Trevor Milton, founder of Nikola Corp., leaves court in New York on Monday Photo: Yuki Iwamura/Bloomberg
Tearful before his eyes Trevor Milton made a final plea to a Manhattan court judge this week to try to avoid a prison sentence that, under federal guidelines, could be 27 years or longer.
He had no intent to cause harm to anyone and he “did not commit these crimes,” he said.
Little came of it. Milton was sentenced this week to four years in prison and a $1 million fine for defrauding investors of Nikola, the electric truck company he founded.
Tears and pleas were a far cry from the stellar salesmanship demonstrated Milton, when he introduced Nikola's six-wheeled truck, designed to transport giants across the United States using electric or hydrogen fuel.
At a 2016 Steve Jobs-style presentation, he strutted around the stage in front of a shiny white prototype, claiming his company had $4 billion in pre-orders. Plans have been touted for a fleet of hydrogen fueling stations across North America.
Truck owners will receive a million miles of free hydrogen fuel from stations to be built starting in 2019, Milton promised.
He said : “It’s a little expensive, ok, maybe you could buy a plane.” how much did it cost to build this thing, so we'll try to keep people from leaving, but this thing is fully functional and working, and it's really incredible.
“What we show you we can actually do. keep working and that's the best thing about Nikola.”
Nikola Refuse truck, pictured in 2020, around the time Milton's resignation as executive chairman. Photo: AFP
This turned out not to be the case. Judge Edgar Ramos told Milton this week: “The law does not allow good intentions.”
“For many months, you used your considerable social media skills to promote your company in ways that were materially false.”
Nikola, founded in Utah in 2014, was one of a wave of companies electric vehicle maker founded over the past decade to compete with Tesla as investors bet big on the death of fossil fuels. Nikola's competition with Elon Musk's business was open – the company was also named after Nikola Tesla, the pioneer of electricity.
While Tesla has sought to reinvent passenger transportation, Milton said Nikola will clean up the U.S. transportation business. Its hydrogen-powered trucks will transport vital goods across America without emissions.
However, the 41-year-old's promises did not come true in 2020, shortly after he began working on the New York stock market.
Short-selling company Hindenburg Research learned that Nikola's truck was not actually running or close to running. In the infamous episode, Hindenburg revealed that a video posted by Nikola showing the truck moving was actually footage of it rolling down a hill.
Hindenburg Research called the company an “intricate scam” , built on dozens of lies.” “.
Shortly after Hindenburg's report, the company admitted that the truck was indeed not working, although it downplayed the significance of Hindenburg's statements.
Nikola was originally valued at $3.3 billion when it went public and experienced a boom. it was briefly worth more than $30 billion.
However, shares fell after Hindenburg's statements and are down 90% from their peak.
In 2021, Nikola paid a $125 million settlement to the U.S. Securities and Exchange Commission (SEC) in a civil case against her, in which she admitted no wrongdoing. Milton resigned over the issue and was indicted later that year on criminal fraud charges.
Without an apology, Milton said this week: “I obviously feel terrible for everyone.” the resources and time it took on everyone. I don't think you can feel human without feeling terrible for everyone involved.”
He asked the judge to take into account his “extraordinarily tender heart” and the fact that he was not “very experienced general director.”< /p>
Milton's lawyer, Mark Mukasey, argued that the lawsuits caused his client “financial harm.” He faces private lawsuits and an ongoing SEC case.
The judge showed some leniency by not imposing the 11-year sentence that prosecutors had sought. But Milton, who plans to appeal his conviction, was in tears when the verdict was handed down.
U.S. Attorney Damian Williams said, “Today’s sentencing should serve as a warning to startup founders and CEOs everywhere.” “Fake it 'til you make it is no excuse for fraud, and if you mislead your investors, you will pay a heavy price.”
Although Milton's fall from grace was severe, Nikola remains a going concern. It's now worth about $900 million, a fraction of its former value.
It's one of many Tesla competitors that have survived the boom and bust cycle, although it is unique in that it was caused by fraud.< /p
Electric truck rival Lordstown Motors filed for bankruptcy protection in the summer.
British van maker Arrival, once valued at $13 billion, said in October it was cutting one in four jobs.
British inventor James Dyson also abandoned plans to develop his own electric car in 2019 after realizing it would take too long to break even.
Electric vehicle startups were once thought to have an advantage over legacy combustion companies. engine-focused competitors. After all, large companies like Ford, Volswagen and Toyota had production lines, designs and inventories that soon became worthless as countries moved to ban gasoline and diesel.
But these same companies had strong balance sheets, and they started producing their own electric cars and trucks.
Meanwhile, newcomers began to feel disadvantaged by higher borrowing costs.
Prospects also began to feel poorer due to inflation and higher borrowing costs. Many electric car companies are positioning themselves in the luxury sector, creating a crowded market with fewer buyers.
Professor David Bailey, an auto industry expert at the University of Birmingham, said: “Any new wave of technology will have a whole bunch of start-ups , and many of them will fail.
“I think investors are increasingly differentiated. Initially, everything that happened in the industry received significant investment support. They are now much more aware of the fact that many of them are finding it quite difficult to survive.”
Last year Nikola released a battery-powered truck that actually worked. But the company's difficulties continue. In August, the company recalled all 209 delivered vehicles and suspended sales due to fire fears.
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