Former Nikola CEO Gets 4 Years In Prison For Playing Make Believe With Investors (original) (raw)

from the fake-it-til-you-make-it dept

The saga of former Nikola CEO Trevor Milton has come to a close. We began talking about Nikola, a company that bill itself as “decarbonizing” the trucking industry by selling electric long-haul trucks, back in 2020 when it was revealed that a very slick demo of its products had been totally staged. Like, hilariously staged. As in the truck couldn’t move on its own so they towed it down the start of a downward slope on a hill and then recorded it moving “on its own.” Once word got out, Nikola got busy trying to hide all of this from the public view via DMCA takedown notices, which of course Streisand-ed the story into further public view. Milton then handed off his CEO duties and became Chairman of the Board, only to resign that position in September of 2020 as the deal the company had struck with General Motors went from a blockbuster to a flop, because of how pared back the deal became.

But it all stemmed from Milton’s promotional materials that made it look like the company had a working product when it very much did not, as well as overstating for investors how real the partnership deals the company had struck actually were. And the end result of that for Milton is going to be several years in prison.

The disgraced founder and former CEO of the “zero emissions” truck company Nikola, Trevor Milton, was sentenced to four years in prison on Monday, Bloomberg reported. That’s a lighter sentence than prosecutors had requested after a jury found Milton guilty of one count of securities fraud and two counts of wire fraud in 2022. During the trial, Milton was accused of lying about “nearly all aspects of the business,” CNBC reported.

Nikola’s stock peaked in 2020, but then dozens of fraud allegations were reported by the investment firm Hindenburg Research, causing Nikola stock to plummet promptly. “We have never seen this level of deception at a public company, especially of this size,” Hindenburg Research’s report said. Facing backlash, Milton resigned, voluntarily withdrawing from his company and selling off 100millioninNikolastocktofundmorethan100 million in Nikola stock to fund more than 100millioninNikolastocktofundmorethan85 million in luxury purchases, the Times reported. Today, Milton remains Nikola’s second-largest shareholder, Bloomberg reported.

Misleading investors and inflating the company stock price by fudging just how workable your electric vehicles’ features are? Where have I heard that one before?

Yes, one of the questions that must be floating around in Milton’s head at the moment has to be, “How come I’m going to jail and Elon Musk remains free?”

Not that Milton has done a particularly good job of defending himself, of course. His excuses at trial amounted to claiming that he didn’t have a ton of experience being a CEO. Apparently CEO classes don’t include a course called “Don’t lie to your investors and other great advice you shouldn’t actually need.” Absurdly, Milton also asked the court to sentence him to mere probation, arguing all along that he didn’t intend to lie to investors, but was rather simply very optimistic about his company and its products.

But Nikola’s trucks don’t run on optimism and optimism isn’t what Nikola’s investors were hoping to get in return for their hundreds of millions of dollars in funding. Nor were the tears that Milton shed in court, for that matter.

And now it’s left to current CEO Steve Girsky to try to pick up the pieces and save a company that many expect to go out of business. For what it’s worth, with the spotlight of the investing world firmly on Nikola, Girsky is trying to put out some good news.

Girsky seems keen to move past the scandal by promoting Nikola’s latest successes. In September, Girsky boasted that daily tests showed that one of Nikola’s fuel cell trucks could successfully run for 900 miles.

“This was quite an accomplishment, and I defy anyone to find another zero-emission vehicle truck anywhere that can run up to 900 miles in a day,” Girsky said.

However, since the 2020 scandal, Nikola’s stock has dropped 99 percent, Forbes reported, and now an investor analytics company called Macroaxis has estimated that Nikola has an 81 percent chance of going bankrupt.

And it’s not hard to understand why. Even if Girsky does everything right, and even if Nikola is actually progressing to a real, market-ready electric truck that would otherwise be in demand in the marketplace, the kind of things Milton has been sentenced to prison for are reputation killers. The company may not survive without more funding and how many people want to invest in this company now?

Filed Under: deception, ev, securities fraud, trevor milton
Companies: nikola