There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Caleb Newquist: In January 2018, a video exploded across social media. It showed a massive futuristic semi truck sleek, silent, gliding down a desert highway. The caption read behold the 1000 horsepower, zero emission Nikola one semi truck in motion. People lost their minds. The truck looked like something out of a sci fi movie. Nikola Corporation was going to revolutionize trucking. Hydrogen fuel. Zero emissions. [00:00:30] The future. Right now, there was just one thing nobody knew. The truck had no motor, no fuel cell, no gears. It wasn't driving. It was rolling.

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Caleb Newquist: This is all my fraud. A true crime podcast where money walks after all the bullshit talks. I'm Caleb Newquist. Hey there. How's it going? How are you? Anything to report, I think. Oh, the World Cup has begun. Um. So, yeah, if you have the fever, then enjoy. I will pop in and out. Probably. [00:01:30] Um. What else? Oh, lots of lots of political ads lately I've noticed. There's so many political ads my kids are noticing and they just. And if there's if there are adults on TV, they they don't pay attention. And and, you know, my oldest especially is just like, why, why, why are there so many ads for this person? And I'm like, I don't know. Anyway, but the attack ads especially, she's even noticed the attack ads, how they kind of have a tone and a, and a like [00:02:00] a vibe to them. Um, and I know they're, you know, they're people don't like the attack ads or they, they say they don't like them. Um, because, you know, they've got these kind of nefarious methods and aims and, um, but I find them hysterical. I find them so funny. Um, like the voiceovers are so sinister and full of kind of these hilarious, exaggerated claims. Um, you know, and they always use these terribly unflattering photos [00:02:30] of the targets. You know, imagine if you're designing one of those things and you've got a checklist. And I feel like the number one, the number one thing at the top of that checklist for unflattering photos of the target is like all the double chin pictures, like get, get, get, find all the pictures of our target.

Caleb Newquist: Who, where, where they have a double chin, triple chin, if you can, you know, and if there's no multiple chins available, Then, you know, try finding a picture of them looking [00:03:00] like that. They're there just letting loose the worst belch that they've that they've ever had like that they, they, they just drank like an entire six pack of warm seven up like that is that is what people's faces look like on these ads. And then, and then they take like 7 or 10 words and then from like the, like, they patched together these words that they've used over the course of their entire lives. And then they put it into this suspicious statement. And then, and [00:03:30] so that doesn't make any sense. You know, everything's out of context. Then the ad ends with the voiceover stating the person's name and they and it's followed by, you know, something like too extreme for new Jersey or whatever it is. Like it's two something for the state where they're running. There's all this research around attack ads and their effectiveness, which is all very, you know, kind of clinical and boring. And I. So I don't know if they other [00:04:00] I don't know whether they work or not, but I do know that there are people out there, a fair number of people actually, whose job it is to like make these ads and put in like this dog whistle copy and find these terrible pictures of people looking like someone just sneezed on their Cobb salad, you know? Anyway, I do have one comment to share, and this is a fun one.

Caleb Newquist: Zack, my producer, Zack Frank sent this to me and we had a good laugh about it, but here it is from Apple Podcasts. [00:04:30] Uh, the headline for this, uh, review or this comment is terrible person gave it one star, uh, MD 2020 B that's who wrote it. And they write whoever thought it was okay to make fun of people with Crohn's disease is a terrible person. Now. I, I personally would never make fun of anyone with Crohn's disease. So immediately I realized that, well, [00:05:00] this isn't about me, but I don't. But I actually don't know what this is about at all. And I thought, well, that sounds like something that maybe Greg Kite would have said on an episode at one point. And Zach agreed. So, you know, we kind of I checked in with Greg. I said, hey, do you remember ever making Crohn's or IBS joke? And he said, this is what he he texted me back. He said, I don't remember doing it, but I wouldn't be surprised if I did. And I'm like, okay, yeah, see, he owns it.

Caleb Newquist: And [00:05:30] so, I mean, Greg's not a terrible person. Um, but then he said again, uh, a lot of people listen to podcasts while they're on the toilet. So I guess CPAs with Crohn's disease are probably a large part of the oh, my fraud listenership, which again, objectively funny, objectively funny. Okay. And, um. And of course, I got his permission to use this little exchange and um, anyway, I, we don't, we don't know. I think the other thing [00:06:00] Zach put Zach asked, uh, Claude or GPT one of them, uh, find the episode where there's maybe a joke about Crohn's disease or IBS. And, uh, the only thing they didn't, there was not a, um, there was not a definitive conclusion made by the bot, but the closest thing that it came to was something in episode two. Episode two. And it isn't even clear that it was about Crohn's disease because [00:06:30] Crohn's disease isn't mentioned. So I don't know, you know, um, so if you're listening out there, aggrieved person with probably Crohn's disease, I, I, I'm sorry about your situation. Uh, hopefully you are managing it as best you can. I know it's not fun. Um, but, uh, you know, uh, maybe clarify what you mean. Maybe, you know, point to specific instance where, uh, this [00:07:00] is, uh, that that, uh, is, uh, is grounds for your grievance. Okay. All right. Anyway, if you have questions, comments, or fraud stories, uh, share them with me.

