4 years in prison for Nikola Corp founder for defrauding investors on claims of zero-emission trucks

Nikola founder Trevor Milton, center, leaves a federal courthouse in New York on July 29, 2021, after being charged with three counts of criminal fraud for lying to bolster stock sales of the electric vehicle start-up Nikola. Photo: AP Photo // Craig Ruttle

Milton was sentenced to three years of supervised release and ordered to forfeit a property in Utah and pay a fine of $1 million

NEW YORK — 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.

Milton committed securities fraud when used company stock to help purchase 4,600 acres of land in the Wasatch Creeks Ranch in Morgan County in 2020.

“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.”

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.

Prosecutors said Milton falsely claimed to have built its own revolutionary truck that was actually a General Motors Corp. product with Nikola’s logo stamped onto it. There also was evidence that the company produced videos of its trucks that were doctored to hide their flaws.

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.

BY LARRY NEUMEISTER