Nikola founder Trevor Milton faces four-year sentence for fraud

Trevor Milton, the convicted founder of electric- and hydrogen-powered truck maker Nikola, was sentenced to four years in prison on Monday after a jury last year found him guilty of lying to investors about the company's technology.

Trevor Milton, founder and former-CEO of Nikola Corp., exits the Manhattan Federal Courthouse following an appearance in New York City, U.S., July 29, 2021. REUTERS/Eduardo Munoz/File Photo

Federal prosecutors in Manhattan said Milton misled investors by stating that Nikola had built a pickup from the “ground up,” that it had developed its own batteries even though he knew it was buying them, and that it had early success creating a “Nikola One” semi-truck that he knew did not work.

After announcing the sentence at a hearing in federal court in Manhattan, U.S. District Judge Edgar Ramos told Milton he was aware the statements he made about the company were false.

“As difficult as it may be for you or your family to hear, I believe the jury got it right,” Ramos said.

The judge allowed Milton to remain free on bail while he appeals his conviction.

Prosecutors last week urged Ramos to sentence Milton, 41, to around 11 years in prison – in line with the sentence Theranos founder Elizabeth Holmes received last year after being found guilty of defrauding investors in her blood testing startup.

“There has to be a message that whether you are an entrepreneur, a startup founder, a corporate executive, when you go out there and talk about your company, you must be honest,” Matthew Podolsky, a prosecutor, said at the hearing before the sentence was handed down.

Milton’s lawyers had said he should get probation, arguing that any misstatements resulted from his “deeply-held optimism” in his Phoenix-based company, and that Holmes’ case was different because her lies put people at medical risk.

Milton spoke at length before he was sentenced, quoting Bible verses and talking about his family and rural upbringing. He told Ramos a sentence of probation would allow him to spend time with his wife as she recovers from illness.

“I did not intend to harm anyone and I did not commit those crimes levied against me,” Milton said.

The judge agreed that Holmes’ case was different from Milton’s because Theranos marketed faulty technology that affected people’s health.

But Ramos did not accept Milton’s explanation that he spoke with enthusiasm and did not intend to harm investors.

“The law does not grant a pass for good intentions,” he said.

Milton was convicted in October 2022 on one count of securities fraud and two counts of wire fraud, and acquitted on an additional securities fraud count.

Nikola in 2021 agreed to pay $125 million to settle civil charges brought by the U.S. Securities and Exchange Commission.

The company’s shares now trade for less than $1, down from a peak of higher than $60 in June 2020.

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