Trevor Milton, the former CEO and disgraced founder of the electric truck startup, Nikola, was handed a four-year prison sentence for securities fraud on Monday.
Judge Edgardo Ramo of the U.S. District Court in Manhattan delivered the sentence, concluding a years-long saga that once escalated Nikola stock by 83%, only to drastically plummet months later amidst fraud accusations and terminated contracts.
The sentencing follows four separate postponements, during which Milton was free under a $100 million bond.
In his judgement, Ramos decreed a 48-month sentence per count to run concurrently and added a penalty of $1 million. Milton is anticipated to appeal the sentence, an expectation that Ramos acknowledged.
Ahead of the verdict, Milton, in tears, implored Judge Ramos for mercy through a lengthy, often perplexing statement. At one point, he claimed his reason for stepping down as Nikola’s CEO was not due to fraud allegations, but as an act of support for his wife.
“I stepped down because my wife was suffering live threatening sickness,” he said in his statement, which reporter Matthew Russell Lee of Inner City Press shared on social media post X. “She suffered medical malpractice, someone else’s plasma. So I stepped down for that – not because I was a fraud. The truth matters. I chose my wife over money or power.”
Trevor Milton, aged 41 and the previous CEO of Nikola, was found guilty by a jury in October 2022 on one count of securities fraud and two counts of wire fraud due to false claims made to investors over Nikola’s electric truck development, which inflated the company’s stock price.
During the sentencing hearing, Milton’s defense argued that he had no intention of defrauding investors or causing harm, claiming his aspirations were to be admired and praised like Elon Musk. Prosecutors rebuked this, citing Milton’s recurring falsehoods, particularly aimed at retail investors.
Federal prosecutors sought an 11-year prison sentence, though Milton could have faced up to 60 years. Furthermore, the government requested a $5 million fine, forfeiture of Milton’s Utah ranch, and an undisclosed amount of investor restitution.
Milton has been accused by prosecutors since 2019 of misleading investors with false claims, including Nikola’s capability to develop a truck “from the ground up” and create batteries that were, in fact, sourced elsewhere. One notorious incident involved a marketing video appearing to show a Nikola truck moving under its own power when it was actually rolling downhill.
After external investigations and a fraud allegation from Hindenburg Research, Milton resigned in September 2020. Nikola was consequently charged a $125 million penalty by the U.S. Securities and Exchange Commission, causing devastating stock losses for investors and the company.
Nikola sought reimbursement for the SEC settlement and penalty, resulting in a New York arbitration panel ordering Milton to pay the company $165 million in October.
Denying guilt post-indictment, Milton’s lawyers maintain that there is no proof of intent to defraud investors. They argue his misstatements were products of optimism and faith in the company. Milton’s lawyers suggested probation last month, in part due to his obligation to care for his sick wife.
Milton’s case is among a small number of high-profile cases involving tech founders, such as Elizabeth Holmes of Theranos, currently serving an 11-year sentence for investor fraud, and Sam Bankman-Fried, founder of crypto exchange FTX and Alameda Research, found guilty of fraud and money laundering in November.
