The full story of Nikola's founder and his imprisonment
Nikola founder Trevor Milton has been handed a four-year prison sentence after being found guilty of fraud in 2021. The 41-year-old wept during the hearing, insisting his intentions were good. US Attorney for the Southern District of New York, Damian Williams, warned, "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."
The rise and fall of Nikola Corporation
Milton established the electric truck start-up Nikola around 2015, aiming to compete with Tesla by creating trucks fueled by electricity and hydrogen. In June 2020, the company went public and quickly reached a valuation of over $20 billion, despite not having delivered a single vehicle. His claims helped pump up the firm's share price, which climbed over nearly 600% during the COVID-19 pandemic before crashing due to fraud claims.
Nikola's shares plummeted over 98% following fraud allegations
However, doubts about Milton's claims grew when a well-publicized report from short-seller Hindenburg Research questioned them. Federal prosecutors also discovered that Milton had "made false claims regarding nearly all aspects of Nikola's business." "Over the course of many months, you used your considerable social media skills to tout your company in ways that were materially false," said Judge Edgardo Ramos. From the height of $65.90 achieved in June 2020, Nikola's shares have dropped more than 98% to trade at $0.82.
Consequences and similar cases
Along with his prison term, Milton received three years of supervised release, and was ordered to forfeit property and pay a $1 million fine. This comes after Nikola paid $125 million in 2020 to settle fraud allegations from financial regulators. Milton's case follows other American entrepreneurs like Theranos founder Elizabeth Holmes, who is currently serving time in prison, while the fraud-ridden cryptocurrency exchange FTX founder, Sam Bankman-Fried awaits sentencing.
