Nikola Founder Lied To Investors About Tech, Prosecutor Says in Fraud Trial (reuters.com) 37
Nikola founder Trevor Milton became a billionaire by lying to investors about the most important aspects of his low-emission vehicle company, a prosecutor told jurors as Milton's fraud trial began on Tuesday. Reuters: Prosecutors have said Milton sought to deceive investors about the electric- and hydrogen-powered truck maker's technology starting in November 2019. He left the company in September 2020 after a report by short seller Hindenburg Research called the company a "fraud." "He lied to dupe innocent investors into buying his company's stock," Assistant U.S. Attorney Nicolas Roos said in U.S. District Court in New York. "On the backs of those innocent investors taken in by his lies, he became a billionaire virtually overnight." Milton, 40, has pleaded not guilty to two counts of securities fraud and two counts of wire fraud. Milton's attorney Marc Mukasey on Tuesday called the case "prosecution by distortion" and said the entrepreneur sought to express a vision about the future of trucking, not mislead investors.
Lies and Vision (Score:3)
the entrepreneur sought to express a vision about the future of trucking, not mislead investors
Well if you call lies "a vision" then it is okay! This seems to be a common theme in the tech world these days.
Re: (Score:3)
What can you expect when it's generally accepted that "Fake it till you make it" is wise advice?
Fake it until you make it (Score:3)
I think that there is a certain amount of faking it to be expected, but the problem come into play when it becomes the expected, not the exception.
Sometimes, I think what happens is that they don't set out to be total frauds, but, well, they're going to miss some critical deadline or showing, so they fake it. This, of course, means that they're even further behind when the NEXT deadline looms, and it takes even greater effort to fake it.
Eventually, they lose sight of the actual goal, as faking it becomes t
Re:Lies and Vision [and uncertainty] (Score:4, Interesting)
One man's marketing is... Basically concurrence, though I think the VCs deserve to be lied to. I can even stretch it a bit farther and say they welcome being lied to as long as they can cash out and secure their own profits before the lies are exposed.
The ethics do become a bit muddled when the "victim" is also a "beneficiary" of the lies. They'll gladly ride a unicorn if they think they can get away with it, but they also want to be realists and they know how rare unicorns are. Last statistics I read indicated that the quick dismount is the most profitable strategy in most cases.
However there's another angle on it... If the tech really is new and it's trying to solve some problem in a truly innovative way, then there are complexities that are not understood. It's not just lies versus visions, but also promises that may or may not be kept or even keepable. The only certainty in the first implementations is that they are not the best possible solutions. Less certain but a pretty safe bet is that more money can help improve the early solutions. In cases where race conditions develop between competing solutions with similar solution approaches, "Let the most money win" is too often the winning philosophy (IMO).
But the new technology I want (and might even consider investing in) involves better restaurant comparisons. NOT controlled by or even influenced by the biggest advertisers. But it comes down to my fondness for Indian food. "I never met a naan I didn't like", with the most sincere apologies to the ghost of Will Rogers.
Re: (Score:2)
Investment involves risks, and the law requires that the risks be spelled out. If a VC is stupid and ignores the warning signs then that's their fault. But if the VCs are actively being lied to then that becomes fraud, whether the VC liked being lied to or not. It doesn't stop being fraud if the VCs are stupid or culpable. This is like theft being illegal even if you steal from the mafia.
Re: (Score:2)
I think you're misunderstanding my point. The citation that comes to mind is an old movie with Paul Newman and Robert Redford? "The Sting" came out about 50 years ago? I wish I could recall more of the details, but the kernel idea is that the best scam puts the victim on the wrong foot, so the victim can't and won't go to the police in the case of the movie. In the case of this story, the VCs would lie and cheat, too, as long as they thought they could get away with the money.
Color me unsympathetic with the
Re: (Score:3)
It is a fine line that separates "vision" from "hallucination".
Re: (Score:2)
Expressing a vision is ok, spread all the fantasy stories about elves and unicorns, up to the point where you actually start collecting money. Once you start collecting money the law gets involved. These investors were not giving money to support his ministry like it was a charity, there was a very clear intent that investments were intended to support and grow an actual company. Taking an investment risk requires, legally, that a good faith statement about the state of the company and its future projecti
Old news (Score:1)
Re: (Score:2)
Re: (Score:2)
The world is built on credit and trust. Once you get one person to trust you, then two things happen 1) their success is now tied up in your success or failure and 2) if they're of good reputation, then you get their reputation by association. It becomes the Emperor's New Clothes.
This is what happened with the Magic Leap fraud.
1) They got a big investor on the hook. So now the investor had a massive incentive to ensure they succeed.
2) The investor was well regarded and "if they invested, then they must kn
Re: Old news (Score:2)
Whispering in her mouth (Score:2)
Let's hope he treats his lawyers with the same respect & consideration as his investors.
WHAT? (Score:2)
Hold up... you're saying that someone that is being prosecuted for fraud is also being accused of lying? UNFATHOMABLE.
Re: (Score:2)
Generally it's a requirement for a conviction on fraud to prove intent. Which means not only was the defendant not telling the truth, but the defendent knew they were lies. Without that evidence it ends up being a defense of "well, we screwed up, we really thought that turkeys could fly, oops". But with evidence of knowingly deceiving the investors then it becomes fraud. Such evidence would include things like... hmmm... doctored videos? A mock-up demo that claims to be the real thing? So many noob mis
Was he the only cheat? (Score:4, Insightful)
Are we to believe that one single man lied so convincingly and all those auditors, due diligence guys, reporting agencies all were hood winked by one super liar?
