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Feds say zero-emission Nikola investors were fed ‘mountain of lies’

The fraud trial of a billionaire who launched a Tesla-esque truck startup heads into jury deliberations Friday.

MANHATTAN (CN) — Wrapping up the monthlong trial for Nikola founder Trevor Milton, an attorney for the college dropout turned billionaire called it wrong to prosecute a start-up executive over statements that he believed in good faith.

“It’s not a crime to use special effects in a commercial, otherwise the government would have to indict the Energizer bunny,” Marc Mukasey with the firm Mukasey Frenchman said Thursday at closing arguments in the Southern District of New York.

The glib remark came in response to a 2018 video that drove a lot of buzz for a hydrogen-powered truck prototype called the Nikola One that Milton had launched from a basement in Utah years earlier and promised would one day revolutionize the transportation sector.

While the video appeared to show the Nikola One cruising at high speeds down a level road, prosecutors say the battery-operated prototype had no hydrogen capacity and was only moving at all because it had been towed to the top of the hill and to roll down. An outfit called Hindenburg Research dissected the farce in September 2020, caused Nikola's share value to plummet followed shortly thereafter by Milton's resignation.

“It was a complete mirage, the truck never worked,” Assistant U.S. Attorney Jordan Estes told jurors during the government's closing Thursday morning.

“It was all smoke and mirrors," the prosecutor added later, "but it fooled real people."

Milton, 40, pleaded not guilty to securities and wire fraud after his arrest last year.

The government says Milton pumped up Nikola’s share value by billions of dollars through “a campaign of lies over months,” including statements on Twitter, podcasts and TV interviews.

"His lies may have been on social media, but his was an old-fashioned fraud,” Estes.

“When you lie to investors to get their money, it’s securities fraud,” Estes continued. “They believed the defendant, they trusted him, and they were deceived.”

Milton’s attorney Mukasey meanwhile insisted to jurors that the government had presented a “stunning lack of evidence."

“Don’t you think that in a fraud case," Mukasey asked, "somebody would say that?"

The defense lawyer said Milton was answerable to what he called “the boy scout cops,” Nikola's board of directors. That no member of the board ever sounded any alarms about Milton’s public statements, according to Mukasey, suggested that “Trevor was exactly in sync with what the company wanted to do."

“They didn’t call out any misconduct because they never saw misconduct because there never was any misconduct,” Mukasey said. “Their silence delivered a message, and it was a loud and clear message: there’s no problem here. … Keep going out there, keep saying similar things.”

“It is a distortion say Trevor Milton intended to commit fraud when there’s no record of anybody saying, ‘hey Trevor, you’re doing something wrong here, you’re crossing a criminal line here,'" the lawyer continued. “It is the ultimate distortion say Trevor Milton intended to commit fraud when the people who worked with him at Nikola came in to this courtroom but not a single one of them testified that he intended to commit fraud or that he had a wrongful purpose/"

Estes meanwhile told jurors about how Milton had falsely bragged about billions of dollars in orders that were in fact reservations or expressions of interest.

“These are completely meaningless, they’re nonbinding, they’re noncommittal,” Estes said. “Orders mean sales; they’re guaranteed."

The trial before U.S. District Judge Edgardo Ramos kicked off one month ago and commenced closing summations on Thursday after a weeklong break due to one of Milton’s lawyers testing positive for Covid-19 last week. Milton's defense team includes Kenneth Caruso of Mukasey Frenchman and Bradley Bondi of Cahill Gordon & Reindel,

Nikola trades today at under $5.50 a share but reached a price of close to $66 when it went public in June 2020, briefly giving the company a market valuation that exceeded some major, established automakers.

Last year, the company paid $125 million to settle a civil case against it by the Securities and Exchange Commission. Nikola, which continues to operate from an Arizona headquarters, didn’t admit any wrongdoing. It has begun delivering some vehicles to customers and says it has been ramping up toward a capacity of making thousands of trucks per year.

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