Nikola founder Trevor Milton jailed over fraud

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“You used your considerable social media talents to tout your company in a way that was materially false,” Ramos said at the sentencing. “What you said over and over in multiple media outlets was wrong and it was materially wrong.”

Defence lawyer Marc Mukasey said Milton’s communications were driven by his “true belief” in his company rather than greed. “It was not a nefarious attempt to take advantage of people,” Mukasey said. “It wasn’t trained on or aimed at particular people.”

But prosecutor Joshua Podolsky said it was “beside the point” whether Milton wanted to harm investors. “He ultimately didn’t care” if he did, Podolsky said.

For a time, Nikola had a higher market capitalisation than Ford Motor Co., giving Milton a net worth of $US4 billion.Credit:

Nikola drew investors eager to find the next Tesla after it made its market debut through a June 2020 blank-check merger. For a time, Nikola had a higher market capitalisation than Ford Motor Co., giving Milton a net worth of $US4 billion.

But soon after Nikola began trading, Bloomberg reported that Milton had greatly exaggerated the capabilities of one of its first prototypes, the Nikola One, describing it as a fully functioning vehicle even though the truck couldn’t be driven at the time because of missing parts. Three months later, short seller Hindenberg Research published a report accusing the company of deception and lying about its technology, sending the shares plummeting.

‘I was not a very seasoned CEO.’

Nikola founder Trevor Milton

Milton stepped down as executive chairman in September 2020. He was charged by federal prosecutors the following July.

His conviction was a victory for federal prosecutors in Manhattan, who have vowed to crack down on corporate wrongdoing, and his sentencing comes just over a month after FTX co-founder Sam Bankman-Fried was found guilty of defrauding investors in the cryptocurrency exchange.

Milton previously asked Ramos to throw out his conviction, arguing that some of the judge’s instructions to the jury were wrong and that one juror lied to get on the panel. The motion was rejected in August.

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He remains Nikola’s second-biggest shareholder and earlier this year called for leadership changes at the company, urging investors to reject company-backed proposals to reelect directors and allow new shares to be issued.

The stock traded below $US1 a share for most of April and May, raising threats of delisting. While shares rebounded to more than $US3 in August, they have since fallen back below $US1, far below a closing peak of almost $US80 in mid-2020.

Bloomberg

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