Trevor Milton, the founder of electric and hydrogen-powered truck maker Nikola, has been sentenced to four years in prison for his role in defrauding investors. The sentencing took place on Monday, December 18, 2023, in the U.S. District Court in Manhattan.
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Trevor Milton is billionaire after taking Nikola public through a special purpose acquisition company (SPAC) deal in June 2020, was found guilty in October 2022 on two counts of wire fraud and one count of securities fraud.
The charges stemmed from allegations that he made false and misleading statements about Nikola’s capabilities and technology, inflating the company’s value.
The punishment handed down by Judge Edgardo Ramos included a four-year prison term, a $1 million fine, and the possibility of property forfeiture.
While the sentence was lower than the 11 years prosecutors had initially sought, it was a far cry from the non-jail sentence of probation advocated by Milton’s defense team. The judge allowed Milton to remain free on bail while he appeals his conviction.
During the sentencing hearing, Milton maintained that he did not intend to harm anyone and expressed his disagreement with the charges levied against him.
Prosecutors, however, said Trevor Milton’s lack of remorse and a denial of accountability in a letter to the judge, suggesting that he continued to blame others for his actions.
Trevor Milton’s conviction revolved around allegations that he lied to investors about Nikola’s progress and capabilities.
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Prosecutors argued that he misled investors through various channels, including social media, television appearances, podcasts, and print media.
They compared Trevor Milton to Elizabeth Holmes, the founder of Theranos, parallels in their fraudulent activities.
One aspect of the case involved Milton’s misrepresentation of Nikola’s hydrogen-powered semi-truck, the Nikola One.
Prosecutors asserted that he staged a promotional video, falsely depicting the truck driving under its own power when, in reality, it was rolling downhill.
Investors who believed in Nikola’s as a major player in the electric vehicle (EV) market faced losses. The company, initially valued at over $30 billion, saw its stock plummet following the allegations of false and misleading statements.
In 2021, Nikola agreed to pay $125 million to settle civil charges brought by the U.S. Securities and Exchange Commission (SEC).
Since Milton’s resignation in September 2020, Nikola has struggled to regain its footing. The stock has fallen, trading under $1 with a market value of about $296 million.
The company’s reputation suffered, and it faced challenges in retaining executives and restoring investor confidence.
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Milton’s defense team argued that Nikola was still a legitimate business, distinguishing it from the situation at Theranos.
They addressed that Nikola was a publicly traded company with real assets, unlike the privately held Theranos.
However, prosecutors contended that Milton’s actions were to a “sustained scheme to take advantage of individual, non-professional investors.”
The fraudulent activities at Nikola have increased scrutiny of SPACs, as prosecutors argued that the SPAC process allowed Milton to make misleading statements that might not have been allowed under a traditional IPO.
Once heralded as a promising EV startup, has questions about the due diligence conducted during the SPAC boom and the need for more regulations in the IPO process.
The Securities and Exchange Commission’s actions against Nikola and the criminal conviction of its founder underline the risks associated with high profile IPOs and the importance of transparency in the capital markets.
Trevor Milton plans to appeal his case. His legal team contends that errors in the judge’s instructions to the jury and the presence of a juror who allegedly lied to join the panel warrant a review of the verdict.
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