Caleb Newquist: With us at o my fraud at earmark cpe.com. And yeah, leave, leave, leave comments, leave reviews on Apple or Spotify or whatever. Rate the show. All right, that's enough business. Time for some fraud. Trevor [00:07:30] Robert Milton was born in 1982 in Layton, Utah. He grew up in Kanab, a small town in southern Utah, population of a few thousand more red rock than anything else. His dad worked for Union Pacific Railroad. His mom was a realtor and sadly, when Trevor was 15, she died of cancer. By any normal resume standard, Trevor Milton was not the [00:08:00] obvious candidate to become a billionaire truck company founder. He dropped out of Utah Valley University after one semester. He didn't have an engineering background. He didn't have a finance background. What he did have was the ability to walk into a room, start talking, and make people feel like whatever he was selling was the future. He would later describe his learning style this way. Quote, I gained all my knowledge in the real world. I [00:08:30] like to learn by touching things, which is a charming way of saying I figured it out as I went. And for a while, for a surprisingly long while, that worked. His first company was Saint George Security and Alarm, a home security installation business. He sold it to a Nevada businessman named Glen pills, who drained his 401 K and savings account to buy it, and who would later [00:09:00] tell CNN that the books hadn't been what they appeared.

Caleb Newquist: Pills described the experience as a section of his life. That quote sucked. Then came You, Pillar, an online classified site for used cars. Milton would later say, without apparent irony, that they quote, would have ended up being Amazon, but they grew too fast. You pillar was not Amazon. It was a used car website in Utah. Next [00:09:30] was Dihybrid, a company that converted diesel truck engines to run on compressed natural gas. This one is actually worth pausing on, because D hybrid is where the Trevor Milton playbook really started to take shape. Hybrid landed a deal with Swift Transportation, one of the largest trucking companies in the United States. Swift gave Milton $2 million up front and a $322,000 loan to get conversions [00:10:00] rolling. The Wall Street Journal podcast Bad Bets, reported that it was around this time while investors were waiting for this revolutionary truck technology to work, you pillar was also sponsoring what it hoped would be the world's largest silly string fight. Thousands of people, strobe lights, 8000 cans of silly string money cannons blasting cash into the crowd. And if you're asking yourself, what does any of that have to do [00:10:30] with converting semi-trucks to run on natural gas, the answer is nothing. Nothing at all. Anyway, by the time the money was gone, D hybrid had completed exactly five test conversions. Swift sued another investor, sued.

Caleb Newquist: The company failed. Now, it's worth noting that in these early ventures, Trevor Milton was not raising money from sophisticated [00:11:00] investors. The Wall Street Journal interviewed some of these early investors who said they put in life changing money. One man put $40,000, basically everything he had. Another said he scraped together about 3000, in part with cash advances from credit cards. But nevertheless, these failures were part of the Trevor Milton story. Part of the legend. And so Trevor, always [00:11:30] on the lookout for opportunity. He pivoted Dihybrid to a new venture called Dihybrid Systems. Instead of converting diesel trucks to compressed natural gas, Dihybrid systems focused on natural gas storage systems specifically for heavy duty trucks. Trevor was able to sell some of the hybrid systems assets to Worthington Industries for about $12 million. And the next thing Trevor Milton started would be much, [00:12:00] much bigger. In 2015, Milton founded Nikola Motor Company in Salt Lake City. The name was not subtle. Nikola Tesla was the Serbian American inventor who made significant contributions to electrical engineering during the late 19th and early 20th centuries. His last name was already on Elon Musk's electric car company. The [00:12:30] company everyone in clean transportation was chasing. So Trevor Milton took the first name because Trevor Milton was not just trying to build a truck company, he was trying to build a Trevor Milton company. And the template for that was Elon Musk. Milton talked about Musk constantly, sometimes admiringly, sometimes competitively, often both at once.

Caleb Newquist: When Musk sent an [00:13:00] internal Tesla email saying it was time to go all out on the Tesla Semi, Milton responded publicly, quote, he doesn't like us, and that's okay, he told journalists with complete sincerity, quote, there's very few people that can out Elon in this world, and I'm one of them. To be fair to Trevor Milton, in this rare instance, he was at least half right. He wasn't entirely wrong about what [00:13:30] made Elon Musk work. Musk understood that in the modern investment landscape, the story is the infrastructure. If people believe in the vision, the vision attracts capital, and capital can sometimes turn the vision into a real thing. Trevor Milton watched that playbook and thought he could run it. The difference, the very crucial difference, [00:14:00] was that Elon Musk was actually building things. Painful, chaotic, often disastrously late things, but real things. Tesla made cars. Spacex landed rockets. Milton was trying to, you know, skip the hard part. The whole whole building thing. He wanted to get straight to the bit where everybody thinks you're a genius. So what was the pitch for Nikola? Hydrogen [00:14:30] electric semi trucks, massive zero emission class eight rigs that would replace diesel across the American trucking industry. And not just the trucks. Nikola would build the fuel network to hundreds of hydrogen fueling stations across the US and Canada so drivers would never be stranded.

