Nikola (NKLA) founder Trevor Milton was found guilty of three counts of criminal fraud on Friday in a case accusing him of spreading lies about the electric truck startup for his own personal benefit.
A federal jury in Manhattan found Milton, 40, guilty of two counts of wire fraud and one count of securities fraud, with the top charge carrying a prison sentence of up to 25 years, according to Bloomberg and other news reports. Milton pleaded not guilty to all of the government’s charges.
Nikola gained notoriety in September 2020, when short seller Hindenburg Research alleged that the company had spun up an “ocean of lies” to deceive investors. Memorably, Hindenburg accused Nikola of releasing a deceptive video making it seem as if its Nikola One semi-truck were traveling under its own power at a high rate of speed when, in fact, it was just rolling down a hill.
Milton resigned from the company days after the Hindenburg report, and in July 2021, Manhattan prosecutors charged him with defrauding investors to drive up the value of his company’s stock. Prosecutors say Milton lied about the capabilities of Nikola’s trucks and fueling infrastructure between November 2019 and the month he stepped down.
Nikola, founded in 2015, made its public debut on June 4, 2020, through a merger with VectoIQ Acquisition Corp (VTIQ), a special acquisition company formed by former General Motors (GM) employees.
Prosecutors said Milton promoted the misleading video of the Nikola One semi-truck to make it appear as if it could drive on its own propulsion. He’s also accused of lying about the existence of hydrogen fuel manufacturing and fueling facilities, as well as deceiving investors about the costs of hydrogen production. Milton also allegedly made false statements about its Badger pickup truck, truck orders, and battery technology.
Milton tapped social media platforms including Twitter (TWTR) and YouTube (GOOG, GOOGL) to spread his lies, prosecutors said. That drummed up support for the company’s stock — especially from retail investors, according to prosecutors.
The deception turned Milton into a billionaire whose stock was worth $8.5 billion, according to prosecutors.
U.S. Attorney Damian Williams tweeted on Friday that other would-be fraudsters should take note of Milton’s conviction. “Trevor Milton lied to Nikola’s investors — over and over and over again. 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,” he tweeted. “Anyone who plays fast and loose with the truth to get investors to part with their money. It won’t end well.”
Prior to the criminal case, Nikola agreed to pay $125 million in fines to the U.S. Securities and Exchange Commission to settle charges that it misled investors about its products, technical advancements, and commercial prospects.
The jury began deliberations on Friday after a nine-day delay due to COVID-19. In an email to Yahoo Finance Nikola stated that it was not commenting on Milton’s trial.
However, in a statement issued at the time of Milton’s indictment, the company noted that the government’s actions against Milton were brought against him, individually, and not against the company.
“The company has cooperated with the government throughout the course of its inquiry. We remain committed to our previously announced milestones and timelines and are focused on delivering Nikola Tre battery-electric trucks later this year from the company’s manufacturing facilities,” the statement said.
Nikola, once worth north of $65 a share, was trading at roughly $3 at market close on Friday.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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