A fraud conviction results in the jail term of Founder of EV Start-up
The founder of a once-popular electric truck start-up in the US, Trevor Milton, has been handed a four-year prison sentence after being convicted of fraud. The former leader of Nikola Corporation was found guilty last year of persistent lies that artificially inflated the company's share price, leading to a spectacular rise and subsequent crash during the pandemic.
Milton, 41, wept during the sentencing hearing, maintaining his intentions were good. Damian Williams, the US Attorney for the Southern District of New York, emphasized the broader message of the sentence: "'Fake it till you make it' is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price."
Milton, lacking a formal degree, founded Nikola around 2015, positioning it as a potential competitor to Tesla. The company claimed to be developing electric and hydrogen-powered trucks. After merging with another firm in June 2020, Nikola's valuation exceeded $20 billion within weeks, despite not delivering any vehicles. Partnerships with major companies, including General Motors, were announced.
As doubts grew about the accuracy of Milton's statements, the company's fortunes crumbled, fueled by a report from short-seller Hindenburg Research. Federal prosecutors' investigation revealed that Milton had "made false claims regarding nearly all aspects of Nikola's business," specifically targeting non-professional investors.
Judge Edgardo Ramos criticized Milton, stating, "Over many months, you used your considerable social media skills to tout your company in ways that were materially false." The sentencing, occurring two years after Nikola paid $125 million to settle fraud claims, delivered less prison time than the potential losses described by prosecutors. Milton also faces three years of supervised release, forfeiture of property, and a $1 million fine.
Trevor Milton joins a growing list of American entrepreneurs facing legal consequences, including Elizabeth Holmes, founder of Theranos, currently serving time in prison, and Sam Bankman-Fried, awaiting sentencing, who heads FTX.