One tyrant gets the blame for all the atrocities. Be it Putin, Pol Pot or the big H, there were generals and commanders and staff officers who formulated the plan to execute the mad tyrant's orders, and the colonels, majors and captains who got their sergeants and corporals and privates to executed them.
If the auditors, and the agencies and the bankers do not get punished for being aiders and abettors, it will continue
Re: (Score:2)
>>No lie can garner billions of dollars without people on the know, looking the other way.
It can gain traction, when at the same time stock shorts were lying prolifically about the viability of Tesla
Between the actions of stock shorts, political propaganda and the idea of a Post Truth society [wikipedia.org], a LOT of BS gets slung around
Re: (Score:3)
You think about it, the very name of the company - Nikola, was selected to bring parallels to mind with Tesla, the car company. Kind of like how Elizabeth Holmes deliberately dressed to bring Steve Jobs to mind with Theranos.
Re: (Score:3)
Are we to believe that one single man lied so convincingly and all those auditors, due diligence guys, reporting agencies all were hood winked by one super liar?
You don't need to be a super liar. You just need to have just the right amount of bullshit outside of the expertise of the people you're lying to. Bankers and VCs by n large don't know shit outside of their narrow banking world. It doesn't take much for due diligence to fail to pick up a lie in some foundational engineering concept, especially given that the lie wasn't that big (it's very conceivable given the year and the interest that they had the ability to deliver their promise).
Very Conceivable (Score:2)
I'd have to agree. From what I saw of their claims, it all sounded plausible. At the time, Tesla was rising like one of SpaceX's rockets. Hell, even Tesla has since started their own EV semi program.
So if you know that most of the biggest vehicles in the world use electric drivetrains, going from diesel-electric locomotives that use diesel generators to produce electricity to operate electric motors to drive the wheels, all the way up to azipods driving things like cruise ships through the ocean. The ba
Re: (Score:2)
Lets say you can/do wield such influence. Would you be so casual in saying, "it is plausible"? Could you/we have built billion dollar trustworthiness had you/we been so casual?
Those influencers should suffer serious loss of credibility. They should lose their influence. They should be sued for conflict of interest if there is evidence. That is what we need to stem this rot. All this media cacaphony about Trevor Milton being
Re: (Score:2)
I did at one point. Government.
That said, keep in mind that we're not just talking about a single investment of billions, but hundreds to thousands in the millions. For people making potentially dozens of these investments a year.
And no, I wouldn't make such an investment just on the "plausible". It's what would get me looking at the portfolio and other documentation. Which, from what I understand, they were faking.
Like I said: The premise sounds plausible. They have partnerships with GM and such. Th
Re: (Score:2)
Do you influence billion dollar investment decisions? Or me? Or the GP thegarbz?
Lets say you can/do wield such influence. Would you be so casual in saying, "it is plausible"?
Well ... yes, they would be so casual. I think you're missing the point here. These people aren't buying a house they can walk around in and inspect, they are buying an idea, one that over time investors hope may turn to reality. "It is plausible" is a shining gold star for an investment in an emerging market. VCs literally exist to put money into "the plausible", after all if something existed it wouldn't actually need external funding anymore, you could just go get a bank loan or perform an IPO instead.
Those influencers should suffer serious loss of credibility. They should lose their influence.
I
Phew! (Score:2)
For a second I thought this was going to be yet another NFT/crypto shitshow.
Re: (Score:2)
Naa, good old real-world scams still exist. Of course the profits they promise are just as much hot air.
Re: Phew! (Score:2)
Re: Phew! (Score:2)
This wouldn't be the first time a fake 'supercar' was rolled around to convince the investors that were getting fleeced that there was a real product in the works.
Well, the investors were really, really stupid (Score:2)
It was clear pretty much from the beginning that Nikola did not have what they claimed to have. At the very least these investors were negligent and bear part of the blame.
Re: (Score:2)
Re: (Score:2)
Sad but true.
So does Nikola have a running LH2 truck now? (Score:2)
Even with all their partnerships and kitbashing, lack of significant in house IP ownership and a history of growing the company valuation based on total bullshit, it would still be impressive if they actually managed to put together a running prototype of a liquid hydrogen fuel cell truck with refueling station. There's some pics on the web from National Institute of Clean-and-low-carbon Energy allegedly showing them refueling, but even if that is true that doesn't mean the truck can run.
Is Nikola any furth
Re: (Score:3)
Re: So does Nikola have a running LH2 truck now? (Score:2)
None of this is surprising (Score:2)
It was an example of the tension/conflict between engineering and sales (including C-level promotion). Engineers spoke at 90% truth level. Sales spoke at 10% truth level.
(Lame defense: "I wasn't lying. I was time-shifting the
And no information was conveyed. (Score:2)
Would he say that if his client were innocent? Yes.
Would he say that if his client were guilty? Yes.
Sometimes I wonder why people bother with he-said-she-said reporting.
Now, did the short seller make a ton of money? Did the stock price crash before the indictment? This would be evidence against the defendant, bu
Visionary (Score:1)
The amazing thing (Score:2)