Caleb Newquist: The trucks and the fuel bundled together. Vertically integrated green trucking. The whole thing. So the idea was that Nikola [00:15:00] wasn't just the next Tesla. It was going to be the next ExxonMobil, too. The numbers Milton threw around were staggering reservations worth billions of dollars, partnerships with Bosch, with nel hydrogen, eventually with Anheuser-Busch, which placed an order for 800 trucks. Milton celebrated the Anheuser-Busch partnership by writing out for a photo op in a wagon pulled by Budweiser's Clydesdales. Because [00:15:30] Trevor Milton was always going to find a way to make it about Trevor Milton. He even appointed his brother Travis as director of hydrogen production and infrastructure. Now, this wasn't any ordinary job. This job required someone with highly technical knowledge, expertise, and experience in engineering and manufacturing. But according to Hindenburg Research, [00:16:00] Travis prior experience appeared to consist largely of construction and remodeling work in Hawaii. Nevertheless, Travis was now helping oversee Nikola's planned hydrogen infrastructure, and investors believed it. Early investors, strategic partners and eventually the public. They all believed it because Trevor Milton was very, very good at making unfinished things sound [00:16:30] inevitable. Before we go any further, it's worth just stopping for a second because on paper, this is a really good business, you know, groundbreaking, innovative stuff that could really change the way, you know, commerce works in the United States. When you think about it, you know, long haul trucking is one of the most expensive industries in the world to operate.

Caleb Newquist: A [00:17:00] single truck can drive 100,000 miles a year and burn through tens of thousands of dollars in diesel fuel. That fuel can, you know, eat up 20 to 30% of the operating costs. And there's there's no good alternative. Battery electric trucks are very heavy, and charging is still a problem, especially for long haul routes. Even if the truck works, downtime that is recharging the battery would take hours. [00:17:30] And that kills you in a business that is built around tight delivery schedules. Hydrogen, in theory would solve all of that. You can refuel in minutes, not hours. You get longer range, zero emissions. If someone actually figured out how to produce hydrogen cheaply and built a fueling network across the country, you wouldn't just have a good company. You'd have one of the most valuable infrastructure businesses in the world. That's [00:18:00] what Trevor Milton was selling. Now, just, you know, a little sidebar. Can I get a show of hands for everyone who's seen a hydrogen car in real life? Out in the wild. Sorry. Lights in my eyes. Is that. Do I see a hand in the back? Oh, sorry. Oh, you were stretching. Got it, got it. Sorry. So no one. All right. That's kind of [00:18:30] the point. Even in places like California, there are barely any fueling stations. You can't just drive wherever you want. You have to plan around where you can fill up. The Department of Energy actually has a map that shows the number of hydrogen fueling stations by state.

Caleb Newquist: It's in the show notes if you care to peruse it. And yes, California by far has the most. Any guesses as to how many. 5050 [00:19:00] hydrogen fueling stations for 40 million people. And you thought the fuel lines after September 11th were bad? Imagine one station for 800,000 people. Anyway, second place for the number of hydrogen fueling stations is every other state with zero. And that's the entire problem. Trevor Milton wasn't saying he could solve this problem. He was saying he already had. [00:19:30] On December 1st, 2016, Trevor Milton walked onto a stage at an event in Salt Lake City. Behind him, hidden under a large white sheet set, the Nikola one, a hydrogen electric semi truck that was going to change everything. Milton was in his element. He built to the reveal, slowly addressing his doubters directly, saying, quote, [00:20:00] for every person out there that said, there's no way this can be true. How can that be possible? We've done it. Then the sheet dropped and the crowd went wild. The truck was enormous and futuristic. Swooping lines and aggressive angles looked like someone had asked a Hollywood designer to imagine what trucking would look like in 2050. And Trevor Milton. He soaked it all in. What the crowd couldn't see was that a few weeks earlier, Nikola's [00:20:30] chief engineer had told Milton the truck would not be functional for the unveiling.

Caleb Newquist: He recommended postponing the event, but Trevor Milton decided to proceed anyway. And this wasn't happening in a vacuum. Engineers knew. Executives knew people inside. Nikola understood there was a gap between what Milton was saying publicly and what the truck could actually do. Nevertheless, the event went forward, [00:21:00] according to a report in Bloomberg, people familiar with the truck said gears and motors were missing and there was no fuel cell on board. So when the Nikola one sat there on stage, it wasn't a working prototype. It was in the most literal sense possible, a very expensive prop. But it was a beautiful prop. And Trevor Milton was a very convincing presenter. And on December 1st, [00:21:30] 2016. That was enough. Milton didn't just imply the truck worked. He said it at the event, he told the crowd that Nikola had put up a chain to keep people from bumping into the vehicle controls. We're going to try to keep people from driving off, he said. Then he added, this thing fully functions and works. And in another interview from inside the cab, Milton went even further. He said the Nikola [00:22:00] one quote was not just a pusher industry slang for a vehicle that looks real, but has to be pushed around because it can't move on its own. Each of these statements were remarkable because one, the truck did not fully function, and two, it could not move on its own.

