Former CEO and founder of Nikola Motors Trevor Milton has been found guilty on three of four counts of fraud in federal court today. Milton was charged with two counts of securities fraud and two counts of wire fraud, pertaining to statements he made while he was acting chairman and CEO of Nikola.
Although Nikola Corporation, fka Nikola Motor Company, has nothing to do with the news of today’s conviction, it must be mentioned because of the pivotal role it plays in the Trevor Milton saga that has led to his guilty verdicts.
Before going public, the original iteration of the ZEV startup founded by Milton came out swinging, promising several hydrogen-fueled, Class 8 semi trucks to battle the likes of Tesla. The company also introduced a hydrogen-electric pickup truck called that Badger that would be produced with the help of GM.
Things truly started to get “interesting” when then Milton became a billionaire by taking Nikola public through a SPAC merger, following several bold claims about the company’s tremendous progress, causing its stock to hockey stick up to over $90 per share.
However, the Nikola cash rocket was quickly grounded after a report from notorious short-seller Hindenburg Research made several allegations that exposed deception by Nikola and Milton. It included several claims corroborated in previous reports from both Electrek and Bloomberg. Nikola issued a response to those claims, but the statement lacked any rebuttal of the main allegations of deception by the company and Milton.
A key focus of deception in the report was a substantial claim that Nikola staged the first video of its hydrogen truck driving by simply rolling it down a hill. The company eventually admitted to the ruse, albeit without an apology, claiming the deception was “fair game” due to a technicality.
Milton ended up leaving the company shortly thereafter as public pressure started to increase. The US Department of Justice as well as the SEC soon opened separate investigations into Milton’s actions (or lack thereof) and he was inevitably indicted by a grand jury over the aforementioned false claims.
Until today, Milton has been chest deep in litigation on a $100 million bail. Nikola Corporation on the other hand, cooperated with the SEC in order to move on from Milton, paying a $125 million settlement agreement and refocusing on actually delivering electric vehicles, a feat Trevor Milton never accomplished during his sprint to the bank.
Nikola issued a statement in regard to the court’s decision today, stating:
We appreciate the court’s and jury’s attention to this matter. It is important to remember that this trial was related to statements that Mr. Milton made, several years ago. Neither the prosecutors nor Mr. Milton questioned the Company’s promising future and unique ability to positively transform the commercial transportation industry.At Nikola, we are pleased to close this chapter and focus on executing on our strategy and achieving critical milestones. With our vehicles in production and in the hands of customers, along with the energy infrastructure well on its way to support them, the Company is making meaningful contributions toward cleaning up one of the world’s most polluting industries. Nikola and its dedicated team continue to work relentlessly towards real long-term value for its shareholders as we work to create a cleaner and healthier planet for future generations.
Milton still owns Nikola stock, but that is the only tie that currently exists between him and the current version of automaker, which is still working to claw its reputation out of the hole its former CEO dug for it. Milton was facing up to 25 years in prison if he were convicted on all four counts of fraud. Now that he has been found guilty of three, we will need to see what his sentence ends up being.
Oil may no longer be necessary in electric vehicles, but there is still some snake oil going around in the industry. Milton’s counts of guilty should come as no surprise to anyone since much of the evidence against him was quite public and abundant – one of the downsides of publicly pumping your company for profit. Stock is only down 3% aftermarket today, again providing evidence that many saw this coming.
What we may not see coming however is the next Trevor Milton, and it’s a safe bet that person is out there somewhere. We promote a lot of young and upcoming startups at Electrek for the good of EV adoption, and the cold truth of it is that many won’t pan out.
Funding and scale are usually the death weapons, but there are plenty of bad actors out there looking to capitalize off investors excited about EVs, who are looking to invest in a company that will “become the next Tesla.” How many times have we heard that statement, right?
We still believe that charlatans like Milton are the exception and not the rule, but it’s important that he was caught and is held accountable because there are other CEOs or EV startups lurking, waiting for an opportunity to exaggerate their EV tech and make a quick buck off it. Hopefully those frauds will see Milton dressed in orange and think twice.
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