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The backstory: In 2015, electric vehicle (EV) startup Nikola was founded by Trevor Milton, who would also become its CEO. The company wanted to create EVs that were bigger and more specialized, like those for long-haul trucking and other commercial uses. These rigs would use “hydrogen fuel cell technology” to be emission-free. In 2020, Nikola was introduced to the market. Investors came rolling in pretty quickly. GM even took on an 11% stake in the company and announced it would help to produce some of Nikola’s vehicles. That year, Nikola’s market cap was above US$30 billion.
Then, there was trouble. Bloomberg reported that Milton had misled people about one of Nikola’s prototypes, the Nikola One, which was promoted as fully functional but was actually missing parts. A few months later, Hindenburg Research, a firm that specializes in uncovering corporate wrongdoing, released a report accusing Nikola of fraud and saying that it had turned an "ocean of lies into a partnership with the largest auto OEM in America." GM quickly backed out, and Milton stepped down. In 2021, Nikola stopped production on a planned ATV and motorboat, which was a move that cost it about US$14 million.
More recently: In 2021, Milton was charged with fraud for exaggerating and making excessive claims about Nikola cars. Last year, he was put on trial in a federal US court. Some of the false claims that Milton made include that the company had working prototypes of completely emission-free long-haul trucks, billions of dollars in orders and was already making cheap hydrogen fuel. He even shared a video that seemed to show a Nikola semi-prototype moving on its own, but it was really moving from the force of gravity as it traveled downhill. The jury found Milton guilty of securities and wire fraud last year.
The development: On Monday, Milton was sentenced to four years in prison for his fraud convictions. He also has to pay a US$1 million fine. The sentencing hearing was a bit strange, with Milton saying, at one point, he was part Cherokee and going on to condemn ethnic cleansing against Indigenous Americans. He also brought up wrongful convictions of Black and Latino defendants that were later overturned, as well as said the reason he resigned from his position was because of his wife’s illness, not because of the fraud accusations. Prosecutors recommended Milton get put away for 11 years, comparing his fraud to Theranos’ Elizabeth Holmes and saying he misled retail investors. But the judge didn’t go for that big of a sentence. The judge allowed Milton to remain free on bail while he appeals his conviction, according to Reuters.
"I did not intend to harm anyone, and I did not commit those crimes levied against me," Trevor Milton said.
"As difficult as it may be for you or your family to hear, I believe the jury got it right," US District Judge Edgar Ramos said.
“[Milton’s claims were] not a nefarious attempt to take advantage of people,” Trevor Milton’s defense lawyer Marc Mukasey said. “It wasn’t trained on or aimed at particular people.”
"There has to be a message that whether you are an entrepreneur, a startup founder, a corporate executive, when you go out there and talk about your company, you must be honest," Matthew Podolsky, a prosecutor, said at the hearing before the sentence was handed down.
"Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck," US prosecutors in the trial said.