The $28 Billion Fraud: How Trevor Milton Fooled Everyone — Transcript

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1. 0:00In September 2020, Nicola Corporation
2. 0:02was valued at more than $20 billion. The
3. 0:05company had gone public months earlier,
4. 0:07promising to revolutionize trucking with
5. 0:09hydrogen-powered semi-truckss. At the
6. 0:12helm was founder Trevor Milton, a
7. 0:14charismatic entrepreneur who compared
8. 0:16himself to Elon Musk. But by September
9. 0:192021, Milton had resigned in disgrace,
10. 0:22facing federal fraud charges. By 2023,
11. 0:26he was convicted and sentenced to 4
12. 0:28years in prison. This is the story of
13. 0:31one of the most spectacular frauds in
14. 0:33recent corporate history. Trevor Milton
15. 0:35founded Nicola Motor Company in 2014,
16. 0:38naming it after inventor Nicola Tesla.
17. 0:41Milton had previously started a company
18. 0:43called Dehybrid that made natural gas
19. 0:45storage systems for trucks. He sold that
20. 0:48company in 2014 for $15 million and
21. 0:51immediately pivoted to his new vision,
22. 0:53hydrogen fuel cell semi-truckss that
23. 0:56would produce zero emissions and be
24. 0:58cheaper to operate than diesel trucks.
25. 1:00From the start, Milton was a master
26. 1:01salesman, posting constantly on social
27. 1:04media and making bold predictions about
28. 1:06Nickeola's future. The company's
29. 1:08flagship product was the Nicola 1, a
30. 1:10semi-truck that Milton claimed would be
31. 1:12powered by hydrogen fuel cells, giving
32. 1:14it a range of 800 to 1,200 m. He showed
33. 1:18off prototypes at industry events,
34. 1:21attracting attention from major
35. 1:22companies and investors. In 2016, Nicola
36. 1:26claimed to have received $7 billion
37. 1:28worth of pre-orders for the Nicola 1.
38. 1:30Milton promised the trucks would be in
39. 1:32production soon, but behind the scenes,
40. 1:34there were serious problems. The company
41. 1:37was burning through cash and was nowhere
42. 1:39close to having a functioning truck. The
43. 1:41prototypes shown at events were largely
44. 1:43non-functional. They looked impressive,
45. 1:46but they couldn't drive under their own
46. 1:47power.
47. 1:49In December 2016, Nicola released a
48. 1:52promotional video titled Nickeola 1 in
49. 1:54motion. The video showed the Nickeola 1
50. 1:56truck driving along a desert highway,
51. 1:58seemingly demonstrating that the company
52. 2:00had a working vehicle. The video was
53. 2:02pivotal in attracting investors and
54. 2:04partners. It was shown to potential
55. 2:06stakeholders, posted on the company's
56. 2:08website, and used in presentations. The
57. 2:11problem was that the truck in the video
58. 2:13wasn't actually driving. It was rolling
59. 2:15down a gentle incline. The company had
60. 2:17towed the truck to the top of a hill and
61. 2:19filmed it coasting downward. There was
62. 2:22no working drivetrain, no hydrogen fuel
63. 2:24cells powering it. It was an elaborate
64. 2:26deception, but one that would take years
65. 2:28to come to light. Despite the lack of a
66. 2:31functioning product, Milton continued to
67. 2:33raise money and make deals. In 2020,
68. 2:36Nicola went public through a merger with
69. 2:38a special purpose acquisition company or
70. 2:41spa called Veto IQ. This allowed Nicola
71. 2:44to bypass the traditional IPO process
72. 2:46and get onto the stock market quickly.
73. 2:49The deal valued Nicola at $3.3 billion.
74. 2:52After the merger, Nicola's stock price
75. 2:55soared. At its peak in June 2020, the
76. 2:58company had a market capitalization of
77. 3:00more than $30 billion, briefly
78. 3:02surpassing Ford Motor Company. Despite
79. 3:04having never sold a single truck,
80. 3:07Milton's personal stake in the company
81. 3:08was worth billions. He had become a
82. 3:11billionaire on paper, and the media fed
83. 3:13over him as the next great innovator,
84. 3:15but cracks were already forming. Short
85. 3:17sellers and skeptical analysts began
86. 3:19digging into Nicola's claims. They
87. 3:22noticed inconsistencies in the company's
88. 3:24statements about its technology and
89. 3:25partnerships. Then in September 2020, a
90. 3:29short-selling research firm called
91. 3:30Hindenburg Research published a damning
92. 3:33report titled Nicola, how to parlay an
93. 3:36ocean of lies into a partnership with
94. 3:38the largest auto OEM in America. The
95. 3:42report alleged that Nicola was an
96. 3:43intricate fraud built on dozens of lies.
