Trevor Milton’s lawyers portrayed the Nikola Corp. founder as “guileless” and well meaning in a motion seeking probation instead of prison time at his scheduled Nov. 28 sentencing on three federal fraud convictions.
A jury found the 41-year-old Milton guilty on Oct. 14, 2022, for lying about the progress and prowess of the electric truck startup to inflate the company’s stock value.
“Trevor’s enthusiasm, his optimism, his spontaneity, and his ‘deep emotional connection’ to Nikola inspired many of his statements,” according to the 50-page motion filed late Tuesday in U.S. District Court in Manhattan, New York. “And there is no doubt that Trevor is an ‘ambitious dreamer’ who ‘sometimes gets ahead of himself.’
“Those who know Trevor best explain that he is ‘child-like in his passions for what he gets excited about and because of this, his words may come off at times differently than he intends.’”
Lost bid for new trial
Milton was convicted on one count of securities fraud and two counts of wire fraud. That included the acquisition of a Utah ranch partially paid for with Nikola stock options that ended up being worthless. Prosecutors called Milton a liar and “con man” who intentionally defrauded investors.
Under federal sentencing guidelines, Milton should receive 17½ to nearly 22 years in prison. Judge Edgardo Ramos does not have to follow those guidelines. Milton’s lawyers said the sentence should range from 12-18 months. But they are seeking probation, in part because Milton is caring for his ill wife. He is free on a $100 million bond, secured in part by his $32 million ranch in Utah.
Milton lost a bid for a new trial in August. In a recently concluded arbitration case, Milton must pay Nikola and was $165 million, in part to cover a $125 million Securities and Exchange Commission fine levied against the Phoenix-based company.
Nikola builds hydrogen-powered fuel cell electric trucks at a plant in Coolidge, Arizona. Milton envisioned a fuel cell truck when he founded the company in the basement of his Utah home in 2015.
“It is undisputed that Trevor and his team delivered a cutting-edge company that developed track-tested trucks and a hydrogen station infrastructure,” his motion said. “Nikola’s revolutionary accomplishments were supported by a bona fide business model, proven technology, and sophisticated engineering.”
Social media presence led to trouble
But Milton’s penchant for using social media and interviews to brag about the company’s accomplishments got him in trouble.
“Putting Trevor out in public to promote Nikola was a strategy conceived and endorsed by two of the most sophisticated and esteemed members of the company’s board, Jeff Ubben and Steve Girsky,” his motion said. “And Trevor’s public statements were largely consistent with the Nikola business model.”
Nikola went public in a reverse merger with special purpose acquisition company VectoIQ, led by Girsky, in June 2020. The company value at one point exceeded $30 billion. Girsky in August became the company’s fourth CEO in four years. Company shares trade around $1 today compared to an intraday high of more than $90 in June 2020.
In a rare public statement on social media, Milton in June opposed Nikola’s bid to double the number of authorized shares in the company. The activation of those shares dilutes the value of current holders.
Milton cashed out tens of millions in Nikola stock
Milton at one time owned more than 25% of the company stock and landed on the Forbes magazine lists of billionaires under the age of 40. He resigned from Nikola in September 2020. That followed a 67-page report by short seller Hindenburg Research alleging the company was built on “an ocean of lies.”
Milton collected tens of millions of dollars from selling company shares after his lockup expired in December 2020.
“Trevor is a decent, guileless, hard-working, kind-hearted, generous and caring person,” his lawyers wrote. “We respectfully submit that any misstatements Trevor made were the product of his deeply-held optimism and belief in Nikola, rather than any sinister motive or intent to harm retail investors.
“The government introduced no evidence whatsoever that Trevor intended to sell all, or a substantial portion, of his shares upon the expiration of the lock-up period. In fact, to this day, Trevor remains the single largest shareholder of Nikola, the company that he conceived, built and still loves.”
Prosecutors have a week to file their sentencing recommendation with the court.
Related articles:
Nikola claws back $165M from founder Trevor Milton
Nikola founder loses bid for a new trial
Milton cashes out $131M in Nikola stock, slicing dominant ownership
Click for more FreightWaves articles by Alan Adler.
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