The creator of a well-known electric truck start-up in the US received a four-year prison term.
The jury ruled that Trevor Milton, the head of Nikola Corporation, had repeatedly lied about the business, leading to his conviction for fraud last year.
His allegations contributed to the company’s stock price surge, which during the epidemic reached incredible heights before collapsing as a result of fraud allegations.
At the sentencing hearing, the 41-year-old sobbed and insisted that he meant no harm.
The Southern District of New York US Attorney Damian Williams stated, “Today’s 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.”
Without a degree, Milton launched Nikola in 2015 and positioned it as a possible competitor to Tesla.
It stated that it was creating trucks that run on hydrogen and electricity. Nikola merged with another company and went public in June 2020.
Despite never having delivered a single car, it was valued at more than $20 billion in a matter of weeks, and it rapidly began announcing alliances with companies like General Motors.
But when doubts about Milton’s veracity mounted, the excitement fizzled away. The fears grew as a result of a well-publicized report by short-seller Hindenburg Research.
After looking into the matter, federal authorities discovered that Milton had “made false claims regarding nearly all aspects of Nikola’s business” and had targeted non-professional investors in particular.
“Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false,” Judge Edgardo Ramos said.
“What you said over and over on different media outlets was wrong,” the court stated.
For instance, in a promotional video, the truck was rolling downhill when it looked like it was moving on its own.
Two years before to Nikola’s imprisonment, he had paid $125 million to settle financial regulators’ allegations of fraud.
Considering the hundreds of millions of dollars in losses that the prosecution detailed, Milton could have received substantially less prison time than what he received.
In addition, he received a three-year supervision period, a $1 million fine, and an order to forfeit property.
He is the most recent American businessman to be imprisoned.
Elizabeth Holmes, the founder of Theranos, is presently incarcerated, and Sam Bankman-Fried, the CEO of FTX, is awaiting punishment.
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