Caleb Newquist: The truck did not work, but the Nikola one was only the beginning. Prosecutors would later say that Milton made false claims about nearly every aspect [00:22:30] of Nikola's business. Not some aspects. Nearly all of them. First there was the hydrogen. Hydrogen fuel is real technology. It works. It has genuine appeal for trucking. The problem is producing it cheaply and building the infrastructure to deliver it. Producing, storing and distributing it are incredibly inefficient and expensive. Milton [00:23:00] claimed that Nikola was producing hydrogen and doing it at a cost that undercut competitors. If that were true, Nikola wouldn't just have trucks. It would have the fuel, the stations and the moat around the entire business. But Nikola was not producing hydrogen. Not expensive hydrogen. Not cheap hydrogen. No hydrogen at any cost. Then there was the badger. This [00:23:30] was Nikola's pickup truck, announced in 2020 to enormous fanfare. Milton described it as being built from the ground up, using Nikola's own parts and technology. He talked about it the way a founder talks about something he had spent years building. The Badger became the next big Nikola story. That story was that it would take on the Ford F series pickup trucks, the best selling vehicles in the U.S. for forever. People put down reservations, but Nikola [00:24:00] did not have the technology to build the Badger. The plan, which Milton knew and did not disclose, was to rely on General Motors technology through a partnership that had not even been finalized.

Caleb Newquist: The truck Milton described as Nikola's own achievement, was more like a placeholder dressed up as a breakthrough. There were the orders. Milton talked constantly about demand billions of dollars in reservations, a backlog that proved the market wanted what [00:24:30] Nikola was building. What he didn't emphasize was that most of those reservations were non-binding. No deposit required. Cancel at any time for free. Milton had even bragged about removing the deposit requirement after Tesla was criticized for doing the same thing. As if making the reservations easier to cancel somehow made the order book more impressive. Nikola's order book was not billions of dollars in locked in revenue. It was real interest, but it was not real commitment, [00:25:00] not real revenue. And then there was the video. Actually, let's go back to the video because we left something out of the cold open. Something important. In January 2018, two years after the Salt Lake City unveiling and well after the Nikola one had been publicly celebrated as a working prototype, Nikola posted a video called Nikola One in Motion. It showed the truck cruising [00:25:30] down what appeared to be a flat desert highway. Remember the caption? It read, quote, behold the 1000 horsepower, zero emission Nikola one semi truck in motion. But also remember, the truck had no motor, no fuel cell, no gears to move it. So how was it moving? Hindenburg Research, the short selling firm that would eventually blow this [00:26:00] whole thing open, sent an investigator to find the filming location, and they found it.

Caleb Newquist: A remote stretch of road on the old Mormon Trail south of Grantsville, Utah. Straight, lightly traveled and sloped downhill just enough to get the truck rolling at what looked like highway speed. Milton himself had said the Nikola one weighed about 21,000 pounds. So this wasn't a golf cart [00:26:30] rolling down a driveway. This was a ten ton semi coasting downhill. While the company framed it as in motion, Nikola had towed the truck to the top of the hill, positioned the camera so the road looked flat in some shots, at least even slightly uphill in some cases, and filmed it rolling down. In its official response, Nikola later said it, quote, never [00:27:00] stated its truck was driving under its own propulsion in the video, which is kind of a weird sentence that sounds like a defense until you read it a second time. When Arizona Governor Doug Ducey watched that video at a ceremony celebrating Nikola's planned Arizona manufacturing facility, he announced, quote, Nikola Motor Company is coming to Arizona. This is a huge announcement. He had no idea. [00:27:30] He was just watching a truck coast down the hill. Now, Milton did not invent the idea of a flashy product demo that overstates reality. Silicon Valley has a long tradition of demo theater showing something in its best possible light. And, you know, glossing over what wasn't quite ready.

Caleb Newquist: The fine line between ambitious and fraudulent can be a blurry one, but there's no version of the truck has no motor, and we filmed it rolling downhill. That lives [00:28:00] on the ambitious side of that line. By June 2020, the Nikola story was working beyond anything that should have been possible. And the reason it was working. The reason any of this worked at scale was that Milton had found his audience, not institutional investors, with analysts and due diligence teams, not sophisticated funds, with lawyers [00:28:30] reading the fine print. Milton went directly to regular people, and he talked to them constantly. His platform was social media, podcasts, TV interviews. He posted on Twitter like a man who had nothing to hide, which was a very effective thing to do when you had everything to hide. And Trevor Milton was good at it. He wasn't posting dry corporate updates and hoping for the best. He was very entertaining, accessible. He answered questions from random retail investors like [00:29:00] they were old friends. He talked about hydrogen costs, truck specs, partnerships, contracts, timelines, always with the confidence of an engineer despite not being one. And when skeptics push back, he didn't calmly address the criticism. He made doubt look like Jealousy, their haters, paid attack accounts, Tesla fans trying to tear down a competitor. It was a playbook designed to make skepticism feel [00:29:30] like weakness. And I have to say, this kind of intense rivalry between two automobile manufacturers.

