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The Courts The Almighty Buck Transportation United States

EV Startup Nikola Agrees To $125 Million Settlement (seattletimes.com) 41

Posted by BeauHD from the price-you-pay dept.
Long-time Slashdot reader bird writes: Without admitting wrong-doing, would-be electric truck maker Nikola has agreed to a $125,000,000 settlement to settle charges that it defrauded investors with false claims about their EV vehicle technology. You may recall the video of a supposedly electric-powered truck that was later admitted to be powered not by a motor but rather by gravity? Nikola. The Seattle Times provides additional details about the settlement: Nikola violated the antifraud and disclosure control provisions of the federal securities laws, the Securities and Exchange Commission said Tuesday. In July the founder and one-time chair of Nikola, Trevor Milton, was freed on $100 million bail after pleading not guilty to charges alleging he lied about the company. The U.S. Attorney's Office in Manhattan, New York, charged Milton, 39, with two counts of securities fraud and wire fraud. He resigned as chairman in September. The SEC said in its order that Milton embarked on a public-relations campaign aimed at inflating and maintaining Nikola's stock price before the company had produced a vehicle. The SEC also found that Milton misled investors about Nikola's technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook. In addition, it found that Nikola misled investors by misrepresenting or omitting information about the refueling time of its prototype vehicles, as well as the economic risks and benefits associated with a potential partnership with General Motors.

Nikola, based in Phoenix, didn't admit or deny the SEC's findings. The company did agree to cease and desist from future violations and to the $125 million penalty. Nikola also agreed to continue cooperating with the SEC's ongoing investigation. The order also establishes a fund to return penalty proceeds to investors who were affected. "We are pleased to bring this chapter to a close as the company has now resolved all government investigations," Nikola said in a statement. We will continue to execute on our strategy and vision to deliver on our business plan."
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EV Startup Nikola Agrees To $125 Million Settlement More

EV Startup Nikola Agrees To $125 Million Settlement

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  • $125M settlement eh? (Score:4, Insightful)

    by Rosco P. Coltrane ( 209368 ) on Wednesday December 22, 2021 @08:26AM (#62105563)

    Let me guess... That's $100M in the pockets of the lawyers, $24M in the pockets of the richest claimants, and a $5 coupon for anybody else in the class action?

    • Exactly. "We agree to not do in the future what we won't admit to having done before."

      And the SEC will agree to some plea deal in which Trevor Milton will plead guilty to one of the lesser charges in exchange for all the serious fraud charges being dropped—in one of the clearest and easiest to prosecute fraud cases ever. So that they have the time go after the really serious cases, like Elon Musk for his tweets, which they spent considerable time in court over.

    • Re: (Score:3, Interesting)

      by Fly Swatter ( 30498 )
      $5? They are lucky. I am apparently eligible to be a member of a class action against Fiat-Chrysler/Stellantis and if your damages amount to less than $10 you are DISCARDED from being eligible to receive anything at all. How is that even legal? Oh and the Lawyers get 33-1/3% of total funds PLUS $100 million for 'expenses' AND another $5,000 before any claimants get anything because fuck you.

      How is discarding members from a class action even legal? Those lawyers should be sued in a class action!

      • $5? They are lucky. I am apparently eligible to be a member of a class action against Fiat-Chrysler/Stellantis and if your damages amount to less than $10 you are DISCARDED from being eligible to receive anything at all. How is that even legal?

        I expect you are free to sue Stellantis yourself.

      • I am speaking first hand experience (got the notice yesterday), explaining my displeasure and got modded troll, sure, whatever. Must have been one of those lawyers behind the class action.

    • There's also the question of where the money is going to come from. Nikola made $95,000 last year. It's forward guidance is for the 0-7.5million range.

      The payments will have to come from current shareholders. If they weren't aware of the judgement before they bought then it seems like they are now victims of the fraud too.

      • they are now victims of the fraud too.

        Which is as it should be. Once bitten, ...

        The only thing wrong with this ruling is that the CEO isn't in prison working off the debt by sewing mail bags.

        As it is the company will go broke and he'll be back next year doing it all over again.

        (and the exact same idiots will probably be investing. So it goes...)

    • Re: (Score:2)

      by DarkOx ( 621550 )

      Its sad the SEC isn't throwing the book at NKLA and Milton alike, it but I don't really feel all that bad for the folks they are said to have bilked either.

      Anyone looking at this company for more than 5 min could see it was wildly speculative and they were no where even close an electric passenger vehicle product. The fact their demos of their truck the only thing there is any evidence of actual engineering work for at all was a complete dog and pony should have confirmed it. If that is all the more substan

    • Their weren't much consumer level sails, this is mostly a hurt to investors. If you didn't invest in Nikola, then you are not affected,

      There were a bunch of people who put in a $100 preorder for the Badger Electric or Hydrogen Pickup truck, but that wasn't part of the claim.

    • Re: (Score:2)

      by mjwx ( 966435 )

      Let me guess... That's $100M in the pockets of the lawyers, $24M in the pockets of the richest claimants, and a $5 coupon for anybody else in the class action?

