Founder of Arizona-based Nikola Corp. sentenced to 4 years in prison
The founder of Arizona-based electric truck manufacturer Nikola Corporation was sentenced to four years in prison Monday morning for securities and wire fraud.
Trevor Milton was also ordered to pay a $1 million fine.
In a New York federal courtroom on Monday, Milton did not apologize directly to investors, but asked the judge to spare him prison time.
The judge said the jury correctly convicted him late last year on three counts of fraud, in part for making false and exaggerated claims about Nikola’s products.
Prosecutors said Milton claimed to have built his own zero emission 18-wheel truck when it was actually a design from General Motors. Investors lost hundreds of thousands of dollars.
Milton resigned in 2020. Nikola says it is pleased to be moving forward.
General Motors Corp. product with Nikola’s logo stamped onto it
“Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false,” the judge said, noting investors suffered heavy losses. “What you said over and over on different media outlets was wrong."
Before the sentence was handed down, Milton fought through tears in delivering a half-hour rambling statement portraying some of his actions as heroic at Nikola and his intentions sincere as he sought to produce trucks that would not harm the environment.
He claimed that big companies in the industry have followed his lead to try to create vehicles that would leave a cleaner environment.
And he said he didn’t quit his company because of crimes but rather because his wife was dying.
“I obviously feel awful for all the resources and time this has caused everybody. I don’t think you can feel human without feeling terrible for everyone involved,” he said. “My intent was not to harm others.”
Milton was convicted of fraud charges after prosecutors portrayed him as a con man after starting his company in a Utah basement six years earlier.
Prosecutors said Milton falsely claimed to have built its own revolutionary truck that was actually a General Motors Corp. product with Nikola’s logo stamped onto it. There also was evidence that the company produced videos of its trucks that were doctored to hide their flaws.
Called as a government witness, Nikola’s CEO testified that Milton “was prone to exaggeration” in pitching his venture to investors.
Stock prices into a tailspin
At sentencing, Assistant U.S. Attorney Matthew Podolsky urged “a significant prison sentence,” though below the 27 years in prison or more that federal sentence guidelines called for. Podolsky said Milton's numerous statements on social media enabled a company's founder to solicit “a large number of people over the internet. ... To get a large number of people to trust him.”
He said the crime had harmed a large number of people.
Defense attorney Marc Mukasey urged no prison time, saying Milton had suffered immensely, leaving him “financially crippled” with private lawsuits and a Securities and Exchange Commission case yet to resolve.
He said it would be difficult for Milton to find another job and for his client, “not being able to work is like not being able to breathe.”
Milton resigned in 2020 amid reports of fraud that sent Nikola’s stock prices into a tailspin. Investors suffered heavy losses as reports questioned Milton’s claims that the company had already produced zero-emission 18-wheel trucks.
The company paid $125 million in 2021 to settle a civil case against it by the SEC. Nikola, which continues to operate from an Arizona headquarters, didn’t admit any wrongdoing.
