ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

All About the Nikola Motors Scandal That Led to a Prison Sentence for its Founder

Trevor Milton became an overnight billionaire by deceiving Nikola Motors investors with false promises.
PUBLISHED MAR 10, 2024
Cover Image Source: The Nikola Motor fraud | Pexels
Cover Image Source: The Nikola Motor fraud | Pexels

Zero-emission vehicles have been among the most anticipated inventions in recent times, but every claim about such technology isn't necessarily true. While Tesla has delivered electric cars, its rival Nikola tried to capture the market for heavy vehicles that cut down emissions. But a video purportedly showing a zero-emission truck in motion turned out to be fake and a court later found the ex-founder and chairman of Nikola Corporation guilty of defrauding investors by misleading them about the company's technological capabilities to artificially inflate its stock price. Milton was convicted of one count of securities fraud and two counts of wire fraud. The judge sentenced him to four years in prison along with a fine of $1 million.


 
 
 
 
 
View this post on Instagram
 
 
 
 
 
 
 
 
 
 
 

A post shared by Trevor Milton (@lakepowelltrevor)


 

In June 2020, Nikola's stock surged to $90 per share following its merger, making Trevor Milton a billionaire overnight. However, suspicions arose when Hindenburg Research released a damning report on September 10, 2022, accusing Milton of fraudulent activities to deceive investors. The report debunked many of his claims, revealing his promises of zero-emission hydrogen-fueled trucks.

Milton's alleged proprietary technology was nonexistent, as evidenced by a promotional video, "Nikola One in Motion," which depicted a semi-truck rolling down the road. Other false claims included ownership of natural gas and production of hydrogen trucks at a lower cost. Moreover, Nikola's headquarters lacked the purported 3.5 megawatts of solar panels.

Investigations uncovered that Nikola sourced components from third parties and disguised them as proprietary by concealing their branding with masking tape. Milton publicly admitted to these allegations, acknowledging his attempt to defraud investors for personal financial gain.



 

Following these revelations, Nikola's shares plummeted, prompting Milton's resignation from the company in September 2020. The stock's decline had a ripple effect, impacting General Motors (GM) shares by 4% and causing Nikola's stock to plunge by 36%. The company's board of directors, incensed by the situation, initiated a private investigation conducted by the SEC to uncover the reasons behind the significant financial and reputational losses.

In the wake of the collapsing share prices, and the investigation's findings, Nikola lost partnerships and deals for collaborations, including those with BP (British Petroleum Company PLC) and Republic Services.

Image Source: | Photo by Stephen Yang | Bloomberg via Getty Images
Image Source: Trevor Milton | Photo by Stephen Yang | Bloomberg via Getty Images

In response to the allegations, the company announced the cancellation of its Powersports unit and production plans. Instead, they shifted focus to producing 50 and 100 Nikola Tre Vehicles, along with investing $50 million in a hydrogen factory aimed at fueling sem-truck stations. Supervised by Wabash Valley Resources, this initiative aimed to bolster hydrogen production.

Nikola expanded its presence by announcing the opening of five new class 8 truck dealerships across various states, including Arizona, Texas, Colorado, California, New Mexico, Delaware, Florida, Maryland, and Virginia.


 
 
 
 
 
View this post on Instagram
 
 
 
 
 
 
 
 
 
 
 

A post shared by Nikola Corporation (@nikolamotorcompany)


 

Milton, a Utah-born entrepreneur initially tried his hands at sales and marketing before getting into startups, which, despite significant investments, encountered numerous challenges and ultimately failed. Following his previous ventures, Trevor founded dHybrid Systems before establishing Nikola Corporation in 2015.

Nikola aimed to revolutionize energy solutions with a focus on zero-emission vehicle production. With increasing demand and sales, Nikola Motor gained prominence, paralleling Milton's soaring net worth, which peaked at $1.2 billion. However, his fortunes did not last too long. 

Trevor Milton- The Ex Founder and fraudster behind the Nikola Motor scam| Photo Source: WikiCommons
Image Source: Trevor Milton | WikiCommons

Milton's purported misrepresentations not only led to financial losses for Nikola Corporation but also tarnished the company's reputation and eroded trust in its leadership. Moreover, the aftermath of the fraud allegations has highlighted the importance of regulatory oversight and transparency in corporate governance to prevent similar instances of fraud in the future. It has also resulted in the company bearing losses, with its stock valued at less than $1 today.

MORE ON MARKET REALIST
The rising star of the show's Prime Video spinoff could take over as the full time host.
1 day ago
Rick who couldn't tell the difference between Pokemon and Charizard lost out on a deal of a life.
1 day ago
The guest later happily gave it away for free to a Folk Americana Roots Hall of Fame collection.
1 day ago
The guest had stumbled into the rare artifact online and didn't have to shell out a lot for it.
2 days ago
Jennings answered the question that was making the rounds on social media for quite some time.
2 days ago
While her letter picks gave her just one clue, Angie nailed the final puzzle in seconds.
3 days ago
While the player wasn't too bothered with the loss, fans didn't seem to let it go.
3 days ago
This wasn't the first time that a contestant made a fool of himself on the show.
4 days ago
Even the stingy star of the show, Rick Harrison couldn't resist paying top dollar for the item.
4 days ago
Kevin O'Leary's deal did offer more capital but didn't align with Strauss's goals.
5 days ago
Harvey was waiting for a long time for someone to give that answer.
6 days ago
All the guest could say was, "I am never going to be able to talk to my wife again."
7 days ago
The TikTok creator claimed that the brand is trying to gain attention, but some viewers disagree.
Apr 16, 2025
Harris made a last ditch attempt for the 'Holy Grail' item but it didn't go as he expected it to.
Apr 16, 2025
Jay Tope, who lost $75,000 earlier in the week, redeemed himself while playing with the star.
Apr 16, 2025
While the question was direct, the entrepreneurs kept beating around the bush.
Apr 15, 2025
Fans are posting videos of the game that they discovered at Costco retail stores.
Apr 15, 2025
Catherine also got some help from her mother who was sitting in the studio audience.
Apr 15, 2025
As David walked up to the host, Carey immediately noticed his clothes and said, "What a great shirt!"
Apr 15, 2025
Even the fans agreed that the answer to the puzzle was just too random for someone to guess.
Apr 14, 2025