      I don't see why they should get anything...

      Aren't these business geniuses supposed to be able to spot a scam? The lawyers at least earned their money, the investors were just gambling and lost.

    • Since this company has no product and no revenue, where is this fine coming from? Is it the investors fining and paying off themselves?

    • The real winners here were none of the above. It was Hindenburg Research, the company that did the research and discovered the fraud. They took massive short positions in the company and then announced their findings.

      The same company found and reported fraud at Loop recycling* and Lordstown Motors**. I wish the SEC was half as competent as these guys.

      * Their proprietary technology for recycling PE to virgin monomer doesn't actually "work".

      ** About 80% of their vehicle preorders don't actually "exist".

    • who moderated this nonsense up???

      This was *not* a class action, and there are no attorney fees.

      This was a settlement with the US Government.

      I'm a practicing attorney, and I think the typical class action is nonsense--but this just isn't one.

  • in the USA since you can pay your way out of it. This is so wrong on so many levels.

    • Re:Crimes are not crimes (Score:4)

      by monkeyxpress ( 4016725 ) on Wednesday December 22, 2021 @08:45AM (#62105597)

      in the USA since you can pay your way out of it. This is so wrong on so many levels.

      The fine is for the company, not Milton. What else do you propose? Putting the incorporation documents in a cell for a couple of years?

      As to paying to get out of prison, German has the USA beat on that sort of thing - F1 boss Bernie Ecclestone pays to end bribery trial [bbc.co.uk]

      • The fine is for the company, not Milton. What else do you propose? Putting the incorporation documents in a cell for a couple of years?

        That would only hurt the people who work there. But if you put the person who made the decision into a cell for a couple of years, that might help.

      • Re: (Score:2)

        by DarkOx ( 621550 )

        The fact is the company is populated with a group of people and culture that chose to entertain Milton for quite a long time. I think we should look at situations like this and assume these organizations are rotten to the core.

        So yes I think its very reasonable to dissolve organizations over situation like this. Corporate frauds on this level should result in a bankruptcy like situation where companies existence as a legal entity is terminated, any physical or intellectual assets it holds are sold at auctio

        • I agree, but it is ultimately the owners of the company (shareholders) who allowed the situation to develop and persist. They can say they didn't know, but there are mechanisms in place to allow them to find out. Ultimately, there has to be some responsibilities arising from ownership, other than collecting the dividend cheques.

          So penalising the owners by fining the company does make sense.

          Also the shareholders are free to determine that breaking up the company is the best thing to do. It's not the governme

          • Re: (Score:2)

            by DarkOx ( 621550 )

            but it is ultimately the owners of the company (shareholders) who allowed the situation to develop and persist. They can say they didn't know, but there are mechanisms in place to allow them to find out. Ultimately, there has to be some responsibilities arising from ownership, other than collecting the dividend cheques.

            Right their punishment is they lose the majority of their investment in this situation. Ultimately the stock market is a useful abstraction to facilitate the economy and it really could not work as a practical matter if we trying make shareholders directly liable - people would be to afraid to invest in anything.

            Also the shareholders are free to determine that breaking up the company is the best thing to do. It's not the government's place to force them to run the company one way or another (unless they are acting illegally), and I personally wouldn't want the government to have that power.

            This is my point they WERE acting illegally. I am probably one of the biggest advocates for saying you can dispose your personal property anyway you like - you'll find on Slashdot. However we do ha

    • Justice is not the same as Revenge.

      When there is is harm done.
      The person who was harmed wants Revenge, so they want more from in, to cover their losses and to make the other suffer much more for hurting them in the first place.
      The person who caused the harm, just wants to be go ahead like nothing happened, and is greatly inconvenienced by all this pressure to get so much out of them, than the harm they actually caused.

      The damage of Nikola's crimes was mostly just money. However while the victim would want t

      • Re: (Score:2)

        by DarkOx ( 621550 )

        Revenge IS a part of justice though. Most of the civil code is about restorative justice, and lot of the criminal code is about reform but revenge, deterrence, and incapacitation, are also important components.

        We have punishments like execution, and life imprisonment precisely because survivors and victims often need that closure to go on about their lives, and they are entitled to it. We have penalties for crimes like burglary that are quite severe so as to make to make the risk of committing the act and b

    • Moreover, you pay your way out with the money you stole!
    • Comment removed based on user account deletion
  • May I suggest Cheaters R Us?

  • I hate our legal system (Score:3)

    by zuckie13 ( 1334005 ) on Wednesday December 22, 2021 @09:48AM (#62105735)

    Rich company can functionally (but of course not legally) admit to committing the fraud by paying a ridiculous amount of money.

    Why does this happen? Because we can't manage to fix our legal system so a relatively slam dunk case can get through the courts with reasonable speed and cost. If it could, there would be no reason to take this settlement - you go after them and flat out win.

    Instead, they hire high powered lawyers who throw mounds of baloney paperwork that the system allows, and this is the result.

  • Boeing Execs push a bad design, results in the death of 346 people. No charges filed against the C-suite. But holy shit, you "steal" from rich people, watch your back.

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