Originally Syndicated on December 20, 2023 @ 7:07 am
Key Points: Trevor Milton
- Trevor Milton, Nikola’s founder, was sentenced to four years in prison for defrauding investors.
- He was convicted in October 2022 on two counts of wire fraud and one count of securities fraud.
- Milton achieved billionaire status after taking Nikola public in June 2020 through a special-purpose acquisition company.
Nikola founder Trevor Milton received a four-year prison sentence on Monday for defrauding investors of the troubled electric and hydrogen-powered truck manufacturer. Alongside the prison term, Milton was fined $1 million and faces potential property forfeiture.
Despite being significantly less than the 11 years that the prosecution had requested, Milton’s defense had suggested non-jail probation.
According to Reuters, Milton stated before his sentence that “I did not intend to harm anyone, and I did not commit those crimes levied against me.”
Prosecutors argued that Milton displayed minimal remorse and a profound denial of accountability, emphasizing his tendency to blame others in a letter to Judge Edgar Ramos on Sunday.
While awaiting the outcome of his appeal, Milton has been allowed to remain free on bail, according to Reuters.
Yuki Iwamura | Bloomberg | Getty Images
In October 2022, Trevor Milton was convicted on two counts of wire fraud and one count of securities fraud, facing a recommended 60-year prison sentence as per federal guidelines.
The U.S. Attorney’s Office for the Southern District of New York has stated that the determination of restitution will take place in a subsequent proceeding.
According to Damian Williams, U.S. attorney for the Southern District of New York, “Trevor Milton lied to investors repeatedly—on social media, television, podcasts, and in print. Today’s sentence serves as a warning to startup founders and corporate executives everywhere: ‘fake it till you make it’ is not an excuse for fraud, and misleading investors carries a stiff price.”
In 2021, Nikola agreed to pay $125 million to settle civil charges brought by the U.S. Securities and Exchange Commission.
Milton rose to billionaire status overnight by taking Nikola public through a deal with a special purpose acquisition company in June 2020. Once valued at over $30 billion, the company faced allegations of false and misleading statements by short-seller Hindenburg Research.
Prosecutors likened Milton to Elizabeth Holmes, the disgraced founder of Theranos, who received over 11 years in prison last year for defrauding investors in her blood-testing startup. They noted, “Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck,” in a statement to Ramos ahead of sentencing.
Massimo Pinca | Reuters
Milton sought to distance himself from Holmes, emphasizing that Nikola, unlike Theranos, remains a legitimate business, as per court documents presented by his legal team.
In September 2020, Milton, the company’s major shareholder, resigned as Nikola’s executive chairman amid an internal investigation triggered by the Hindenburg report, which portrayed the company as a precarious structure built by Milton.
Following Milton’s departure, Nikola witnessed a sharp decline in its shares and struggled to retain key executives. In August, Nikola Chairman Stephen Girsky, whose SPAC took the company public, assumed the role of CEO.
Nikola’s stock has recently plummeted to under $1, with a market value of approximately $296 million, experiencing a more than 9% drop on Monday.
An early player in the SPAC trend, Nikola’s high-profile entry into the market inspired numerous startups before the SEC imposed regulations on the practice.
Prosecutors argued that the SPAC process, distinct from a traditional IPO, enabled Milton to make deceptive statements. Under an IPO, he would have been restricted from making public statements around the time of the company’s public debut.
SPACs, essentially shell companies with only cash assets, operate as investment entities formed to raise funds and later merge with privately held companies.
