Nikola (NASDAQ:NKLA) founder and former CEO Trevor Milton is set to be sentenced later today. He faces up to 60 years in prison. In October 2022, Milton was found guilty of two counts of wire fraud and one count of securities fraud. The news shouldn’t have a significant impact on NKLA stock, as Milton stepped down as CEO in September 2020. However, shares of the company have plunged by 97% since then.
The departure followed a scathing short report from Hindenburg Research. The short seller accused the company of rolling down a truck from a hill under the guise of it actually being drivable. Hindenburg also accused the company of making misleading statements and questioned Nikola’s battery technology.
“We have never seen this level of deception at a public company, especially of this size,” said Hindenburg.
NKLA Stock: Founder Trevor Milton Set to be Sentenced Today
Prosecutors have recommended to U.S. District Judge Edgardo Ramos that Milton receive an 11-year sentence and a $5 million fine based on his actions. According to them, Milton falsely disclosed to investors that Nikola had a working prototype truck with binding orders worth billions of dollars. Meanwhile, Milton’s lawyers have requested a sentence of just probation, citing his responsibilities to take care of his sick wife. His lawyers believe that Milton did not act with ill intent and that his optimism led to false statements.
“Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck,” wrote the prosecutors. The 11-year sentence recommended by the prosecutors is similar to the punishment that Theranos Founder Elizabeth Holmes received for defrauding investors. Milton’s lawyers have sought to distance Milton from Holmes because Milton’s misstatements did not cause physical harm or risk.
“Trevor has his faults, but if he is made aware of them, he will make the effort to correct them,” read a court filing.
Nikola has had its fair share of troubles since Milton’s departure, including several new CEOs and a recall of all of its battery-electric trucks due to fire risks.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
