Nikola founder sentenced to four years for defrauding investors

Nikola Corp (NASDAQ: NKLA) is trending down at writing after a U.S. federal court sentenced its founder to four years in prison.

Trevor Milton was found guilty in 2022

On Monday, Edgar Ramos – a U.S. District Judge upheld findings of a federal jury who convicted Trevor Milton of wire and securities fraud in October of 2022.

As difficult as it may be for you or your family to hear, I believe the jury got it right.

Note that the prosecutors had recommended that Milton be imprisoned for 11 years instead. His attorneys, however, were pushing for even less than four years.  

The news arrives more than a month after the electric vehicles company reported its financial results for the third quarter that missed consensus estimates by a significant margin. Nikola stock is now down 75% versus its year-to-date high.

Prosecutors compared Milton to Elizabeth Holmes

It is worth mentioning here that Elizabeth Holmes of Theranos was sentenced to over eleven years in prison for defrauding investors in 2022. That’s why prosecutors wanted the same for Milton as well – as he was not much different than here.

Just as Holmes lies about Theranos-manufactured blood analysers, Milton lied about the operability of Nikola One semitruck.

The Nikola founder will likely appeal the ruling on Monday. Judge Ramos allowed him to be free on bail in the meantime.

Allegations of false and misleading statements against the EV startup first came from Hindenburg Research in 2020. The short seller report invoked an internal probe later that year which saw Trevor Milton quit as executive chairman of Nikola Corp.