E.V. Start-Up Founders Made Big Claims. Now One Could Go to Prison.
Summary
Mr. Milton told investors that Nikola had working prototypes of emission-free long-haul trucks, had billions of dollars’ worth of binding orders and was producing low-cost hydrogen fuel. Few electric vehicle executives have been convicted of crimes, but Nikola was hardly the only new auto company to attract billions of dollars of investment without generating profits or producing many cars or trucks, leaving shareholders with huge losses. After J Capital Research, another short seller, published a report on Faraday in 2021, the company admitted that it had misled investors when it claimed to have 14,000 reservations which, in fact, were unpaid expressions of interest. In September, Faraday said in a regulatory filing that its “corporate culture failed to sufficiently prioritize compliance.” The company has also disclosed that it is under investigation by the Securities and Exchange Commission and the Department of Justice. Mr. Milton, prosecutors said in a sentencing memo, “engaged in a sustained scheme to take advantage of individual, nonprofessional investors.” That included posting a video on YouTube of a prototype rolling down a hill, creating a false impression that the company had a working vehicle.