Caleb Newquist: This is kind of old hat. There are rivalries in virtually every major automobile culture Italian, German, American, Japanese. They're all there, and they are legendary. So just seem right that Nikola versus Tesla was destined to be another one. Nikola [00:30:00] went public through a special purpose acquisition company, or Spac. Spacs have come up in a few of our episodes, but in case you're unfamiliar, here's a quick refresh in plain English. Becoming a public company through a Spac means Nikola did not go public. [00:30:30] The typical way, which is filing for a traditional initial public offering or IPO, and having investors evaluate the company directly before it was listed. Instead, Nikola merged with the company that was already public, a company created for the purpose of finding a private business to take public. For Nikola, that meant a faster route onto the stock market. It also meant Milton [00:31:00] had more room to promote the company's future projections than he would have had in a traditional IPO process, and Milton exploited that room with everything he had. It was 2020. The pandemic had shut down. The economy sent unemployment surging and trapped millions of people at home with nothing to do and in many cases, a stimulus check. They weren't sure what to do with. A new generation of retail investors had piled into the market. Many of them for the [00:31:30] first time, drawn in by commission free trading apps like Robinhood that made buying stocks feel as easy as ordering takeout.

Caleb Newquist: Watching Milton's social media presence that summer, you could see why people felt like Nikola had already won, like the hard work was done, and the only question was how big the payoff would be. That feeling, that sense of being on the inside of something inevitable is exactly what Trevor Milton was selling. And [00:32:00] in the frenzied, stimulus check fueled Robinhood era summer of 2020, it was exactly what people wanted to buy. These were not people who had spent years looking at balance sheets. They were people who had watched the market recover from the 2008 financial crisis and missed it, and were determined not to miss out on the next one. They were people who had seen early Tesla investors become millionaires [00:32:30] and were looking for the next Tesla. There were people who were home, online scrolling and susceptible to a great story, told with great confidence by someone who looked exactly like what they imagined a visionary founder looked like. Trevor Milton was that person. And Nikola Hydrogen zero emissions the Future of trucking, a $10 billion order book. That was the story. Nikola went public on June 4th, [00:33:00] 2020. Within five days, the stock had more than doubled. On June 9th, it peaked at nearly $80 a share. The market cap briefly touched $30 billion, surpassing Ford, a company that had been manufacturing vehicles for 117 years and had roughly $156 billion in annual revenue.

Caleb Newquist: Nikola had no revenue. Nikola had not delivered a single truck. Trevor [00:33:30] Milton's personal stake was worth around $12 billion. He bought himself a $6 million Gulfstream private jet paid with Nikola Stock. The seller was a Nikola board member. The peak of Milton's credibility came on September 8th, 2020, when Nikola announced a partnership with General Motors. Gm would receive an 11% stake in Nikola, then valued at roughly $2 billion, in exchange for supplying hydrogen and battery [00:34:00] technology and manufacturing the Badger pickup. Milton called it, quote, a partnership made in heaven. On a media call with GM CEO Mary Barra. Think about what that meant. General Motors, one of the largest automakers in the world, had just legitimized Nikola. And what did it get in return for agreeing to do all this work? The engineering, the technology, the manufacturing? Unclear. A buzzy press release that put them next to a much [00:34:30] hyped startup. Maybe. Whatever the skeptics have been saying, GM's name was now attached to this company. Trevor Milton had done it. He had parlayed An ocean of lies, as Hindenburg would later put it, into a partnership with the largest auto original equipment manufacturer in America. It was the high point of the performance, and it lasted for two days. On September 10th, 2020, [00:35:00] Hindenburg Research published a report titled Nikola How to Parlay an Ocean of Lies into a partnership with the largest auto OEM in America. It alleged that Nikola was, in Hindenburg's words, quote, an intricate fraud built on dozens of lies over the course of its founder and executive chairman, Trevor Milton's career.

Caleb Newquist: It included text messages from former employees, recorded phone calls, private emails and behind the scenes photographs. It [00:35:30] detailed The Hill. It detailed the hydrogen claims. It detailed the badger. All of it. Milton's response was to go on Twitter and call it a hit job quote. It will take the rest of the day to address the one sided false claims, he wrote. In the meantime, troll on. He did not address them. Ten days later. Trevor Milton resigned as executive chairman of Nikola. In his farewell note to employees, he said Nikola [00:36:00] is truly in my blood and always will be. Then he deleted his social media accounts and disappeared in pretty short order, the Securities and Exchange Commission and the Department of Justice launched investigations. The deal with General Motors that fell apart, and in July 2021, a federal grand jury indicted Trevor Milton on two counts of securities fraud and two counts of wire fraud. The [00:36:30] indictment described him as a serial entrepreneur from Utah with no formal background in engineering. Milton pleaded not guilty, and he was freed on $100 million bail. Meanwhile, Nikola's stock price cratered. The company that had briefly been worth $30 billion shed value by the day. The retail investors who had bought in at the peak, the people who had seen the future of trucking and [00:37:00] wanted a piece of it.

