Founder Nikola faces securities fraud lawsuit over electric truck promises

Trevor Milton, Nicola Corp.

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The founder who lured auto industry leaders and investors with his promise of an electric truck revolution faces a securities fraud trial starting this week on allegations he lied about his company’s environmentally friendly development technology.

Federal prosecutors in Manhattan last year accused Mr. Milton of running a scheme to enrich himself and boost his stature as a businessman by falsely advertising Nicola’s prospects and defrauding lay investors, including stock market novices. He was charged with two counts of wire fraud and two counts of securities fraud. Jury selection begins Monday.

“In order to increase investor demand for Nikola stock, Milton lied about nearly every aspect of the business,” then-U.S. Attorney Audrey Strauss said when she announced the charges.

Mr Milton, who is 40, has pleaded not guilty. He resigned from Nikola in 2020, several days after Hindenburg Research published a report alleging dozens of misrepresentations Mr Milton had made about the business, including rolling a non-drivable truck down a hill to appear operational in a marketing video.

Audrey Strauss last year in New York discussed the allegations against Trevor Milton.


Richard Drew/Associated Press

During a pre-trial hearing last week, Mr Milton’s lawyers said they would argue their client acted in good faith and did not intend to defraud anyone. Mr. Milton may have used certain terms such as “prototype,” “functional” and “demonstration car” differently than some investors understood them, defense lawyer Marc Mukasey said.

“There is a linguistic aspect to it,” Mr. Mukasey said.

The top charge against Mr. Milton carries a maximum sentence of 25 years, although under federal sentencing guidelines he would likely face a much shorter prison term even if convicted on all charges.

A spokeswoman for Nikola declined to comment. The company, which was not charged, said it cooperated with the government throughout its investigation and settled a Securities and Exchange Commission probe for $125 million in December. The company neither admitted nor denied wrongdoing.

Amid the fallout from Mr. Milton’s legal troubles, Nikola continues to attract partners, customers and established executives who are betting on the company’s plan for a network of long-haul trucks powered by hydrogen fuel cells. The company started production of the first truck model, powered entirely by batteries, in April.

The Nikola Two hydrogen semi-truck, which Nikola says will hit the market in 2024.


Nikola Motor/Agence France-Presse/Getty Images

The trial marks the next chapter in the rapid rise and fall of Mr. Milton, who has attracted major companies such as General Motors Co.

and Robert Bosch GmbH as potential partners in his vision of a zero-emission long-haul truck network.

Mr. Milton was an unconventional figure. He said he didn’t finish high school or college, but was a serial entrepreneur who started several companies before Nikola. Those ventures often ended in controversy, litigation and frustrated investors, according to former employees, clients, investors and documents.

Nikola, which Mr. Milton founded in 2015 after selling a majority stake in another company he owned for $12 million in cash, focused on hydrogen trucks and the fueling stations to support them.

Mr. Milton took Nikola public in the summer of 2020 at a $3.3 billion valuation, when the company had yet to sell a single truck. In the company’s first days of trading, its stock market valuation soared to $30 billion, briefly surpassing some auto industry powerhouses like Ford Motor Co. As of Friday’s close, Nikola’s market valuation was $2.4 billion.

Prosecutors claim Mr Milton’s lies helped fuel Nicola’s exploding share price. They say he made false statements about the company’s ability to produce hydrogen, which it planned to use to power some vehicles, and its progress toward making products like the Badger, an electric truck. Nicola withdrew plans for the Badger after Mr. Milton resigned, and the deal to build the trucks from GM was significantly reduced.

The trial could largely hinge on what Mr Milton said in television interviews and podcasts and on social media.

In a 2020 podcast, Mr Milton said that until Nikola came to market, hydrogen was around $16 a kilo. “Now Nikola is producing it well below $4 a kilo,” he said.

Prosecutors said Nikola had never produced hydrogen, at any cost.

Mr. Milton also said in interviews that the Badger was a “fully functional vehicle inside and out.” When asked on Twitter when the first prototype would be produced, he wrote: “Already.” Prosecutors said Nicola only had vehicle renderings and concept sketches.

In a tweet, Mr Milton wrote that the Badger would have a drinking water fountain using the water generated by the truck’s hydrogen fuel cell. Days later, Mr. Milton typed “can you drink water from a fuel cell?” in an internet search, prosecutors alleged.

The rapid rise in Nicola’s stock made Mr. Milton a multi-billionaire, based on his holdings. Before ditching Nicola, she bought a $32.5 million ranch, the most expensive house in Utah at the time, and a Gulfstream jet.

Nicola was the buzz of Wall Street, trying to blaze a trail in electrification. But then federal prosecutors began investigating allegations that he misled investors. The WSJ explains Nikola’s rollercoaster journey. Photo graphic: WSJ

At the time of the indictment, legal observers believed Mr. Milton’s charges signaled a coming wave of enforcement actions related to special purpose acquisition companies, or SPACs, which are blank check companies that raise money with the goal of buying a business and taking over it is public.

Such cases have largely not materialized, perhaps because of deterrence or because SPACs are not the inherent drivers of fraud they were once thought to be, said Martin Bell, a former federal prosecutor now a partner at Simpson Thacher & Bartlett LLP.


What is your take on the Trevor Milton trial? Join the discussion below.

In Milton’s case, “the DOJ and the SEC went out of their way to note the nature of the SPAC apparently to send a shot across the bow that this was an area they were going to watch,” Mr. Bell said.

SPACs have exploded in popularity in 2020 as a means for companies, including Nikola, many with little or no revenue, to go public outside of a traditional IPO. Many companies that went public through SPACs have since struggled.

Mr. Milton received $94 million around the company’s SPAC deal and has sold more than $300 million in Nikola stock since his resignation, according to company filings.

Defense attorneys said the case hinges heavily on traditional securities fraud questions.

“Essentially this boils down to: Did Trevor Milton lie and were those lies critical to investor decisions?” said Celeste Koeleveld, partner at Clifford Chance US LLP. “This is not limited to SPACs.”

Write to Corinne Ramey at and Ben Foldy at

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