Trevor Milton, the founder and former CEO of electric truck maker Nikola, is standing trial on federal charges of wire and securities fraud starting Monday after allegedly misleading investors about the company’s technological and production capabilities.
Nikola is among many electric vehicle startups that have struggled financially and operationally since going public via a special purpose acquisition merger (SPAC); Nikola merged with VectoIQ in June 2020 with a $29 billion valuation. Milton’s trial serves as a warning to risk-loving investors who would throw money at a company before it starts delivering products or bringing in revenue.
The fraud trial will begin with a jury selection in Manhattan federal court. Jurors will be shown the infamous Nikola marketing video that shows a truck appearing to drive on its own power. In reality, it was rolling down a hill.
Prosecutors have accused Milton of deceiving investors since November 2019. The former CEO left the company in September 2020 following a report by Hindenburg Research calling the company a fraud. The controversy also resulted in a $125 million penalty from the U.S. Securities and Exchange Commission. Nikola’s stock collapsed, resulting in serious losses for investors.
The trial is expected to last four or five weeks. Milton has pleaded not guilty and is being represented by Marc Mukasey, who has represented the Trump Organization, and Edward Gallagher, a Navy SEAL who was accused of war crimes in Iraq.
Nikola is still operating today and has started production of its battery-powered Tre truck at the company’s Arizona factory. The company reported a net loss of $173 million on sales of $18 million during the second quarter of 2022.