Trevor Milton, founder and former CEO of Nikola Corporation, has been sentenced to four years in prison for defrauding investors with false statements about the company’s electric trucks.
Milton was found guilty last year of three out of four counts of securities and wire fraud, but sentencing did not happen until today.
His sentence includes four years in prison, seizure of property, a $1 million fine, and three years of supervised release after serving the sentence.
The verdict and sentence related to false statements that Milton made to the public about progress with his company’s electric trucks. In particular, one situation involved a faked video of Nikola’s “One” hydrogen truck in which the truck was shown running when, in fact, it was just rolling down a hill.
This and other statements made by Milton led the public to think that the company was farther along in development than it actually was. Many retail investors bought into the hype after Nikola’s SPAC merger in 2020, turning Milton into a paper billionaire as the company’s stock rose precipitously.
The deception was largely uncovered by a short-seller report by Hindenburg Research, which revealed many issues with the company. This led to Milton leaving the company and a $125 million fine from the SEC.
Prosecutors had sought an 11-year sentence, but the maximum sentence would have been up to 60 years. They said that retail investors lost $660 million because Nikola stock fell from its all-time closing high of around $80/share to the <$1/share it’s trading at today.
Electrek’s Take
We at Electrek were skeptical of Nikola from early on. There are a lot of EV startups out there, and we try to cover as many of them as we can. But it’s a difficult business, and many of them are likely to fail. Everyone should always keep on guard about untested claims from new companies.
Nikola has, to some extent, moved on from its Milton-related issues. It is actually delivering BEV trucks now, which is an accomplishment – and it has delivered far more trucks than Tesla has delivered Semis.
I’ve taken a ride in one of Nikola’s “Tre” trucks, and it was quite nice. It was just around the block at Advanced Clean Trucks Expo, but the vehicle had nothing obviously wrong with it and had a few nice touches, like a particularly spacious cab. (Nikola’s former CEO, Michael Lohscheller, is 6’8″ and can stand up straight in it.) Plus, it ran under its own power, unlike the One… so that’s one obstacle cleared.
The employees we talked to seemed to think things were looking up by comparison to how they had been under Milton – but then again, every employee at a trade show will generally have positive things to say. That’s why they’ve been paid to be there, after all.
The company has also rotated through several CEOs and had a rocky year after having to recall every one of its trucks. So, despite extricating itself from its founder, there’s still plenty of difficulty now and ahead for the company.
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