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Wednesday, February 21, 2024

EV Company Founder Gets 4-Year Prison Sentence for Fraud

'Today’s sentence should be a warning to start-up founders and corporate executives everywhere...'

(Eli Pacheco, Headline USA) Nikola founder Trevor Milton received a four-year prison sentence on Tuesday for investor fraud—less than half what federal prosecutors sought in the case. 

Milton, 41, who founded the electric truck startup, faced a maximum of 60 years in prison. Federal prosecutors asked for an 11-year sentence for Milton, accused of lying to investors about Nikola’s hydrogen and electric truck technology. 

“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 statement read.

In the statement, U.S. Attorney Damian Williams said Milton repeatedly lied to investors on social media, television, podcasts, and print.

Among the deceptions: In 2018, Milton posted on Twitter, footage of a truck cruising along a flat road.

Prosecutors said producers towed the Nikola One to a hilltop and released it. “The ‘driver’ released the brakes, and the truck rolled down the hill until being brought to a stop in front of the stop sign,” said the DOJ release.

Milton said a prototype semi-truck “fully functions and works,” according to prosecutors. Nikola One is a hydrogen-powered semi-truck, which was missing motors and a control system. 

The report on CNN.com stated that Milton’s lawyers had no comment.

According to a Justice Department release, Milton must also surrender property in Utah and pay a million-dollar fine. After his prison sentence, he’ll have three years of supervised release. 

Electric vehicles have hit a few speedbumps of late. 

Some electric vehicle manufacturers are scaling down or pausing production because consumer demand is low. Ford delayed a $12 billion plan in production, and General Motors has nixed a goal to make 400,000 EVs by mid-2024.

GM had contracted with Nikola on the deal until the fraud was exposed and pulled out shortly thereafter, sending the startup company’s stock plummeting. Shares peaked around $75 in June 2020 but are now worth about 9 cents apiece.

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