Trevor Milton, founder of Nikola Corporation, was sentenced to four years in prison Monday by U.S. District Judge Edgardo Ramos in New York for engaging in securities and wire fraud in connection with his scheme to defraud and mislead investors about the development of products and technology developed by Nikola.
Milton was previously convicted of fraud after a one-month trial before Judge Ramos.
In announcing the verdict, Damian Williams, the United States Attorney for the Southern District of New York, stated, “Trevor Milton lied to investors again and again — on social media, on television, on podcasts, and in print. But today’s sentence should be a warning to start-up founders and corporate executives everywhere — ‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price.”
According to the indictment, statements from at least in or about November 2019 up through and including at least in or about September 2020, Milton engaged in a scheme to defraud investors by inducing them to purchase shares of Nikola Corporation, the electric- and hydrogen-powered vehicle and energy company he founded, through false and misleading statements regarding Nikola’s product and technology development.
His scheme was said to target individual, non-professional investors — so-called “retail investors” — by making false and misleading statements directly to the investing public through social media and television, print and podcast interviews.
The court adds Milton made these false and misleading statements regarding Nikola’s products and capabilities to induce retail investors to purchase Nikola stock. He took advantage of the fact that Nikola went public by merging with a Special Purpose Acquisition Company or “SPAC,” rather than through a traditional IPO, by making many of his false and misleading claims during a period where he would have not been allowed to make public statements under rules that govern IPOs, the court stated.
In addition to the prison sentence, Milton was sentenced to three years of supervised release, ordered to forfeit a property in Utah, and ordered to pay a fine of $1 million, the court states.
Milton's lawyers had argued he should receive probation for his misdeeds; prosecutors urged a sentence of 11 years.
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