Caleb Newquist: They watched their accounts collapse in real time. Some had put in a few hundred dollars, some had put in their life savings. Prosecutors would later calculate that retail investors lost more than $660 million in total. And this is what made the Nikola Trevor Milton fraud different from any of the white collar cases that make the news. The victims weren't institutions who should have known better. They [00:37:30] were ordinary people who Milton reached in their social media feeds on podcasts they listened to in their living rooms during the worst economic disruption in a generation. And he told them a story designed to make them believe. The U.S. attorney said as much at the time of the indictment. Some of these investors suffered losses in the tens and hundreds of thousands of dollars, including, in some cases, the loss of their retirement savings or funds they had borrowed to invest. The [00:38:00] government's case was built around a simple argument. Trevor Milton knew what he was saying was false. He said it anyway. And he said it to people who trusted him to prove it. They called more than a dozen witnesses, including the people who had been closest to him, Nikola's own CEO and CFO, Mark Russell, who had taken over as CEO and Nikola went public, testified that he learned only after joining the company that the Nikola one had never had a working [00:38:30] turbine or fuel cell.

Caleb Newquist: When Milton unveiled it, he also testified that at some point he, the CFO and Nikola's chief counsel, had staged what he called an intervention with Milton over his public statements, warning him that his exaggerations were going to cause serious problems. Russell said he threatened to quit. He didn't, though, because he was worried that it would destabilize the company. And Trevor [00:39:00] Milton kept talking. Cfo Kim Brady testified that Milton's statements, quote, could be Inaccurate or exaggerated. He also offered what might be the most revealing detail of the entire trial, and that is this when Nikola's stock fell $5 on its very first day of trading, Trevor Milton called CFO Kim Brady and asked if something was wrong with the Nasdaq. Yes. [00:39:30] Brady explained that the decline was simply supply and demand. Trevor Milton still insisted that Brady contact the exchange. A Bloomberg story detailed the exchange in court. Quote, did you do that? Assistant U.S. Attorney Matthew Podolsky asked. No, I did not, Brady said. Yeah, the man who had built [00:40:00] a $30 billion company on investor confidence apparently did not understand that stock prices sometimes go down, and a CFO wasn't going to call the Nasdaq to see if everything was okay, because that would be insane and humiliating. Prosecutors also called Peter Hicks, the seller of Wasatch Creek's ranch, a 4600 acre Utah property. [00:40:30] Milton bought partly with Nikola stock options. Hicks testified that Milton talked up Nikola's business and truck orders, convincing him to accept options that were valued at millions of dollars at the time.

Caleb Newquist: The deal closed in August 2020. Less than a month later, the Hindenburg report dropped, Nikola's stock cratered, and the options became essentially worthless. Fortunately for Trevor Milton, he managed to sell hundreds of millions [00:41:00] of dollars in Nikola stock before the report came out. Trevor Milton chose not to testify in his own defense. The defense rested in just over a day, calling one witness, a Harvard law professor who argued that Milton's public statements hadn't actually moved the stock in any meaningful way. Earlier in the trial, one of Trevor Milton's attorneys, Marc Mukasey, argued that the downhill [00:41:30] truck video was basically advertising puffery. Quote. As far as I know, it's not a federal crime to use special effects in a car commercial. And I have to say that's pretty gangster Marc Mukasey. That is a that is a fine point you've made. Anyway, Mukasey closed by telling the jury Trevor Milton loved Nikola like a child. He did not have fraud in his heart, which I don't know. What does that even mean? The legal standard [00:42:00] isn't fraud in the heart. If it were, every white collar defendant would just show up with a clean echocardiogram. Prosecutor Jordan Estes closed for the government quote. Trevor Milton is a con man. Why did he do this? Money and power. He wanted to be in the Forbes 400.

Caleb Newquist: An astounding level of greed. This fraud was brazen. After the month long trial, a jury of nine men and three women deliberated and convicted [00:42:30] Trevor Milton on three of the four counts. While awaiting sentencing. Milton had served no time. He remained free on his $100 million bail. Living on his ranch in Wyoming while the case moved toward sentencing for the people who had lost money, the pandemic traders, the first time investors, the retirees. The conviction was something. But it was not the same thing as seeing Trevor Milton punished. It took another 14 [00:43:00] months to get him in front of a judge for sentencing. You know, the courts, you know, pandemic courts real slow, you know, probably standard time frame. But anyway, the sentencing hearing came in December 2023. Milton showed up and sobbed. He told the judge he had grown up milking cows. He said he had no college degree. He said his intent was never to harm anyone. At one point, he claimed he hadn't [00:43:30] resigned from Nikola because of the fraud allegations. He'd done it to support his wife. He asked for probation. Milton's defense attorneys argued that he wasn't trying to defraud anyone. He just wanted to be loved like Elon Musk. Judge Edgardo Ramos sentenced him to four years in prison, a $1 million fine forfeiture of the Utah ranch, and prosecutors sought full restitution of $660 million dollars. [00:44:00] But even after the sentencing, Trevor Milton remained free on bail. On March 27th, 2025, Trevor Milton was driving somewhere when his phone rang.

