What a Presidential Pardon Does Not Erase in a Fraud Case

Does a pardon stop civil lawsuit claims over the same conduct? In a fraud case, the answer is no. A pardon, like an acquittal or a dismissal, closes the criminal case. It does not close the fight over money. On September 9, 2026, U.S. District Judge Steven P. Logan of the District of Arizona ruled that the presidential pardon granted to Nikola founder Trevor Milton does not bar investor securities-fraud claims that he and the company exaggerated Nikola's prospects, according to Law360.

The ruling is a useful map for anyone facing a fraud charge. It shows how one set of facts can produce several separate cases, and how clemency reaches only one of them. Below is what a federal pardon removes, what it leaves in place, and why that matters long before anyone is thinking about clemency.

Does a pardon stop a civil lawsuit?

No. The Justice Department's Office of the Pardon Attorney says in its official FAQ that a pardon does not end civil proceedings, and it names civil forfeiture, IRS actions and SEC actions as examples. A pardon is aimed at criminal punishment. Claims brought by people or companies who say they lost money run on a separate track.

That is the line Judge Logan drew in the Arizona investor case, as reported by Law360. The opinion sat behind a paywall when this article was prepared, so we are not quoting the court or describing its reasoning. What is reported is the outcome: the pardon did not end the civil claims.

The investor case has a long history in front of the same judge. On February 2, 2023, Judge Logan dismissed the consolidated investor class action against Milton without prejudice for failure to plead loss causation, according to a release from Cahill, the firm that represented him. A dismissal without prejudice leaves the door open to refile, and the case continued.

The case in brief

• October 2022: Milton was convicted in the Southern District of New York on one count of securities fraud and two counts of wire fraud (NBC New York / CNBC).

• December 2023: He was sentenced to four years in prison and remained free while he appealed.

• February 2025: Nikola, which had peaked at a valuation of about $30 billion in 2020, filed for Chapter 11 bankruptcy.

• March 27, 2025: Milton received a full and unconditional pardon, according to the DOJ pardon warrant. It was announced the next day.

• September 9, 2026: Judge Logan ruled the pardon does not bar the investor civil claims.

What does a presidential pardon remove?

A federal pardon removes the parts of a sentence that have not yet been served or paid, and it restores civil rights such as voting, jury service and holding office, according to the DOJ FAQ. For Milton, that meant the four-year prison term was gone.

Restitution is where the timing mattered. About two weeks before the pardon, prosecutors asked U.S. District Judge Edgardo Ramos to order about $680 million in restitution to Nikola shareholders and $15.2 million to one wire-fraud victim, Peter Hicks, Courthouse News reported. The pardon arrived before any order was entered, so no restitution could be imposed.

It is more accurate to say the pardon prevented restitution than that it wiped restitution out. No order ever existed. ABC News reported in June 2025 that President Trump's pardon warrants state that no further fines or restitution be collected, language that former pardon attorney Liz Oyer called "without precedent."

Does a pardon erase a conviction from your record?

No. The DOJ says a pardon does not expunge a conviction. Both the conviction and the pardon remain on the record, and a pardon does not signify innocence.

That principle is old. In Burdick v. United States (1915), the Supreme Court said a pardon "carries an imputation of guilt; acceptance a confession of it." For a reader hoping clemency means a clean slate, the practical point is simple: a pardon forgives punishment. It does not rewrite history, and it is not a substitute for expungement or sealing.

Can investors and companies still sue after a pardon?

Yes. Milton's case shows three different kinds of private money claims that kept going after the pardon.

1. Investor securities suits

The September 9, 2026 Arizona ruling is the clearest example. Shareholders who say they were misled can pursue civil claims regardless of what happened in the criminal case.

2. The company's arbitration award

Nikola itself paid $125 million in 2021 to settle SEC fraud charges. An arbitration panel later held Milton responsible for 97 percent of that amount under his separation agreement. On October 20, 2023, an American Arbitration Association panel awarded Nikola about $165 million plus interest against Milton for breach of fiduciary duty (FreightWaves). The award was confirmed in federal court in Arizona (Nikola Corp. v. Milton, No. CV-23-02635-PHX-DJH).

Milton argued that the pardon wiped out the underlying misconduct. On February 5, 2026, the Ninth Circuit affirmed the award of about $167 million and rejected his bid to vacate it, Bloomberg Law reported.

3. The bankruptcy claim

Milton filed a $69.7 million claim against Nikola in its bankruptcy. In September 2025, Bankruptcy Judge Thomas Horan subordinated that claim, pushing it behind other creditors, and rejected Milton's pardon defense, holding that a pardon does not declare innocence (Bloomberg Law). Milton appealed to the U.S. District Court for the District of Delaware, filing his brief on January 30, 2026, before Judge Gregory B. Williams. We could not confirm the current status of that appeal.

