Nikola Corp founder and former chief executive officer Trevor Milton has been sentenced to four years in jail after being found guilty of lying to shareholders about the electric-truck start up’s level of advancement and progress.
Thanks he 41-year old Milton’s, sentence was handed down on Monday in New York by US District Judge Edgardo Ramos, more than a year after a jury convicted him of securities and wire fraud for misrepresenting key details about the development of Nikola’s trucks and technology. He has also been ordered to pay a $AUD1.5 million I fines ( $US1 million).
US Prosecutors had sought a sentence “in line” with the 11 years recommended by probation officials, saying a lengthy term of incarceration was needed both to punish Milton and deter other corporate executives from similar transgressions, which are alleged to have cost investors more than $US660 million.
Milton was in tears at. the sentence and had previously asked the judge to sentence him to probation, saying he didn’t intend to mislead investors and made mistakes due to a lack of experience.
Judge Ramos granted Milton bail and he will remain free while the conviction is appealed.
Milton made the bold prediction after he was sentenced that he believes the verdict will be overturned.
In October last year a jury took only a few hours to convict Milton after a two-month trial which included testimony from more than a 12 government witnesses and evidence including an infamous viral video that appeared to show a Nikola prototype semi trailer travelling under its own power, when it was proven to be actually rolling downhill with gravity as its only power supply.
Unlike many other white collar crimes, Milton’s case was unusual as he was accused of making misrepresentations through social media and streaming channels such as YouTube, rather than through financial statements or other corporate filings.
“You used your considerable social media talents to tout your company in a way that was materially false,” Judge Ramos said during the sentencing.
“What you said over and over in multiple media outlets was wrong and it was materially wrong,” the judge continued.
Milton’s defence lawyer Marc Mukasey said communications were driven by his “true belief” in his company rather than his greed.
“It was not a nefarious attempt to take advantage of people, it wasn’t trained on or aimed at particular people,” ,” said Mukasey said.
Prosecutor Joshua Podolsky however said it was “beside the point” whether Milton wanted to harm investors.
“He ultimately didn’t care” if he did, Podolsky said.
Nikola drew investors eager to find the next Tesla after it made its market debut as a result of a June 2020 reverse listing merger. Nikola had a higher market capitalisation than Ford Motor Company for a short time and it swelled Milton a net worth to more than $US4 billion.
however, not long after Nikola began trading on the stock exchange, it was reported that Milton had greatly exaggerated the capabilities of one of its first prototypes, the Nikola One, describing it as a fully functioning vehicle even though the truck couldn’t be driven at the time because of missing parts.
Three months later, short seller Hindenberg Research published a report accusing the company of deception and lying about its technology, sending the shares plummeting.
