Trevor Milton touted his electric vehicle company, Nikola, as the next Tesla, but federal prosecutors say the company was built on a series of lies meant to defraud investors.
Milton’s meteoric rise as the founder of electric vehicle company Nikola — and his sudden fall last year after whistleblowers released a damaging report tearing into the entrepreneur’s claims that he had created a new hydrogen fuel cell technology to transform America’s trucking industry — are explored in the latest episode of “American Greed,” airing Tuesdays at 10 p.m. ET/PT on CNBC.
Milton is now facing federal charges of securities and wire fraud in connection with his alleged scheme to “defraud and mislead investors about the development of products and technology by the company he founded,” federal prosecutors said in a statement announcing the charges.
“As alleged, Trevor Milton brazenly and repeatedly used social media, and appearances and interviews on television, podcasts and in print, to make false and misleading claims about the status of Nikola’s trucks and technology," Manhattan U.S. Attorney Audrey Strauss said at the time. "But today’s criminal charges against Milton are where the rubber meets the road, and he now will be held accountable for his allegedly false and misleading statements to investors.”
According to “American Greed,” Milton — a serial entrepreneur who once owned a home security company and second-hand sales online marketplace — created his energy and trucking company in 2015 while living in Salt Lake City, Utah.
He convinced friend Jimmy Rex and others to invest in the new start-up that he promoted as a company that could change the transportation industry by producing hydrogen fuel cell semi-trucks, reducing overall emissions produced by diesel trucks.
“I recognized that it was technology and transportation and energy all in one and I was like ‘Dude, you have to let me invest,’” Rex, who said he invested $500,000 of seed money into the company, recalled in “American Greed.”
Milton capitalized on the need to reduce greenhouse gases and create a more energy-efficient and cost-friendly way to transport goods across the country.
“This was a very appealing story right from the get-go, when you look at the possibilities of semi fleets cutting their emissions and being more cost effective, there’s a ton of companies that would look at a truck hydrogen-powered and say we want a piece of that,” said Phil LeBeau, an auto and airline industry reporter for CNBC.
Milton unveiled the truck, which he named Nikola One, at an event in December of 2016, telling attendees it “fully functions and works,” authorities said.
The company would later share a video of the truck in motion on its social media pages in January of 2018, further strumming up excitement and interest in the truck’s possibilities, according to prosecutors.
In an interview of the company’s headquarters, Milton touted the truck as the “most advanced semi-truck the world has ever seen,” and repeatedly compared the company in the media interviews to the automotive and clean energy giant, Tesla.
In March 2020, Nikola announced plans to go public through a special purpose acquisition company, or SPAC, which bypassed the usual “quiet period” placed on executives through traditional IPOs, according to “American Greed.”
The company’s stock soon skyrocketed, helped in part by retail investors stuck at home during the pandemic and looking to find the next big thing.
As the stock prices grew, Milton — who was restricted from selling his shares for the first six months — quickly became a billionaire and purchased a lavish multi-million home in Utah.
The company also touted another new vehicle, a new electric pickup truck called the Badger, marketed to compete against the popular Ford F-150.
“It’s the coolest electric pickup truck the world’s ever seen,” Milton said in one interview.
He claimed to have discovered a way to cleanly produce usable hydrogen — using solar panels on the roof of the company’s Arizona headquarters — that drastically cut the cost of its production.
But a group of whistleblowers cast doubt on the company's story.
“They knew that he was the guy who would say or do anything to close the deal,” Mark Pugsley, a securities fraud attorney who represents the whistleblowers in a pending civil lawsuit, told "American Greed."
The group, working alongside the research firm Hindenburg Research, released a bombshell report in 2020, alleging that Nikola had gone to elaborate efforts to mislead investors to believe the Nikola One was a working vehicle, even staging that earlier video of the truck moving by pushing it down a hill to make it appear like the truck was driving on its own.
As federal authorities would later allege, Milton was also accused of lying about the Nikola One being a fully functional truck at the unveiling event in 2016.
“In fact, the Nikola One prototype was not completed, let alone tested and validated, by the time of the unveiling event," the U.S. Attorneys Office for the Southern District of New York stated in July 2021. "Rather, the prototype was wholly missing significant parts, including gears and motors, and the control system (i.e., the system that communicates the driver’s directions to the vehicle) was incomplete."
Authorities said Nikola was also not producing any hydrogen and had been using hydrogen it purchased from other sources.
The deceptions allegedly extended to the company’s Badger as well, which turned out to be a rendering rather than an actual truck.
“It was never a truck," CNBC reporter LeBeau said. "It was never built.”
Two days after the Hindenburg report was published, Milton stepped down from Nikola.
Jeffrey Block, who represents clients who lost significant money when the company’s stock plunged, told “American Greed” he believes that Milton had been hyping the company in media interviews to drive up the stock price so he could cash out after six months and profit from the alleged deception.
“That’s a classic pump and dump,” he said.
While some of the company’s investors lost their life savings believing in the company’s promise, Milton made hundreds of millions. In the three months after he was charged with securities fraud, he sold $300 million of his stock, according to “American Greed.”
Milton, who declined to comment on the allegations to the show’s producers, is currently on trial in federal court for two counts of securities fraud and two counts of wire fraud, according to CNBC. He's pleaded not guilty.
Nikola Motors, which continues to operate, also declined to comment.
For more stories like this, watch "American Greed" on CNBC, Tuesdays at 10 p.m. ET.