Former Nikola (NKLA) CEO Trevor Milton was sentenced to 4 years in federal jail on Monday, a ruling that got here 14 months after he was convicted by a jury of spreading lies in regards to the hydrogen-electric car firm he based.
Milton’s lawyer requested US District Decide Edgardo Ramos, who presided over the case, to condemn him to no jail time. Throughout a tearful assertion in court docket, Milton reportedly mentioned he did not dispute his verdict however didn’t commit “those crimes.”
The sentencing is lower than what prosecutors wished. They requested for a sentence of 11 years in federal jail, lower than the utmost allowable sentence of 60 years.
In a court docket doc filed previous to Monday’s listening to, Justice Division prosecutors mentioned that an 11-year sentence can be much like the sentence handed down final 12 months to blood-testing startup Theranos’ founder and CEO Elizabeth Holmes, who was additionally convicted of securities fraud.
“Simply as Holmes lied about Theranos-manufactured blood analyzers, Milton lied in regards to the operability of the Nikola One semitruck,” prosecutors wrote in a doc previous to the sentencing listening to.
Nikola’s inventory fell after information of Milton’s sentencing broke and was down greater than 6% in Monday afternoon buying and selling.
Nikola, based in 2015, leapt on to the electrical car scene in 2020 as the corporate went public and Milton promoted its plans to fabricate electric- and hydrogen-powered semi and pickup vehicles, in addition to a community of hydrogen gas stations.
The truck maker made its public debut on June 4, 2020, by a merger with VectoIQ Acquisition Corp (VTIQ), a particular acquisition firm fashioned by former Basic Motors (GM) staff.
Days after the IPO Milton advised Yahoo Finance that Nikola anticipated its first electric-powered semitrucks to be in the marketplace in 2021 and its hydrogen-powered choices to hit the market in 2023.
“My aim is to take the throne from the Ford F-150,” Milton advised Yahoo Finance.
Months later, Nikola got here underneath scrutiny when quick vendor Hindenburg Analysis alleged that Milton dedicated securities fraud by spinning up an “ocean of lies” to deceive traders.
Hindenburg mentioned Nikola launched a misleading video making it appear as if its “Nikola One” semitruck was touring underneath its personal energy at a excessive fee of pace when, the truth is, it was simply rolling down a hill.
Milton stepped down as govt chairman and board member of his firm following Hindenburg’s claims. In court docket on Monday he reportedly advised the choose that he stepped down as a result of his spouse was sick, not as a result of he dedicated fraud.
The declare from Hindenburg, nevertheless, led to investigations after which expenses by the US Justice Division and US Securities and Trade Fee.
At trial, prosecutors alleged that together with with false representations regarding Nikola’s hydrogen gas cell prototype truck, Milton made false public statements selling it as an actual, “totally functioning car.”
Jurors agreed that Milton’s video falsely made it seem as if the truck might drive by itself propulsion, and that Milton lied in regards to the existence of hydrogen gas manufacturing and fueling services.
Additionally they discovered that he deceived traders in regards to the prices of hydrogen manufacturing and made false statements about its pickup truck, truck orders, and battery expertise.
In October 2022 a Manhattan jury returned responsible verdicts towards Milton on three of 4 legal counts of fraud introduced by the Justice Division. The fees included two counts of wire fraud and two counts of securities fraud. The jury mentioned Milton was not responsible of one of many securities fraud expenses.
Throughout Monday’s listening to authorities attorneys and attorneys for Milton argued over the extent of loss sustained by Nikola traders, Interior Metropolis Press reported.
Probation officers chargeable for recommending Milton’s penalties estimated in a report that Milton brought on $125 million in losses. Prosecutors alleged these losses had been between $661 million and $674 million. Milton’s attorneys argued a loss quantity of $0.
The choose finally dominated that Milton can be sentenced to 4 years in jail on every of his three convictions, with every sentence to run concurrently.
Alexis Keenan is a authorized reporter for Yahoo Finance. Observe Alexis on Twitter @alexiskweed.