Trevor Milton, the founder of a vehicle startup Nikola, has been indicted on three counts of fraud for allegedly pretending his company had working vehicles when it did not.
The charges, brought by the U.S. Attorney's office in the Southern District of New York, outline a company founder who painted himself to the public as an honest, straightforward source of information about his company but in fact was allegedly lying about nearly everything. Among the things Milton allegedly lied about:
- That the company's truck could not run under its own power. It released a misleading video that showed it rolling downhill after being towed up, and during a product demo the truck had to be surreptitiously plugged into the wall to power headlamps and other basic electrical components.
- "Falsely claiming that Nikola was producing hydrogen" and doing so for four times cheaper than the prevailing market price
- That the company's electric truck, the Badger, was "significantly developed or already completed"
- That the company had "billions and billions and billions and billions" of dollars of truck orders
- That it had developed a new "game-changing" battery technology and nearly all of the company's parts were developed in-house
This last claim, although on some level the most mundane, is perhaps the wildest claim for a new and prospective automaker to make, since everyone in the industry knows the majority of car parts come from a vast web of contractors and subcontractors.
For a time, the alleged fraud worked. Last year, Nikola went public through a special purpose acquisition company (SPAC) and at the height of its valuation Milton owned more than $8 billion worth of the company's stock. The company struck a deal with General Motors. Then, the short seller Hindenburg Research published a report outlining several of the same allegedly fraudulent behavior Milton has now been indicted for. He resigned from Nikola in September.
In a statement to Motherboard, Nicole Rose, a spokesperson for Nikola, said, "Today’s government actions are against Mr. Milton individually, and not against the company. Nikola has cooperated with the government throughout the course of its inquiry." On its press page, Nikola still touts many articles from the Milton era, including a CNN Business article from August 10, 2020 headlined "Nikola stock surges on deal for garbage truck no one's seen publicly."
Perhaps the most noteworthy aspect of Milton's indictment is how the broad outlines of his behavior are deeply familiar to the tech and transportation industry. Wildly and knowingly exaggerating claims of a technology's capability, running carefully orchestrated demos of a new technology to give the false appearance of product maturity, and hyping a non-existent product's ability to change the world are all common practices.
To take one of the most consequential and transformative product demonstrations of all time, it is now a function of tech lore that the first iPhone, when demonstrated in a massive public reveal by Steve jobs, "barely worked." Many of the capabilities Jobs demonstrated on stage, like playing songs, were carefully staged to give the appearance of functionality when it, in fact, couldn't be done on existing prototypes yet. We will see what a jury has to say about the charges against Milton, but it's not difficult to see why he thought he could get away with it. Others have before.