US Argues Trevor Milton Needs Long Prison Term as Deterrent
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Nikola Corp. founder Trevor Milton should serve about a decade in prison for misleading investors about the future of the electric truck maker, U.S. prosecutors said.
The government said in a memo early on Dec. 12 that in order to deter other would-be white collar criminals, Milton should receive a punishment in line with the 11 years that probation officials have recommended when he is sentenced on Dec. 18.
He “engaged in a sustained scheme to take advantage of individual, non-professional investors” to inflate the company’s stock price and enrich himself, it told U.S. District Judge Edgardo Ramos. “An unjustifiably lenient sentence would encourage others who might be tempted to engage in investor fraud that the rewards of such wrongful activity may be worth the price.”
Milton was found guilty of securities fraud and wire fraud by a jury in October 2022 following a monthlong trial in New York. His conviction was a victory for federal prosecutors in Manhattan led by U.S. Attorney Damian Williams, who has vowed to clamp down on corporate malfeasance. Milton’s sentencing will come shortly after Williams’ office earned another notable win with a guilty verdict against cryptocurrency mogul Sam Bankman-Fried.
Infamous Video
Prosecutors persuaded the jurors that Milton had enticed individual investors to buy Nikola shares by making false statements about the company’s products and capabilities in numerous tweets, media interviews and podcasts. They said he sharply exaggerated Nikola’s capacity to manufacture trucks powered by hydrogen fuel cells as well as its ability to produce the fuel itself.
In one of the trial’s most memorable moments, they showed the jury an infamous viral video that appeared to show a Nikola semi prototype traveling under its own power, when in fact it was rolling downhill thanks to gravity.
VTNA President Peter Voorhoeve outlines how the truck maker is helping its customers make better use of telematics and remote diagnostics tools to run their fleets more effectively. Tune in above or by going to RoadSigns.ttnews.com.
Milton’s lawyers had asked the judge to allow their client to avoid prison altogether, arguing that he made misstatements only due to his strong belief in the company and didn’t intend to mislead stockholders. There is no evidence that he was “motivated by spite, nastiness, ill will or cruelty,” and his “deep emotional connection” to the company he founded in his Utah basement inspired many of his proclamations, they said.
They argued there was no need to incarcerate Milton to put high-ranking corporate executives on notice. Because of him, they said, “CEOs or executive chairpersons of public companies will only engage in direct social media exchanges with members of the general public with extreme caution. And public company boards, lawyers and executives are on notice that they need to police all public statements of executives and directors regarding the company.”
Distorted the Market
“The conduct not only distorted the market — at one time driving Nikola’s market capitalization higher than that of Ford’s, despite Nikola never having produced a vehicle for sale at the time — it brought real harm to investors who were misled as to the risks of their investments,” the U.S. said.
“For those who held onto their stock at the encouragement of Milton,” the government added, those investments “became effectively worthless once the truth became known.”
Milton started Nikola in 2014 and built it into a company valued at $34 billion when it went public. While he resigned in September 2020 after he was charged, he remains Nikola’s second-largest shareholder and in June called for leadership changes at the company.
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