Nikola founder Trevor Milton sentenced to four years in prison for defrauding investors

New York (CNN) — Nikola founder Trevor Milton was sentenced Monday to four years in prison for lying to investors about the company’s hydrogen and electric truck technology.

The sentence is significantly lower than the 11-year sentence federal prosecutors were seeking. Milton was facing up to 60 years behind bars if he was sentenced to the maximum penalty.

“Trevor Milton lied to investors again and again — on social media, on television, on podcasts, and in print,” US Attorney Damian Williams said in a statement. “But today’s sentence should be a warning to start-up founders and corporate executives everywhere — ‘fake it till you make it’ is not an excuse for fraud, and if you mislead your investors, you will pay a stiff price.”

Milton will also turn over property in Utah and pay a $1 million fine, the Justice Department said in a news release. He will also face three years of supervised release after completing his prison sentence.

Milton’s legal team told CNN it had no comment on the sentence.

In October 2022, a New York jury convicted Milton on federal charges of securities fraud and wire fraud. Prosecutors in the US Attorney’s Office in the Southern District of New York had accused Milton of making false and misleading statements about “nearly all aspects of the business” as it pertained to developing electric and hydrogen-powered trucks, as well as defrauding the public through social media and podcast interviews.

Nikola, a Phoenix-based automaker focused on developing semi-trucks vehicles powered by hydrogen fuel cell technology and electric batteries, was regarded as a competitor to Elon Musk’s Tesla when it first went public in 2020, and saw its share price skyrocket. That year, it also entered into a $2 billion dollar partnership deal with General Motors.

Allegations of investor fraud later avalanched into a federal probe, an indictment and a conviction.

“Among the retail investors who ultimately invested in Nikola were investors who had no prior experience in the stock market and had begun trading during the COVID-19 pandemic to replace or supplement lost income or to occupy their time while in lockdown,” the Department of Justice wrote in its indictment of Milton in 2021.

The case revolved, in part, around the Nikola One, a prototype of a hydrogen-powered semi-truck. According to prosecutors, Milton claimed the vehicle “fully functions and works, which is really incredible” even though it was missing important parts and systems, including motors and a control system.

In 2018, Milton posted a video on X, formerly known as Twitter, that showed the truck seemingly cruise down a flat road. But it was all smoke and mirrors, prosecutors say. “In fact, to film these clips, the Nikola One was towed to the top of a hill, at which point the ‘driver’ released the brakes, and the truck rolled down the hill until being brought to a stop in front of the stop sign,” the Department of Justice wrote in the release Monday.

Milton, 41, founded Nikola in 2014 and stepped down as CEO in September 2020 — about three months after the company went public. Prosecutors said Nikola’s retail investors lost more than $660 million.

Shares of Nikola (NKLA) have since plummeted from their peak of more than $79.73 on June 9, 2020, and are currently trading under one dollar.

Correction: A previous version of this article incorrectly stated the all-time high for Nikola’s share price.

CNN’s Chris Isidore contributed to this reporting.

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