The Founder of Nikola Corp Sentenced to Prison
The founder of Nikola Corp. was sentenced Monday to four years in prison for his conviction for exaggerating claims about his company's production of zero-emission 18-wheel trucks, causing investors to lose hundreds of thousands of dollars.
Trevor Milton learned his fate in Manhattan federal court when Judge Edgardo Ramos announced the sentence, saying he believed that a jury in October 2022 "got it right" when it convicted him. The judge also ordered Milton to pay a $1 million fine.
"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."
A report from Hindenburg Research back in September 2020 said the company's success was "an intricate fraud" and based on "an ocean of lies" including showing a truck rolling downhill to give the impression it was cruising on a highway, and stencilling the words "hydrogen electric" on the side of a vehicle that was actually powered by natural gas.
Soon after the report, Milton resigned, amid allegations of fraud and just two weeks after signing a $2 billion partnership with General Motors. "The focus should be on the company and its world-changing mission, not me," he said in a 2020 message to Nikola employees regarding his decision to step aside. He added that he would defend himself against accusations that the company made false claims about its vehicles, allegations that the company also rejected.
Rambling statement
On Monday, 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.
Milton did not apologize directly to investors or anyone else, but he asked the judge to spare him from prison.
"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.
Judge says many people hurt
Called as a government witness, Nikola's CEO testified that Milton "was prone to exaggeration" in pitching his venture to investors.
During the sentencing, Assistant U.S. Attorney Matthew Podolsky called for a significant prison sentence for the defendant, although it was expected to be less than the recommended 27 years. Podolsky argued that the defendant's social media statements had allowed a company founder to deceive and gain the trust of a large number of people over the internet.
Podolsky emphasized that this crime had caused harm to numerous individuals.
On the other hand, defense attorney Marc Mukasey pleaded for no prison time, citing the immense suffering and financial consequences that the defendant had already endured. Mukasey highlighted the defendant's current state of being "financially crippled" due to private lawsuits and an ongoing case with the Securities and Exchange Commission.
Mukasey also expressed concern about the defendant's future job prospects, stating that not being able to work would be like not being able to breathe for his client.
As he exited the federal court on Monday, the defendant, Milton, expressed confidence in the success of his appeal against the conviction.
"I believe we will win," he stated. "The appeal outlines potential issues within the case, and I am confident it will be overturned."
In 2021, the company reached a settlement of $125 million in a civil case with the SEC. Although Nikola, which continues to operate from its Arizona headquarters, did not admit any wrongdoing.
