Nikola Founder Trevor Milton Gets 4-Year Sentence For Fraud
Nikola founder Trevor Milton gets 4-year sentence for fraud, marking a significant legal outcome in the electric vehicle industry's history. Discover the details of his conviction and the implications for the electric vehicle industry.
Author:Rhyley CarneyReviewer:Paula M. GrahamDec 19, 20235.5K Shares77.2K Views
Nikola founder Trevor Milton gets 4-year sentence for fraud on Monday. This sentence comes after a jury found him guilty of lying to investors about the company's technology. Federal prosecutors in Manhattan highlighted Milton's false claims that Nikola had built a pickup from the “ground up” and developed its own batteries, despite knowing they were purchased externally. Judge Edgar Ramos, presiding over the case in a federal court in Manhattan, acknowledged Milton's awareness of the falsehoods in his statements about the company.
Nikola Founder Convicted Of Misrepresenting Company's Technology
“As difficult as it may be for you or your family to hear, I believe the jury got it right,” Judge Ramos stated, addressing Milton in court. The prosecution had sought a sentence comparable to the 11-year term given to Theranos founder Elizabeth Holmes, emphasizing the need for honesty among corporate executives and entrepreneurs.
Matthew Podolsky, a prosecutor in the case, emphasized, “There has to be a message that whether you are an entrepreneur, a startup founder, a corporate executive, when you go out there and talk about your company, you must be honest.”
Contrasting Milton's case with Holmes's, the judge noted the difference in the nature of their misconduct. While Holmes's lies posed medical risks, Milton's did not directly affect people's health. However, Judge Ramos rejected Milton's defense that his misstatements stemmed from “deeply held optimism” and an unintended consequence of his enthusiasm. “The law does not grant a pass for good intentions,” he remarked.
Milton, convicted in October 2022 on one count of securities fraud and two counts of wire fraud, had sought probation, citing his desire to be with his family and asserting his innocence. “I did not intend to harm anyone and I did not commit those crimes levied against me,” he stated.
In addition to his prison sentence, Milton will surrender property in Utah and pay a $1 million fine. His legal team, contacted by CNN, offered no comment on the sentence.
The case against Milton involved allegations of deceiving investors through various channels, including social media and podcast interviews, about Nikola's capabilities in developing electric and hydrogen-powered trucks. US Attorney Damian Williams said in a statement, “Trevor Milton lied to investors again and again — on social media, on television, on podcasts, and in print.”
Nikola, once a promising competitor to Tesla, saw its shares soar after going public in 2020 and securing a $2 billion deal with General Motors. However, the company's fortunes drastically changed as allegations of fraud surfaced, leading to a significant drop in its stock value. The company’s current share price is a stark contrast to its peak of over $79.73 in June 2020, now trading under one dollar.
The Department of Justice, in its 2021 indictment, highlighted the impact on retail investors, many of whom were inexperienced in the stock market and had turned to trading during the COVID-19 pandemic. The crux of the case revolved around the Nikola One, a prototype truck that Milton claimed was fully functional, despite lacking critical components. A video posted by Milton on social media, which showed the truck moving, was later revealed to be a deceptive portrayal.
Milton stepped down as CEO of Nikola in September 2020, just months after the company's public debut. The fallout of his actions resulted in significant financial losses for retail investors, with more than $660 million in losses reported.
Rhyley Carney
Author
Paula M. Graham
Reviewer
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