5.3 C
New York
Saturday, March 2, 2024

Nikola Corp founder gets 4 years prison for exaggerating claims on zero-emission trucks

The founder of Nikola Corp. was sentenced Monday to four years in prison for his conviction for exaggerating claims about his company’s production of zero-emission 18-wheel trucks, causing investors to lose hundreds of thousands of dollars.

Trevor Milton learned his fate in Manhattan federal court when Judge Edgardo Ramos announced the sentence, saying he believed that a jury in October 2022 “got it right” when it convicted him. The judge also ordered Milton to pay a $1 million fine.

“Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false,” the judge said, noting investors suffered heavy losses. “What you said over and over on different media outlets was wrong.”

Areportfrom Hindenburg Research back in September 2020 said the company’s success was “an intricate fraud” and based on “an ocean of lies” including showing a truck rolling downhill to give the impression it was cruising on a highway, and stencilling the words “hydrogen electric” on the side of a vehicle that was actually powered by natural gas.

Soon after the report, Milton resigned, amid allegations of fraud and just two weeks after signing a $2 billion partnership with General Motors. “The focus should be on the company and its world-changing mission, not me,” he said in a 2020 messageto Nikola employees regarding his decision to step aside. He added that he would defend himself against accusations that the company made false claims about its vehicles, allegations that the company also rejected.

Rambling statement

On Monday, before the sentence was handed down, Milton fought through tears in delivering a half-hour rambling statement portraying some of his actions as heroic at Nikola and his intentions sincere as he sought to produce trucks that would not harm the environment.

He claimed that big companies in the industry have followed his lead to try to create vehicles that would leave a cleaner environment.

And he said he didn’t quit his company because of crimes but rather because his wife was dying.

Milton did not apologize directly to investors or anyone else, but he asked the judge to spare him from prison.

“I obviously feel awful for all the resources and time this has caused everybody. I don’t think you can feel human without feeling terrible for everyone involved,” he said. “My intent was not to harm others.”

Milton was convicted of fraud charges after prosecutors portrayed him as a con man after starting his company in a Utah basement six years earlier.

Judge says many people hurt

Called as a government witness, Nikola’s CEO testified that Milton “was prone to exaggeration” in pitching his venture to investors.

At sentencing, Assistant U.S. Attorney Matthew Podolsky urged “a significant prison sentence,” though below the 27 years in prison or more that federal sentence guidelines called for. Podolsky said Milton’s numerous statements on social media enabled a company’s founder to solicit “a large number of people over the internet. … to get a large number of people to trust him.”

He said the crime had harmed a large number of people.

Defense attorney Marc Mukasey urged no prison time, saying Milton had suffered immensely, leaving him “financially crippled” with private lawsuits and a Securities and Exchange Commission case yet to resolve.

He said it would be difficult for Milton to find another job and, for his client, “not being able to work is like not being able to breathe.”

As he left federal court Monday, Milton said he was confident that the appeal of his conviction will succeed.

“I think we’re going to win it,” he said. “There are potential problems in the case which we outlined in the appeal. I think it’s going to be overturned.”

Milton resigned in 2020 amid reports of fraud that sent Nikola’s stock prices into a tailspin. Investors suffered heavy losses as reports questioned Milton’s claims that the company had already produced zero-emission 18-wheel trucks.

The company paid $125 million in 2021 to settle a civil case against it by the SEC. Nikola, which continues to operate from an Arizona headquarters, didn’t admit any wrongdoing.

Related Articles

Latest Articles