The founder of the American automobile startup Nikola Trevor Milton goes behind bars for four years and has to pay a fine of one million dollars, more than 22 million crowns. US court on Monday found the forty-one-year-old businessman guilty from deceiving investors to whom Milton lied about the maturity of Nikola’s technology in order to get them to pour money into his company’s shares. This concludes the story of a once promising businessman, whom many compared to Elon Musk just a few years ago.
According to Britain’s Financial Times, Milton broke down in tears during the verdict and begged the judge to take into account “his sensitive nature” and the fact that he “wasn’t a very experienced CEO” and spare him jail time. The lawsuit called for a far harsher sentence, comparing Milton’s crimes to the case of the founder of the pharmaceutical company Theranos, Elizabeth Holmes, who was sentenced to more than eleven years behind bars last year, also for defrauding investors. However, Judge Edgardo Ramos said that while Holmes’ scams resulted in loss of life, Milton’s did not. That’s why he punished him more lightly.
The businessman’s lawyers have indicated that they will appeal against the court’s decision. Nikolay’s former boss should remain free on bail while his appeal is being considered.
According to prosecutor Damian Williams, the case should be a warning to startup founders everywhere in the world to avoid faking technological advances. “If you mislead investors, you will pay a heavy price,” Williams said in court.
Electric vehicle manufacturer Nikola Corporation was founded in 2014 in Utah, USA, and three years ago this company was being talked about as a competitor to Tesla. Trevor Milton was called the second Musk, also due to the fact that, like him, he borrowed the name of the famous inventor Nikola Tesla in the name of his company and actively appeared in the media and on social networks. Just when it entered the Nasdaq stock exchange in 2020, the electric car manufacturer collected 600 million dollars (13.4 billion crowns) from investors and briefly boasted a higher market value than that of Ford.
In 2018, a video with a hydrogen-powered truck developed by Nikola also attracted a lot of attention. Only later did it become clear that it was a fraud. The tractor was just a model without an engine, and the authors just let it go down the hill.
The well-known hedge fund Hindenburg Research revealed Nikola’s fraud. The company’s analysis found that Nikola was exaggerating the capabilities of its technology and faking the launch of the cars. In September 2020, the US Securities and Exchange Commission and the US Department of Justice began investigating Milton on suspicion of influencing the value of shares. Milton resigned as CEO at the time.
“Nikola under Milton fulfilled all the characteristics of typical financial-casino bets of recent times. Rapid rises and falls in prices, a catchy name, minimal income at record company valuations and more media attention than real business,” economist Dominik Stroukal described the story of the startup for e15 last year.
At the same time, he added that Nikola’s fall probably won’t be the last similar case. “CEOs of rapidly growing ambitious companies have always been under investigation, but now time is running out for them. The era of artificially low yield policies that push us away from conservative investments and into quick speculation. It’s grist to the mill for those of us who point to too many similarities between today’s markets and the internet craze of the turn of the millennium. Even then, all that was needed was a beautiful name, an idea and somehow getting on the stock exchange,” says Stroukal.
2023-12-19 19:00:00
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