Can the SEC or IRS still pursue someone after a pardon?

As a legal matter, yes. The DOJ lists SEC and IRS actions among the civil proceedings a pardon does not end. Whether an agency keeps going is a separate, discretionary decision.

In Milton's case, the SEC chose to stop. On September 11, 2025, the SEC and Milton filed a joint stipulation dismissing SEC v. Milton (S.D.N.Y. No. 1:21-cv-06445) with prejudice, meaning it cannot be refiled. The agency said it acted "in the exercise of its discretion" and did not mention the pardon (SEC Litigation Release No. 26397).

Bloomberg Law reported that the SEC also dropped civil cases against other clemency recipients, including Carlos Watson of Ozy and Devon Archer. Legal experts, including Richard Painter, told Bloomberg Law that a pardon does not let a defendant avoid paying investors. The general rule, then: government civil actions can survive a pardon. In this case, the SEC's did not, because the agency walked away.

Can a state prosecute after a federal pardon?

Yes, as a general rule. The president's pardon power under Article II covers "offenses against the United States," and the DOJ says a presidential pardon applies to federal offenses only. Under the dual-sovereignty doctrine reaffirmed in Gamble v. United States (2019), state and federal governments may each prosecute the same conduct.

Taken together, a federal pardon leaves state charges available. This is a statement of the law, not a prediction: Milton faces no known state charges.

Do you get fines or restitution back after a pardon?

Generally, no. The DOJ says remission of financial penalties applies only to amounts not yet paid.

The rule traces to Knote v. United States (1877). The Supreme Court held that a pardon cannot reach money already paid into the U.S. Treasury without an act of Congress, does not disturb rights that have vested in others, and "does not give compensation for what has been done or suffered." A defendant who paid restitution or fines before a pardon should not expect a refund. Only the unpaid balance is in play. In Milton's case nothing was ever ordered, so there was nothing to refund or remit.

What this means if you are facing a fraud charge

Very few fraud defendants will ever receive a pardon. The more useful lesson from this case applies to everyone: the criminal case and the money cases are separate, and ending one does not end the others.

• Plan for two tracks. The government brings the criminal case. Investors, employers, customers and regulators can bring civil claims, arbitrations or enforcement actions, each with its own rules and burden of proof.

• No criminal outcome guarantees civil peace. A plea, a verdict, a dismissal or clemency rarely ends civil exposure for the same conduct.

• Restitution and civil judgments are different debts. Restitution is ordered in the criminal case. Civil judgments and arbitration awards are owed to private parties. Milton's restitution request never became an order, but the arbitration award stood.

• Your contracts can create their own liability. The arbitration panel held Milton responsible under his separation agreement. Employment, severance and indemnification agreements can matter as much as the criminal charge.

• Ask about admissions early. Before any plea or statement, ask your lawyer how criminal-case admissions could be used against you in parallel civil or SEC proceedings.

The bottom line

For Milton, the pardon removed a four-year prison term and blocked a restitution order that had not yet been entered. It did not remove the conviction from his record, the investor lawsuit, the roughly $167 million arbitration award, or the ruling that pushed his bankruptcy claim to the back of the line. Pardons for fraud are rare for ordinary defendants. Civil liability for the same conduct, which outlasts the criminal case, is not.

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• More White Collar Crime coverage

Sources

• Law360: Ex-Nikola CEO's Pardon Doesn't Let Him Beat Investor Suit (Sept 9, 2026)

• Cahill: Dismissal of the Civil Consolidated Securities Fraud Action (Feb 2, 2023)

• U.S. Department of Justice, Office of the Pardon Attorney: Frequently Asked Questions

• U.S. Department of Justice: Pardon warrant, Trevor Milton (March 27, 2025)

• SEC Litigation Release No. 26397: Trevor R. Milton

• NBC New York / CNBC: Trump pardons Nikola founder Trevor Milton in securities fraud case

• Courthouse News Service: Trump pardons Nikola founder Trevor Milton

• ABC News: Trump's pardons have shortchanged fraud victims of millions of dollars in restitution (June 12, 2025)

• Bloomberg Law: SEC Enforcers Ease Up on Fraudsters After Trump Criminal Pardons

• Bloomberg Law: Nikola Bankruptcy Appeal Tests the Reach of Trump's Pardon Power

• Bloomberg Law: Nikola Founder Loses 9th Cir. Appeal to Vacate Arbitration Award

• FreightWaves: Nikola claws back $165 million from founder Trevor Milton

• Burdick v. United States, 236 U.S. 79 (1915), Cornell LII

• Knote v. United States, 95 U.S. 149 (1877), Cornell LII

• Gamble v. United States (2019), Cornell LII

Note: This article contains AI-assisted content and has been reviewed by our editorial team.

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