Trevor Milton: What's up guys? Oh my gosh. Oh, you won't believe just what happened. Um sorry. It's it's pretty hard for me [00:44:30] to talk about, but, um, probably the best day I've had in five years. I just got a call from the president of the United States on my phone, and he signed my full and unconditional pardon of innocence, I am free. The prosecutors can no longer hurt me. They can't destroy my family. They can't rip everything away from me. They can't ruin my life. I get to be with my wife now. I get to be with my family. It [00:45:00] is done. It's over. I am now officially pardoned by the president of the United States. 4547. An amazing man that cared enough to call me personally to tell me how much of an injustice this all was done by the same offices that harassed and prosecuted him. And I'm now officially 100% pardoned. And I wanted to tell everyone out there, all the people that supported me and fought through all the bull [00:45:30] crap, fought all the lies, fought against all the short sellers and the destruction that they do and everybody else involved. The greatest comeback story in America is about to happen. And I just wanted to tell you guys thank you.

Caleb Newquist: Full and unconditional pardon of innocence. He said that out loud on Instagram, Which I guess this has to be explained. But [00:46:00] that is not what a pardon is. It's not what it means. A pardon does not travel back in time and put an engine in a truck. And also maybe from just a legal standpoint, a pardon does not mean you are innocent. It means that you are forgiven for your crime. A pardon does not exonerate you. It does not expunge your record. Those are very different things. The fact that you are convicted remains a matter of public record. In [00:46:30] fact, because I went down a bit of a rabbit hole, as I tend to do in the case of another person who received a full and unconditional pardon from President Trump, Michael Flynn, the judge in his case, Emmet Sullivan, when dismissing that case because of the pardon, said this, quote, a pardon does not necessarily render innocent a defendant of any alleged violation of the law. Indeed, the Supreme Court has recognized [00:47:00] that the acceptance of a pardon implies a confession of guilt. So if you can get that all back to Trevor, maybe he'll stop saying that. When Trump was asked by reporters why he pardoned Trevor Milton, he explained, quote, they say the thing that he did was he was one of the first people that supported a gentleman named Donald Trump for president. He supported Trump. He liked [00:47:30] Trump. I didn't know him, but he liked him. Then he added, they persecuted him.

Caleb Newquist: They destroyed five years of his life and he did nothing wrong. Yes, Trevor Milton had supported Donald Trump by donating almost $2 million to various Trump reelection efforts and political action committees. For the record, Trevor Milton has said that his donations had nothing, not a thing to do with him. Getting a pardon [00:48:00] never came up, he said. It never came up. It's like, because that's how that's how these things work. They have to be explicitly stated, right? Yes. And because of this pardon, by the way, not only did Trevor Milton not have to go to jail, the financial consequences also disappeared. The restitution and penalties wiped away. Nikola had already filed for bankruptcy in February. The [00:48:30] investors got nothing. Trump's pardon may have ended Milton's criminal punishment, but it did not automatically erase the financial consequences. Separately, Nikola had won an arbitration award requiring Trevor Milton to reimburse the company for roughly $168 million tied to the SEC settlement and legal fees. Milton has argued that the pardon should reach that fight too, not just the criminal case, but [00:49:00] the separate question of whether Nikola can collect from him. As of this recording in June 2026, Trevor Milton was still trying to use the pardon to avoid paying that bill. And so, you know, if somebody wants to pass along a civics lesson to Trevor Milton and explain the difference between criminal court proceedings and civil court proceedings and like and what the presidential, you know, clemency power, [00:49:30] you know, what that involves, because it's written right in the Constitution.

Caleb Newquist: Pretty clear from what I understand, not an expert, but from what I understand, pretty clear. And it doesn't say anything about, you know, civil cases. Anyway, after the pardon, Milton went back on offense. He did a of course, Tucker Carlson interview. He called the whole thing, of course, a conspiracy. He said he'd been railroaded. He [00:50:00] even. My favorite part. He even self-financed a documentary to tell his side of the story, which he could have done in a court of law. He could have done it there. But no, he wanted to self-finance a documentary and I watched it. I fast forwarded through some bits in the beginning, but I watched pretty much the whole thing, and it's linked in the show notes. If you care to also watch it, I would invite you to watch it. But be forewarned, it is very [00:50:30] sympathetic to Trevor Milton and that's fine. Mini documentaries, dare I say. Most of them, uh, they they take a position. It's not a purely documentaries are not purely objective. Right. Um, and in this case, it is a very sympathetic view for Trevor, Milton, Trevor and many of his family members and people who remain loyal to him, are interviewed extensively throughout the overall vibe. You will maybe find [00:51:00] familiar. Um, it is Trevor who is the victim. The people scrutinizing him, they are the problem. So they're demonized, including Hindenburg research, the media, the prosecutors, the jury, the laws, the rules. That's the problem, Trevor. He'll tell you repeatedly.

