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Nikola Founder Trevor Milton is set to be sentenced Monday in a New York courtroom on three charges related to defrauding investors of the embattled electric- and hydrogen-powered truck maker.
Milton was found guilty in October 2022 on two counts of wire fraud and one count of securities fraud. He faces up to 60 years in prison. However, prosecutors in New York last week recommended a sentence of 11 years imprisonment.
Milton became an overnight billionaire when he took Nikola public through a deal with a special purpose acquisition company in June 2020. The company was quickly considered to be one of the most-promising EV startups – valued at its peak at more than $30 billion – until allegations regarding false and misleading statements were uncovered by short-seller Hindenburg Research.
Prosecutors on Tuesday compared Milton to disgraced Theranos founder Elizabeth Holmes, who was sentenced to more than 11 years in prison last year for defrauding investors in her blood testing startup.
“Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck,” prosecutors wrote to U.S. District Judge Edgardo Ramos, who will decide Milton’s sentencing.
Milton has attempted to distinguish himself from Holmes, whose company was private. He argues “that Nikola is still a real business, while Theranos is not,” according to court documents.
Milton, who was the company’s largest shareholder, stepped down as executive chairman of Nikola in September 2020. He did so amid an internal probe after the Hindenburg report, which characterized the company as a house of cards built by Milton.
Since Milton’s resignation, shares of Nikola have crated and the company has failed to retain executives. Nikola Chairman Stephen Girsky, whose SPAC brought the company public, was named CEO in August.
Shares of Nikola have recently traded under $1, with a market value of about $327 million.
Nikola was among the first heavily publicized companies to go public through a SPAC. It inspired hundreds of other startups to do the same before the Securities and Exchange Commission cracked down on the practice.
SPACs are publicly traded companies that don’t have any real assets other than cash. They are formed as investment vehicles with the sole purpose of raising funds and then finding and merging with a privately held company.
This is a developing story. Please check back for additional updates.