The founder of Nikola Corp. was sentenced Monday to four years in prison for exaggerating claims about his company's production of zero-emission 18-wheelers, 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 and said he believed a jury in October 2022 “got it right” when it convicted him. The judge also ordered Milton to pay a $1 million fine.
“Over many months, you used your considerable social media skills to promote your company in materially false ways,” the judge said, noting that investors suffered large losses. “What you said over and over again in different media outlets was wrong.”
TO report of Hindenburg Research in September 2020 said the company's success was “an intricate fraud” and based on “an ocean of lies,” including showing a truck rolling down a hill to give the impression that it was driving on a highway and write the words “electric hydrogen.” ” on the side of a vehicle that actually ran on natural gas.
Shortly after the report, message to Nikola employees about his decision to step aside. He added that he would defend himself against accusations that the company made false claims about its vehicles, accusations the company also rejected., amid fraud allegations and just two weeks after signing a $2 billion partnership with General Motors. “The focus should be on the company and its mission to change the world, not on me,” he said in a 2020 report.
On Monday, before the sentence was handed down, Milton struggled through tears as he delivered a rambling half-hour statement in which he portrayed some of his actions as heroic at Nikola and his sincere intentions as he sought to produce environmentally friendly trucks.
He stated that large companies in the sector have followed his example to try to create vehicles that leave a cleaner environment.
And he said he didn't leave his company because of crimes but because his wife was dying.
Milton did not directly apologize to investors or anyone else, but asked the judge to release him from jail.
“I obviously feel really bad for all the resources and time this has cost everyone. I don't think you can feel human without feeling terrible for everyone involved,” he said. “My intention was not to harm others.”
Milton was convicted of fraud charges after prosecutors portrayed him as a fraudster after starting his company in a Utah basement six years earlier.
Judge says many people were injured
Called as a government witness, Nikola's CEO testified that Milton “was prone to exaggeration” when pitching his company to investors.
In handing down the sentence, Assistant U.S. Attorney Matthew Podolsky urged “a significant prison sentence,” though less than the 27 years or more in prison that federal sentencing guidelines called for. Podolsky said Milton's numerous statements on social media allowed a company 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 still unresolved.
He said Milton would find it difficult to find another job and, for his client, “not being able to work is like not being able to breathe.”
As he left federal court Monday, Milton said he was confident his appeal of his conviction would be successful.
“I think we're going to win,” he said. “There are potential problems with the case we described in the appeal. I think it's going to be overturned.”
Milton resigned in 2020 amid fraud reports that sent Nikola's stock prices into a nosedive. Investors suffered heavy losses when reports questioned Milton's claims that the company had already produced zero-emission 18-wheelers.
The company paid $125 million in 2021 to resolve a civil case against it by the SEC. Nikola, which continues to operate from a headquarters in Arizona, did not admit to any wrongdoing.
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