Disgraced Nikola founder Trevor Milton gets 4-year sentence for lying about EVs
Policy / Civilization & Discontents
Prosecutors had asked for a heavier sentence to deter future fraud.
Trevor Milton, founder of Nikola Corp., arrives at court in New York on Monday, Dec. 18, 2023. Milton is set to be sentenced on Monday after being found guilty of securities fraud and wire fraud in October 2022.
The disgraced founder and former CEO of the "zero emissions" truck company Nikola, Trevor Milton, was sentenced to four years in prison on Monday, Bloomberg reported.
That's a lighter sentence than prosecutors had requested after a jury found Milton guilty of one count of securities fraud and two counts of wire fraud in 2022. During the trial, Milton was accused of lying about “nearly all aspects of the business,” CNBC reported.
From 2016 to 2020, Milton's "extravagant claims" were fueled by a desire to pump up the value of Nikola stock, The New York Times reported. He was accused of misleading investors about everything from fake prototypes of emission-free long-haul trucks to billions worth of supposedly binding orders for hydrogen fuel cells and batteries that were never shipped. In a sentencing memo, prosecutors said that Milton targeted "less sophisticated investors," the Times reported, engaging "in a sustained scheme to take advantage of" their inexperience.
Nikola's stock peaked in 2020, but then dozens of fraud allegations were reported by the investment firm Hindenburg Research, causing Nikola stock to plummet promptly. "We have never seen this level of deception at a public company, especially of this size," Hindenburg Research's report said. Facing backlash, Milton resigned, voluntarily withdrawing from his company and selling off $100 million in Nikola stock to fund more than $85 million in luxury purchases, the Times reported. Today, Milton remains Nikola's second-largest shareholder, Bloomberg reported.
By 2021, Nikola had admitted to the US Securities and Exchange Commission that nine statements made by Milton were "inaccurate."
The price of these lies to investors was more than $660 million, prosecutors claimed.
Through it all, Milton has denied the charges, requesting to be sentenced to only probation while holding back tears, Bloomberg reported. At his sentencing hearing, he said that his "misstatements" came from a place of "deeply held optimism," and he did not intend to cause any harm, Yahoo reported.
“I was not a very seasoned CEO,” Milton reportedly said.
✓ Prosecutors sought heavier consequences, asking the judge to order Milton to pay a $5 million fine and sentence Milton to 11 years in prison.
✓Milton is likely to appeal, Bloomberg reported.
Nikola's spokesperson provided Ars with a statement on the sentencing.
"Nikola has a strong foundation and is in the process of achieving our mission to decarbonize the trucking industry, which is our focus," Nikola's statement said. "We have made significant progress year-over-year and will continue with the same level of discipline and commitment in 2024. We are pleased to move forward and remind the public that the company founder has not had any active role in Nikola since September 2020."
Nikola’s shaky road to recovery
Current Nikola CEO Steve Girsky has recently said that Nikola will recover by attracting “world-class people to execute on our business plan" and working toward "establishing ourselves as the leader in zero-emissions commercial transportation,” Forbes reported.
✓ Girsky seems keen to move past the scandal by promoting Nikola's latest successes. In September, Girsky boasted that daily tests showed that one of Nikola's fuel cell trucks could successfully run for 900 miles.
"This was quite an accomplishment, and I defy anyone to find another zero-emission vehicle truck anywhere that can run up to 900 miles in a day," Girsky said.
However, since the 2020 scandal, Nikola's stock has dropped 99 percent, Forbes reported, and now an investor analytics company called Macroaxis has estimated that Nikola has an 81 percent chance of going bankrupt.
While Forbes credited Milton with most of Nikola's current woes, it's not just the scandal causing investment setbacks for Nikola. In August, Nikola also recalled most of its battery-electric trucks—about 209—after a fire probe revealed a "defective part" that "is believed to have caused a battery to overheat" and risk setting trucks on fire, The Wall Street Journal reported.
This represented "virtually all" the battery-electric trucks that Nikola had shipped to customers, the Journal reported. While engineers worked on a solution to keep battery-electric trucks on the roads, Nikola temporarily halted sales of the battery-electric trucks, ramping up production instead on hydrogen fuel-cell electric trucks that remain Nikola's core focus.
In September, Girsky described the recall as a setback but pointed to all of Nikola's progress since Milton's departure.
"It’s a setback, but we’re in it for the long haul," Girsky said. "We’ve proved the skeptics wrong who said we couldn’t engineer a truck, couldn’t build a truck, and couldn’t sell a truck, and we’re not planning on stopping any time soon."
Ashley Belanger / Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.
29 July 2021
03 August 2021
Let's Get It Right: Nikola Founder Trevor Milton is NO Elon Musk
Nikola Founder’s Bombshell Fraud Charges May Hold Warning For Tesla’s Elon Musk
Let's skip the unsubstantiated innuendoes:
"Federal prosecutors indicted Nikola Corp. founder Trevor Milton this week for fraudulent statements in public appearances and on social media that misled investors about the market-readiness of the electric truck startup’s products and technology.
Let's skip the unsubstantiated innuendoes:
"Federal prosecutors indicted Nikola Corp. founder Trevor Milton this week for fraudulent statements in public appearances and on social media that misled investors about the market-readiness of the electric truck startup’s products and technology.
Watch Out for All Those EV Production Promises! Nikola Founder Charged with Fraud
Nikola founder charged with securities fraud over allegedly fake truck demo
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‘Behold, the Nikola One in motion’
In Southern District of New York federal court on Thursday, Nikola founder Trevor Milton was charged with securities fraud. The charges allege that Milton made a series of materially false claims which portrayed the electric vehicle company Nikola as far closer to releasing a functional product than it actually was, and raising more than $500 million of investment in the process.
“Milton sold a version of Nikola not as it was – an early stage company with a novel idea to commercialize yet-to-be proven products and technology – but rather as a trail-blazing company that had already achieved many groundbreaking and game-changing milestones,” the indictment alleges.
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INSERT
The Media Took the Bait, Calling it ‘Road Testing’. Nikola Then Featured the Video for Arizona Governor Doug Ducey When Announcing Its New Manufacturing Facility
Ducey: “This is a HUGE Announcement”
Specifically, the indictment argues Milton used a staged video to create the false impression its Nikola One semi truck prototype was capable of moving under its own power, when in fact the vehicle was simply rolling downhill. Additionally, Milton falsely claimed the company was producing its own hydrogen fuels at below-market rates and had obtained “billions and billions and billions and billions” of dollars worth of committed truck orders, according to the indictment.
A nominal rival to Tesla, Nikola rose to prominence in 2020 with plans for a pickup truck and tractor trailer cab powered by hydrogen fuel cells. Excitement around the trucks peaked that September, when General Motors announced a $2 billion deal to acquire an equity stake in the company and assist in the release of its Badger pickup truck.
The excitement was short-lived: less than a week after the plans were announced, a report from short-seller firm Hindenburg Research accused the company of fraud.
17 June 2023
Electric-truck maker Nikola laying off 270 employees...The moves came a day after convicted founder Trevor Milton took shots at company leadership on social media.
- Nikola’s leadership has been trying to turn the company around since its founder and CEO Trevor Milton was indicted for federal securities fraud. While it has made some progress, including installing a new CEO and preparing for commercial production, it has also encountered numerous speed bumps.
- The company said Friday it will lay off 150 workers who were supporting the company’s European programs.
- Another 120 employees based at the company’s Phoenix and Coolidge, Ariz., sites will also lose their jobs. About 900 employees will remain.
- Shares fell 15% Friday, but rose about 1.7% in after-market trading following the announcement.
