Today: Apr 16, 2024

Startup founder gets four-year prison term for fraud conviction in E.V.

4 months ago

Key points:

  • Trevor Milton, the CEO and founder of electric truck startup Nikola, has been sentenced to four years in prison for securities fraud.
  • Milton was convicted in October 2022 on one count of securities fraud and two counts of wire fraud for making false statements to investors about Nikola’s electric truck development, artificially inflating the company’s stock.
  • He is expected to appeal the decision.

Trevor Milton, the former CEO and founder of electric truck startup Nikola, has been sentenced to four years in prison for securities fraud. The verdict, delivered by Judge Edgardo Ramos of the U.S. District Court in Manhattan, marks the end of a protracted legal drama that initially boosted Nikola’s stock by 83% but later saw a steep decline amid fraud allegations and terminated contracts.

Milton’s sentencing was delayed four times, and he remained free on a $100 million bond until the judgment. Judge Ramos handed down a concurrent 48-month sentence per count, accompanied by a $1 million fine. Milton is expected to appeal the decision, a possibility acknowledged by Judge Ramos.

Prior to the sentencing, Milton made a tearful plea for mercy from Judge Ramos, claiming that he resigned as Nikola’s CEO not because of fraud allegations but to support his wife, who he said had suffered a life-threatening illness. He asserted, “I stepped down for that – not because I was a fraud. The truth matters. I chose my wife over money or power.”

Milton’s conviction in October 2022 came on one count of securities fraud and two counts of wire fraud for making false statements to investors about Nikola’s electric truck development, artificially inflating the company’s stock. During the sentencing hearing, Milton’s defense argued that he had no intention of defrauding investors and portrayed his ambitions as comparable to Elon Musk’s. Prosecutors countered by highlighting Milton’s consistent falsehoods, particularly targeting retail investors.

The former CEO’s legal troubles began in 2020 when he resigned amid a fraud allegation from Hindenburg Research. Nikola also faced a $125 million penalty from the U.S. Securities and Exchange Commission, resulting in significant stock losses for investors. Milton’s case is part of a small group of high-profile cases involving tech founders, alongside Elizabeth Holmes of Theranos and Sam Bankman-Fried, founder of crypto exchange FTX and Alameda Research.

Overall, the conviction and subsequent prison sentence of Trevor Milton mark the culmination of a legal saga that has tarnished the reputation of both Nikola and its founder. The case serves as a reminder of the potential consequences for fraudulent activity in the startup world and the importance of transparency and honesty in dealing with investors. The upcoming appeal will determine whether Milton’s conviction and sentence will stand or be subject to further legal proceedings.