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Trevor Milton, the founder of electric and hydrogen-powered truckmaker Nikola, was sentenced to four years in prison on Monday for lying to investors about the readiness of his start-up’s technologies in order to boost its share price.
The 41-year-old serial entrepreneur was found guilty on three counts last year, and faced a maximum sentence of almost 34 years. He broke down in tears during the sentencing hearing, pleading with the judge to take his “unusually tender heart” into consideration — as well as the fact that he was not a “very seasoned CEO” — and spare him prison time.
But Judge Edgardo Ramos said Milton had used his “considerable social media talents to tout the company in ways that were materially false” and that “real people were hurt by [his] actions”.
Ramos’s sentence included a $1mn fine and three years of supervised release, as well as the forfeiture of a Utah ranch, yet fell significantly short of the 11 years sought by the government. Prosecutors had compared Milton’s crimes with those of Theranos founder Elizabeth Holmes, who was sentenced to more than 11 years in prison after being convicted for fraud.
Ramos said he believed that while Holmes’s fake blood diagnostics company “resulted in very real life harm . . . that is not what Milton did”.
Milton’s lawyers indicated that they would appeal against the guilty verdict and the sentence. He will remain free on bail while the appeal is pending.
Damian Williams, the US attorney for the Southern District of New York, whose office brought the case, said the 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.”
Milton’s sentencing caps a precipitous fall for Nikola, which went public via a special purpose acquisition company, or Spac. It briefly boasted a higher market valuation than Ford before short seller Hindenburg Research called the company “an intricate fraud”, alleging it had exaggerated its technology and faked product launches.
That report, which came just two days after General Motors announced a $2bn deal with the start-up in 2020, also claimed that it faked a product video in 2018 by rolling its Nikola One truck along a downhill stretch of highway, to disguise the fact that the vehicle had no working engine.
Milton’s lawyers had described him during trial as a gifted entrepreneur and claimed he had been made a scapegoat by other Nikola executives who sought to blame him for the company’s problems.
Marc Mukasey, a lawyer for Milton, said on Monday that while his client might have occasionally been “impulsive” and “undisciplined”, he had a “decent and pure heart” and never intended to harm anyone.
In his own appeal to the judge, Milton, who is of Mormon faith, cited several Bible verses and characterised himself as someone who would “die on the cross for the truth”. He said it was “impossible” for him to “purposely hurt others”.
Ramos said “the law does not grant a pass for good intentions” and that it was of “no moment” whether Milton believed what he said at the time the false statements were made.
Milton faces several civil lawsuits, including one brought by the Securities and Exchange Commission. He has also been sued by Nikola, which is seeking reimbursement for costs and damages.
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