The creator of Nikola Corp. was given a four-year jail sentence on Monday after being found guilty of making false statements about the company’s production of eco-friendly 18-wheel trucks, resulting in investors losing large sums of money.
In a Manhattan federal court, Judge Edgardo Ramos declared Trevor Milton’s punishment, stating that he agreed with the jury’s decision to convict him in October 2022. The judge also mandated that Milton pay a $1 million penalty.
The judge stated that over a period of several months, you utilized your impressive social media abilities to promote your company in a manner that was factually inaccurate. This resulted in significant financial losses for investors. The judge also emphasized that your repeated statements on various media platforms were incorrect.
A report by Hindenburg Research in September 2020 alleged that the company’s achievements were a result of fraudulent activities and were built on a foundation of deceit, such as using a truck rolling downhill to appear as if it was driving on a highway and labeling a vehicle as “hydrogen electric” when it was actually fueled by natural gas.
Shortly following the report,
Amid accusations of fraudulent activity and only two weeks after entering a $2 billion partnership with General Motors, the CEO of Nikola announced his decision to step down. In a message to employees in 2020, he stated that the focus should remain on the company’s mission and not on himself. He also stated that he would defend himself against claims that the company had made false statements about its vehicles, which the company denied.
Before the sentence was given on Monday, Milton tearfully delivered a lengthy, rambling statement in which he portrayed some of his actions at Nikola as heroic and claimed his intentions were sincere in his efforts to create environmentally-friendly trucks.
He stated that major corporations in the industry have taken his lead in attempting to develop vehicles that would have a positive impact on the environment.
He stated that he did not leave his company due to illegal activities, but rather because his wife was in declining health.
Milton refrained from directly apologizing to investors or anyone else, but appealed to the judge for leniency in his sentencing.
“I deeply regret the impact this has had on everyone’s resources and time. It’s impossible to feel empathy without also feeling remorse for those affected,” he stated. “My intention was not to cause harm to others.”
Milton was found guilty of committing fraud following accusations by prosecutors who painted him as a deceitful individual. This occurred six years after he established his company in a basement in Utah.
The judge ruled that a significant number of individuals were injured.
During the trial, the CEO of Nikola testified as a government witness and stated that Milton often exaggerated when pitching his business to potential investors.
During the sentencing, Assistant U.S. Attorney Matthew Podolsky advocated for a substantial prison term, although it would be less than the recommended 27 years according to federal sentencing guidelines. Podolsky highlighted how Milton’s frequent posts on social media allowed the company’s founder to attract a significant number of individuals online and gain their trust.
According to him, the offense had negatively affected numerous individuals.
Defense lawyer Marc Mukasey argued against a prison sentence, stating that Milton had gone through a great deal of suffering. He also mentioned that Milton was facing financial difficulties due to ongoing lawsuits and an unresolved case with the Securities and Exchange Commission.
He mentioned that it would be challenging for Milton to secure a new job and, for his client, being unable to work is equivalent to being unable to breathe.
Upon exiting federal court on Monday, Milton expressed his confidence in the success of his appeal against his conviction.
He expressed confidence in their chances of winning, stating that the issues they presented in their appeal could potentially lead to a reversal of the case.
In 2020, Milton stepped down following allegations of fraud, causing a sharp decline in Nikola’s stock value. As accusations were raised about Milton’s assertions of the company’s production of emission-free semi trucks, investors faced significant financial losses.
In 2021, the SEC reached a settlement with the company for $125 million in a civil case. Despite operating from an Arizona headquarters, Nikola did not acknowledge any fault.