Trevor Milton, the founder of Nikola Corporation, has been sentenced to four years in prison for fraud. The 41-year-old was convicted last year after a jury found that he had consistently lied about the company, inflating its share price during the pandemic before it ultimately collapsed amid fraud allegations.
At his sentencing hearing, Milton became emotional, asserting that he had good intentions. U.S. Attorney for the Southern District of New York, Damian Williams, stated, “Today’s sentence should be a warning to start-up founders and corporate executives everywhere — ‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price.”
Milton, who founded Nikola in 2015 without a formal degree, positioned the company as a competitor to Tesla, claiming it was developing trucks powered by electricity and hydrogen. In June 2020, Nikola went public after merging with another firm, reaching a valuation of over $20 billion despite never delivering a single vehicle. Partnerships with major companies like General Motors were announced, further fueling the hype.
However, scrutiny intensified as questions arose about the validity of Milton’s claims, particularly following a report from short-seller Hindenburg Research. Federal prosecutors found that Milton had “made false claims regarding nearly all aspects of Nikola’s business,” specifically targeting non-professional investors.
Judge Edgardo Ramos criticized Milton’s actions, stating, “Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false.” An example cited was a promotional video that falsely depicted a truck running on its own power, when in reality, it was rolling downhill.
In addition to the prison sentence, Milton received three years of supervised release, was ordered to forfeit property, and required to pay a $1 million fine. His sentencing follows Nikola’s earlier settlement of $125 million to resolve fraud claims from financial regulators.
Milton joins a list of American entrepreneurs facing legal repercussions for fraudulent activities, including Theranos founder Elizabeth Holmes, who is currently serving time, and FTX CEO Sam Bankman-Fried, who is awaiting sentencing.