Caleb Newquist: He was just trying to build a great company. He was just. Just trying to build the greatest company in the world ever seen. Trying to change the world. That's what he was trying to do. In [00:51:30] October 2025, Trevor Milton became CEO of Cyber Jet Aircraft, an Arizona based aviation company staffed with, yes, former Nikola employees. In a Wall Street Journal profile of Milton postpartum, he said, quote, I walk into meetings now and I'll get high fives from the most wealthy people in the world. They're like, welcome to the club. You can withstand the fire. We can trust you now. Trevor [00:52:00] is posting on LinkedIn about the future of private aviation, with the same conviction he once posted about the future of hydrogen trucking. In that same Wall Street Journal article, he's quoted again saying, quote, I love to find products that are unreal and need someone with vision or guts to be able to bring it to market. End of quote. Unreal is right. So, [00:52:30] uh, did we learn anything? What did we learn? Maybe several things. Maybe old lessons learned again. I don't know many things. Let's cover a few. This isn't meant to be comprehensive. First, fake it till you make it is not a legal defense. Trevor Milton's attorneys tried to frame him as an optimistic founder who got carried away, which is a very [00:53:00] euphemistic way of saying that Trevor Milton is a bullshitter. And the jury wasn't buying it. You know, there's a very different there's. There's a big difference between painting a bold picture of the future and telling investors you're producing hydrogen when you are in fact, producing no hydrogen.

Caleb Newquist: The law has a word for this second bit, and that word is not enthusiasm. That [00:53:30] is, the word is not getting carried away. And it's worth noting this kind of matters for anyone who works in and around early stage companies. Founders are allowed to be optimistic. Have you heard him talk? They are extremely optimistic. They have a vision. They're allowed to sell the vision. What they're not allowed to do is state things as fact when they know they are false. And Trevor Milton. [00:54:00] He still believes that what he did was just a matter of people misunderstanding him or him. Misspeaking on a quick podcast. I am not even kidding. There's a video with an Arizona a Phoenix, Arizona affiliate where he basically says this in the in the therapy racket, we talk about accountability. Trevor Milton is not taking accountability. The line between vision and fraud [00:54:30] isn't always obvious from the outside, but inside Nikola it was very obvious. Trevor Milton knew. The engineers knew, the executives knew. And when the people closest to the operation are privately describing public statements as, quote, inaccurate or exaggerated. You are no longer in vision territory. I think you are in fantasy territory or you know the other F word. Okay. [00:55:00] Another lesson. Spacs are not great. You know, the Spac structure gave Trevor Milton far more room to make projections and keep promoting Nikola, uh, than if he had gone the traditional IPO route.

Caleb Newquist: All right, Trevor Milton used that room like it was his personal marketing budget. Right. And he talks about there's all kinds of clips, even in the documentary. The documentary, no matter where you [00:55:30] hear him talking about it, they, they, he talks about, oh, no, the Spac, the Spac was the, the quickest route to market. That's what we had to do, uh, because we needed the money. Now, fortunately, the SEC has tightened rules around SPACs, including disclosure and investor protection requirements. But, you know, the Spac phase has kind of faded anyway. But, you know, it came around once. This wasn't the first era of SPACs. So it had a it had [00:56:00] a heyday in some in yesteryear. Just in case they ever come around again. Remember this basic lesson? That is, if a company goes public by Spac, don't ask what the company says it can become. Ask what the founder has already said publicly and whether any of it is actually verifiable. Okay. Third, pay attention to the people around the founder, not just the founder. Remember [00:56:30] Trevor Milton's brother, Travis? I mentioned him earlier. If a company is promising to build a national hydrogen infrastructure network, and the people or the person in charge to run. That part of the business does not appear to have the background or qualifications that you might expect for that job. Then that is not just a humorous detail. It is a big red flag. Fourth and finally, retail investors are not [00:57:00] just an audience.

Caleb Newquist: They can be a target. Trevor Milton didn't stumble into these retail investors. He kind of went looking for him. You know he's doing podcasts. He's on social media all the time. You know TV, a lot of TV interviews directly replying to all these people. The whole point is to reach and connect to the people who are excited, who are emotionally bought into this thing. And we're probably very unlikely to do any kind of [00:57:30] professional diligence. These green tech companies, these promises to save the world, the environment. That's all great. We, I think many of us would really like some technology that would help slow down or reverse climate change. Okay. But they still have to deliver the goods, not just pay it lip service. Okay, that's it for this episode. And remember, gravity won't just pull you downhill. It'll bring [00:58:00] you back to earth. If you have questions, comments, or suggestions for stories, drop me a line at omnifrog at earmarked. Cpe.com. This episode of Oh My God was written by Zach Frank and me, Caleb Newquist. Oh my fraud is created, produced and hosted by me, Caleb Newquist. Zach Frank is my co-producer, audio engineer, and music supervisor. Laura Hobbs designed the logo rate review and subscribe to the show wherever you listen to podcasts. And if you listen on the earmark, that's where the CPE is. Great, great. Join us next time for more avarice, swindlers and scams from stories [00:58:30] that will make you say, oh my fraud!