Trevor Milton, the once-celebrated CEO and founder of electric truck startup Nikola, received a four-year prison term for securities fraud on Monday. The verdict, delivered by Judge Edgardo Ramos of the U.S. District Court in Manhattan, marks the end of a protracted legal drama that initially boosted Nikola’s stock by 83%, only to witness a steep decline amid fraud allegations and terminated contracts.
The sentencing, delayed four times, occurred while Milton remained free on a $100 million bond. Judge Ramos handed down a concurrent 48-month sentence per count, accompanied by a $1 million fine. Milton is expected to appeal the decision, a possibility acknowledged by Judge Ramos.
Prior to the sentencing, a tearful Milton pleaded for mercy from Judge Ramos in a lengthy and sometimes confusing statement. He claimed he resigned as Nikola’s CEO not because of fraud allegations but to support his wife, who he said, suffered a life-threatening illness due to medical malpractice involving someone else’s plasma. Milton asserted, “I stepped down for that – not because I was a fraud. The truth matters. I chose my wife over money or power.”
The 41-year-old former CEO was convicted in October 2022 on one count of securities fraud and two counts of wire fraud for making false statements to investors about Nikola’s electric truck development, artificially inflating the company’s stock.
During the sentencing hearing, Milton’s defense argued he had no intention of defrauding investors, portraying his ambitions as comparable to Elon Musk’s. Prosecutors countered, highlighting Milton’s consistent falsehoods, particularly targeting retail investors.
Federal prosecutors sought an 11-year prison term, although Milton could have faced up to 60 years. Additionally, the government requested a $5 million fine, forfeiture of Milton’s Utah ranch, and an undisclosed amount for investor restitution.
Since 2019, prosecutors accused Milton of misleading investors with false claims about Nikola’s ability to develop a truck “from the ground up” and create batteries that were actually sourced elsewhere. One infamous incident involved a misleading marketing video showing a Nikola truck moving under its own power when it was, in fact, rolling downhill.
After investigations and a fraud allegation from Hindenburg Research, Milton resigned in September 2020. Nikola faced a $125 million penalty from the U.S. Securities and Exchange Commission, resulting in significant stock losses for investors.
Milton’s legal troubles continued, with a New York arbitration panel ordering him to pay Nikola $165 million in October to cover the SEC settlement and penalty. Despite denying guilt, Milton’s lawyers argued his misstatements were driven by optimism and faith in the company, proposing probation last month, citing his responsibilities to care for his sick wife.
Milton’s case is part of a small group of high-profile cases involving tech founders, alongside Elizabeth Holmes of Theranos, currently serving an 11-year sentence for investor fraud, and Sam Bankman-Fried, founder of crypto exchange FTX and Alameda Research, found guilty of fraud and money laundering in November.
