, says crypto-miner
[9]Prison inmate accused of orchestrating $11m fraud using cell cellphone
[10]How do you protect your online systems? Cultivate an insider threat
[11]Broker-dealers can stop burning records to CD, but they don't have to, says SEC
Truck was moving in promo video – because of gravity
The complaint also claimed there was evidence that Milton shared details on social media hiding the truck's flaws, and that Milton asked a Nikola employee to upload footage from a commercial shoot where the truck had been towed to the top of a hill before the brakes were released.
Included among court docs is a video showing a truck in motion "where the Nikola One appears to be driving down a road with no incline... on its own power, notwithstanding that the Nikola One could not do so and has never done so." The indictment also shows a tweeted post of the same video on the company's Twitter account, stating: "Behold, the 1,000 HP, zero emission Nikola semi-truck in motion."
Milton's lawyers filed a motion last week including text messages between the Nikola founder and its chief legal officer where Milton was asking about acceptable social media language. His defense team said short sellers – betting on decreases in the company's stock price – had launched a campaign to discredit him and that he was just an enthusiastic salesperson who never intended to defraud anyone.
The company ultimately [12]delivered its first electric semis in December 2021.
[13]
The jury [14]found Milton guilty on three of the four counts [PDF] late last week – one count of securities fraud and two counts of wire fraud – after a trial that started in early September. He was found not guilty on one count of wire fraud under the Securities Exchange Act of 1934.
Milton continues to deny guilt and appears to plan to file an appeal, with his defense attorney Marc Mukasey [15]telling reporters outside the court last week: "We're going to keep fighting." ®
Get our [16]Tech Resources
[1] https://capital.com/nikola-ipo-and-the-future-of-the-green-truck-stock
[2] https://nikolamotor.com/press_releases/nikola-hosts-truck-showcase-in-nations-capital-to-underscore-market-readiness-of-zero-emissions-commercial-transportation-technology-183
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[6] https://storage.courtlistener.com/recap/gov.uscourts.nysd.564175/gov.uscourts.nysd.564175.1.0_1.pdf
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2022/10/14/bitcoin_energy_consumption/
[9] https://www.theregister.com/2022/10/13/prison_11m_schwab_fraud/
[10] https://www.theregister.com/2022/10/10/opinion_infosec/
[11] https://www.theregister.com/2022/10/14/sec_cloud_records_update/
[12] https://www.ft.com/content/621cb553-d7f2-4cf6-a86b-f8cf9bd073c7
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/science&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y1BzdKw-CtkjJrrap7ZpRAAAAMg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://regmedia.co.uk/2022/10/18/jury_verdict_usa_v_milton.pdf
[15] https://apnews.com/article/business-new-york-manhattan-general-motors-co-nikola-corp-87a2e0e2614db6fbf613948fd19f1ee2
[16] https://whitepapers.theregister.com/
Ummm, correction ?
Alistair
Milton continues to deny guilt and appears to plan to file an appeal, with his defense attorney Marc Mukasey telling reporters outside the court last week: "I've suckered him into paying me more of that money."
enthusiastic salesperson who never intended to defraud anyone
The Man Who Fell To Earth
If that flies, then no one is safe.
This one runs
Spherical Cow
Nikola does have a working electric truck now, but it's not a ground-up build, just a conversion of someone else's truck.
https://www.drive.com.au/news/controversial-nikola-electric-truck-goes-into-production-with-a-catch/
Re: This one runs
Ashentaine
Given that GM owns a majority stake in Nikola, to the point that they may as well own the entire company outright, looks like this is a nice little backdoor way for GM to get into the electric hauler market without actually spending any of their own money to develop it.
towed to the top of a hill before the brakes were released.
Yet Another Anonymous coward
So a zero emission vehicle powered by its attraction to Mother Earth - how much more green can you get ?
Re: towed to the top of a hill before the brakes were released.
H in The Hague
The funny thing is, there are actually some electric mining trucks which are loaded with ore at the top of the mountain, then drive downhill using regenerative braking which charges the battery, unload the ore, and then use the stored energy to drive uphill empty.
Here's one example, but there are larger ones:
https://driving.ca/auto-news/news/say-watt-this-massive-ev-never-needs-to-plug-in
Admittedly a bit of a niche use case :)
Re: towed to the top of a hill before the brakes were released.
Yet Another Anonymous coward
Similarly there is an energy storage scheme with an electric locomotive running up a mountain to an abandoned mine pulling a train of concrete blocks.
Off peak it is driven up the hill and then comes back down to generate peak power
Slow justice for obvious fraud.
The US justice system is so toothless that in very public cases of obvious fraud, it takes years to work it's way into the courts. In the mean time these shysters raked in a fortune selling hot air and pumped up stock with the assistance of the press and wall street. Everyone that held there nose and trumpeted Nikola as the next Tesla should have been rounded up and put in the clink along with the founder and anyone inside the company that looked the other way.
Failure to rapidly and effectively indict and prosecute such brazen fraud has created a climate where frauds and hucksters have spread across the country like a plague of locusts, know that the more of them in the swarm, the less likely they are to get prosecuted, and the longer it will take. Worse the penalties for white collar crime are often LESS then the money gained in the crime. So after a few appeals, a decade goes by, they declare bankruptcy, and have lived like a rock star of the proceeds of fraud and crime.
Making outrageous claims in their first public statements should have triggered an outside audit from an impartial third party, and if they couldn't back them up, they should have been barred from the lending and capitol markets. Instead we wait for 4-5 years while a DA tries to build an airtight case on the easiest charges. That system isn't working.