Treveor Milton, founder of hydrogen heavy truck startup Nikola, was found guilty by a federal jury of three of four charges against him, including one count of securities fraud and two counts of wire fraud. Treveor Milton faces a maximum sentence of more than 20 years in prison if convicted on all four counts.
Founded in 2014, Nikola is Milton's fourth company since dropping out of school. The company initially positioned itself to inherit the natural gas technology of its predecessor, dHybrid, but later shifted to developing hydrogen fuel cell technology. At the same time that Milton was making a big pitch for hydrogen trucks, Nikola was getting a boost.
Less than eight years after starting its business, Nikola was transformed from an ordinary startup to a star company under the influence of Treveor Milton. On the day of its IPO, Nikola soared 104%, and its market value topped $34 billion at one point, surpassing Ford Motor. Even if not a single car is sold, the Nikola could still be seen by GM as a strategic partner.
However, on the third day after Nikola officially announced its cooperation with GM, when the stock price was soaring, Hindenburg Research, a short-seller, pointed out that Nikola's technology was fake and the order was not real. Then Milton left, the stock price fell below $3, and the market value lost more than 30 billion. The whole thing was a hoax constructed by Milton's deception.
Hindenburg Research's report lists Nikola's "SINS," pointing out that Nikola's claims about proprietary battery technology, natural gas Wells, solar panels, and hydrogen production capabilities are false or misleading, For Nikola's claim that critical parts of its vehicles were designed in-house, they were actually licensed or purchased from third parties.
The report also revealed that the electrical system that Nikola One showed off at the event was actually connected to a cable under the stage to provide power, while in the road driving video Nikola released earlier, the vehicle was not running itself, but sliding down a sloping mountain road.
Not only that, but Nikola has also been exposed as having falsely advertised solar panels at its headquarters, and as having a natural gas well that was not listed in its prospectus. As a company developing hydrogen trucks, it has only a handful of patents related to hydrogen fuel cells.
Milton responded immediately after the short selling report was published, calling the report a "malicious attack," followed by Nikola's detailed response on September 14, stating that Hindenburg's actions were "designed to give false impressions to investors and negatively manipulate the market in order to financially benefit short sellers, And that includes Hindenburg himself."
At that moment, Milton walked away. On Sept. 20, Milton announced his resignation as executive chairman.
When Milton's scheme was unravelled, the capital markets were the first to react, with Nikola's share price falling by 53%. General Motors became a "big loser", and its $2 billion agreement was worth 11% of Nikola's shares in essence, which was reduced to less than half of its original value in less than half a month.
Later, GM canceled any equity investment in Nicola, as well as plans to build an electric pickup truck for Nicola, leaving the two companies in a fuel-cell partnership.
In Milton's case, U.S. prosecutors filed criminal charges in mid-2021, and Nikola agreed to pay a $125 million civil penalty to settle a fraud investigation by the Securities and Exchange Commission.
From "the first stock of hydrogen heavy truck" to the crisis of delisting, Nikola's great change is actually a bubble inflated by lies, which will eventually burst.