Trevor Milton, founder and former CEO of Nikola Motor Co., was indicted July 29 by federal prosecutors for making false and misleading claims to investors. Among other incidents, prosecutors say Milton used social media and public appearances to make it seem as though Nikola had “fully functioning” prototypes of its Nikola One truck and Badger pickup before those prototypes were actually functional.
In a statement released the same day as the indictments were unsealed, Nikola Co. noted that the company has cooperated with the government, which has only taken action against Milton as an individual and not against the company.
Prosecutors say Milton is currently charged with two counts of securities fraud and one count of wire fraud. Each charge carries with it a maximum penalty of about 20 years in prison.
Milton, who founded Nikola in 2014, resigned from the company September 20, 2020 after a short-selling firm, Hindenburg Research, alleged fraud on a massive scale. Following that report, General Motors, which had previously agreed to purchase an 11% stake in Nikola, significantly dialed back its commitments to the company.
According to the indictments unsealed in July, Milton misled investors about much of his company’s operations, including its hydrogen/electric semitruck Nikola One, its hydrogen/electric powered pickup truck, the Badger, and its capacity to produce hydrogen for use in vehicle applications.
In one example of Milton’s alleged fraud, Nikola published a video in January 2018—about a year after Nikola had elsewhere claimed to have a fully functioning prototype—in which its Nikola One model appeared to move under its own power. The video was actually produced by towing the vehicle to the top of a hill and allowing it to roll down.
In the case of the Badger pickup truck, Milton used Ford F-150 trucks as “surrogate” vehicles to construct prototypes, using the Ford chassis as a base for the prototypes, and taking steps to conceal their construction from the public.
Finally, despite Milton’s claim that Nikola was producing hydrogen at “well below $4 a kilogram,” prosecutors say Nikola has never actually produced hydrogen at all, and at the time was actually purchasing it for the market price of $16 a kilogram.
In a statement from the Justice Department, U.S. Attorney Audrey Strauss said Trevor Milton “brazenly and repeatedly” misled the public and investors about the status of his company’s operations. “Today’s criminal charges against Milton are where the rubber meets the road, and he will now be held accountable for his allegedly false and misleading statements to investors.”
