The comparison doesn’t come up until page 36 of the 41-page federal sentencing recommendation for convicted Nikola founder Trevor Milton. How does his case compare to that of convicted Theranos blood-testing startup founder Elizabeth Holmes?
In his request for probation in advance of next Monday’s sentencing, Milton said he and Holmes share practically nothing in common other than being young founders with good ideas to make the world better.
Also read: Feds seek 11-year prison term for Nikola founder
Holmes began serving a sentence of 11 years and three months in May. Federal prosecutors are seeking an 11-year sentence when Milton is sentenced Monday.
Comparisons aplenty between Elizabeth Holmes and Trevor Milton, feds say
“There, the defendant [Holmes] made misrepresentations to potential investors about Theranos’s financial condition and future prospects, including about the operability of the company’s technology and its expected revenue,” the federal sentencing motion said.
“Here, Milton made numerous misrepresentations about multiple aspects of Nikola’s technology and future prospects. Just as Holmes lied about Theranos-manufactured blood analyzers, Milton lied about the operability of the Nikola One semitruck.
“Just as Holmes used third party, commercially available blood analyzers to trick investors into believing Theranos had an operating production, Milton used Ford pickup trucks to show [as battery-electric, fuel cell Nikola] Badger trucks.
“And just as Holmes exaggerated Theranos’s revenue projections, Milton lied about the prices at which Nikola could obtain electricity and produce hydrogen, as well as lying about the revenue that Nikola could expect from reservations.”
No Theranos-like financial shenanigans, Milton defense attorneys say
Milton argued that Nikola’s ongoing existence — though operating under a notice of going concern filed in February — made the company he founded in 2015 different from Theranos, which no longer exists.
“In contrast, whatever Trevor may have done, he did it openly and with the full knowledge of Nikola’s executives and board of directors,” his attorneys wrote in a presentencing memo to U.S. District Judge Edgardo Ramos on Nov. 14. “There were no fake documents or financial shenanigans, and there were no threats to anyone to keep quiet.”
Lying to the company’s directors as Holmes did barely contrasts with Milton ignoring entreaties from company executives to tell the truth about Nikola in social media, television, print and podcast interviews, prosecutors said.
“The fact that Nikola was more established and publicly traded, while Theranos was not, is an aggravating factor that, at a minimum, is a reason to give Milton a sentence comparable to the sentence imposed on Holmes, if not a greater one,” the federal sentencing memo said.
Additional facts weigh in favor of Milton getting a longer sentence than Holmes, the memo said.
More victims in Milton’s fraud case
“Nikola was publicly traded, the victim investors were not able to do due diligence in the same way Theranos’s investors could, and the number of victims involved is significantly greater.”
Milton, 41, also was two years older than Holmes, 39, when he committed fraud. Holmes argued that some key decisions at Theranos were pushed by her former boyfriend and business partner, Sunny Balwani.
Milton claimed that company board members Steve Girsky and Jeffrey Ubben encouraged him to speak about Nikola publicly. During his trial, however, former Nikola CEO Mark Russell and former CFO Kim Brady said they and others encouraged Milton to tell the truth about the company.
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