Billionaire from Utah sentenced to jail time for deceiving investors

Nikola founder Trevor Milton received a four-year prison sentence on Monday. He was found guilty of deceiving investors about the technology behind the company’s hydrogen and electric trucks.

The sentence imposed on Milton is much lower than what federal prosecutors had sought. They were aiming for an 11-year sentence, but Milton will serve a significantly shorter term. If he had received the maximum penalty, he could have faced up to 60 years in prison.

According to US Attorney Damian Williams, Trevor Milton repeatedly deceived investors through various channels, including social media, television, podcasts, and print. Williams emphasizes that this sentence serves as a clear message to all startup founders and corporate executives: the notion of “fake it till you make it” cannot be used as an excuse for fraudulent activities. Any misleading of investors will result in severe consequences.

Milton has agreed to surrender property in Utah and pay a $1 million fine, according to a news release from the Justice Department. Additionally, he will be subject to three years of supervised release once he completes his prison sentence.

CNN reached out to Milton’s legal team for comment on the sentence, but they declined to provide any statement.

In October 2022, Milton faced a conviction on federal charges of securities fraud and wire fraud by a New York jury. The US Attorney’s Office in the Southern District of New York accused Milton of deceiving the public through false and misleading statements about various aspects of the business related to the development of electric and hydrogen-powered trucks. Additionally, Milton was alleged to have defrauded the public through social media and podcast interviews.

Nikola, an automaker based in Phoenix, is dedicated to the development of semi-trucks powered by hydrogen fuel cell technology and electric batteries. When the company went public in 2020, it quickly emerged as a strong contender to Elon Musk’s Tesla, resulting in a significant surge in its share price. Additionally, in the same year, Nikola forged a remarkable $2 billion partnership agreement with General Motors.

Investor fraud allegations quickly escalated into a federal investigation, resulting in an indictment and subsequent conviction.

The Department of Justice stated in its 2021 indictment of Milton that some of the retail investors who invested in Nikola lacked prior experience in the stock market. These individuals had started trading during the COVID-19 pandemic to make up for lost income or to keep themselves occupied while in lockdown.

The case centered on the Nikola One, a hydrogen-powered semi-truck prototype. Prosecutors alleged that Milton touted the vehicle as “fully functional and amazing” despite its lack of crucial components and systems, such as motors and a control system.

In 2018, Milton shared a video on X, formerly known as Twitter, showcasing the truck appearing to effortlessly glide along a level road. However, prosecutors assert that it was all a deceptive illusion. “In reality, to capture these clips, the Nikola One was actually towed to the peak of a hill, where the ‘driver’ then released the brakes, allowing the truck to roll downhill until it came to a halt in front of the stop sign,” stated the Department of Justice in the release on Monday.

Milton, aged 41, established Nikola in 2014 and resigned as CEO in September 2020, approximately three months after the company’s initial public offering. According to prosecutors, Nikola’s retail investors suffered losses exceeding $660 million.

Nikola (NKLA) stock, which reached a high of over $79.73 on June 9, 2020, has experienced a significant decline and is now trading below one dollar.

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