Electric Truck Company Nikola's Founder Is Facing Over 10 Years In Prison: Here's Why

Troubled electric car maker Nikola has more than just financial woes staring at it. Just over a year after former CEO Trevor Milton was convicted of fraud, prosecutors have now demanded a prison term of up to 11 years for the disgraced executive. Milton was found guilty of two counts of wire fraud and one count of securities fraud following misleading comments he made about the company's business. "Trevor Milton lied to Nikola's investors — over and over and over again. That's fraud, plain and simple," attorney Damian Williams said last year. When the sentence was pronounced, Milton faced prison prospects of up to 25 years, assuming he was convicted on all four charges against him.

Milton started the company in 2014, focusing on electric trucks with the ambition to take on heavyweights like Tesla in the segment. The Nikola chief is accused of lying to investors, a pattern that allegedly began in 2019, a year before the company went public and Milton became a billionaire in the process. The company has faced tumultuous times ever since Milton's ouster in 2020 over rumors of fraud. "The focus should be on the company and its world-changing mission, not me," Milton said after the leadership change. Towards the end of 2021, the SEC ordered Nikola to cough up $125 million for defrauding investors. In a span of around a year leading up to 2023, Nikola had endured three CEO shuffles, highlighting deep troubles at the company.

In September 2020, short-seller Hindenburg Research released a report accusing Nikola of misleading investors with an "intricate fraud." The EV brand refuted those allegations, labeling them as false and misleading. Back then, Nikola was riding high on top of a partnership with GM that gave it an 11% stake in the upstart valued at roughly $2 billion. The company was also targeted about a 2018 demonstration to investors, where a Nikola One semi was shown "in motion," but it was later discovered that the vehicle was not self-propelled and was instead moving downhill. Milton was simultaneously accused and subsequently charged over misleading claims regarding the company's progress and landing investments worth hundreds of millions of dollars.

He was also lambasted for falsely claiming that the company had developed an in-house production capacity for hydrogen fuel tech at rates below the current market levels and that it got billions of dollars in investment for the same. General Motors soon backed out of its equity deal with Nikola, several projects were scaled down, and ambitious plans such as producing an electric motorboat were also put on ice. In October 2023, freshly unearthed regulatory documents revealed that Milton was told to pay the company $165 million in damages. A month later, Milton urged a federal court should avoid prison and instead be put on probation, claiming that his past actions had no "ill will."