97. 3:46It detailed how the Nickeola 1in motion
98. 3:48video was faked, showing that the truck
99. 3:50was rolling downhill rather than
100. 3:51driving. It revealed that Milton had
101. 3:54lied about partnerships, exaggerated the
102. 3:56company's technological capabilities,
103. 3:58and made false claims about having
104. 4:00working prototypes and productionready
105. 4:02vehicles. The Hindenburg report also
106. 4:05exposed specific lies Milton had told.
107. 4:08He claimed Nickeola had built its own
108. 4:09hydrogen fuel cell technology from
109. 4:11scratch when in fact it was using
110. 4:14components from other companies. He said
111. 4:16Nicola had developed its own battery
112. 4:18technology, but it hadn't. He claimed to
113. 4:20have a working natural gas truck called
114. 4:22the Nickeola 2, but it was also
115. 4:24non-functional. The list went on. The
116. 4:26report was meticulously researched and
117. 4:28devastating in its conclusions. It
118. 4:30accused Milton of being a con artist who
119. 4:32had deceived investors, partners, and
120. 4:35the public for years. Nicola's stock
121. 4:37price plummeted after the report was
122. 4:39published. Milton vehemently denied the
123. 4:42allegations, calling them false and
124. 4:43misleading. The company issued
125. 4:45statements defending its technology and
126. 4:47business practices. But the damage was
127. 4:49done. Federal prosecutors and the
128. 4:52Securities and Exchange Commission
129. 4:53launched investigations into Nicola and
130. 4:55Milton. Major partners, including
131. 4:58General Motors, which had announced a $2
132. 5:00billion partnership with Nicola just
133. 5:02days before the Hindenburg report, began
134. 5:04backing away. On September 21st, 2020,
135. 5:09less than 2 weeks after the Hindenburg
136. 5:11report, Trevor Milton resigned as
137. 5:13executive chairman of Nicola. The
138. 5:15company said it was to allow it to focus
139. 5:17on delivering on its business plan
140. 5:18without distraction. The investigations
141. 5:21continued. In July 2021, federal
142. 5:24prosecutors charged Milton with three
143. 5:26counts of fraud for lying to investors
144. 5:28about Nicola's technology and
145. 5:30capabilities. The indictment alleged
146. 5:32that Milton had made false statements on
147. 5:34social media, in media appearances, and
148. 5:37during podcast interviews to inflate the
149. 5:39value of Nickeola's stock. Prosecutors
150. 5:42said he knew the Nickeola 1 couldn't
151. 5:43drive under its own power when the
152. 5:45promotional video was released. They
153. 5:47said he lied about having binding orders
154. 5:49for trucks worth billions of dollars
155. 5:51when in fact the orders were non-binding
156. 5:53and many customers had no serious
157. 5:55intention of purchasing vehicles. He
158. 5:57exaggerated the company's progress on
159. 5:59batteries, hydrogen production, and
160. 6:01autonomous driving technology. All of
161. 6:04this, prosecutors argued, was designed
162. 6:06to artificially inflate Nicola's stock
163. 6:08price and enrich Milton personally.
164. 6:10Milton pleaded not guilty and prepared
165. 6:12to fight the charges. His defense argued
166. 6:15that he was an optimistic entrepreneur
167. 6:16who believed in his company's vision,
168. 6:18not a fraudster. They said the
169. 6:20Hindenburg report was a hit job by short
170. 6:22sellers trying to profit from Nicola's
171. 6:24decline. But when the trial began in
172. 6:27September 2023, the evidence against
173. 6:29Milton was overwhelming. Prosecutors
174. 6:32presented testimony from former Nicola
175. 6:34employees who said they were pressured
176. 6:35to mislead investors. They showed emails
177. 6:38and text messages in which Milton
178. 6:40acknowledged the company's technological
179. 6:41shortcomings, but continued making rosy
180. 6:44public statements anyway. On October
181. 6:465th, 2023, a jury convicted Trevor
182. 6:49Milton on three counts of fraud. He was
183. 6:52found guilty of one count of securities
184. 6:54fraud and two counts of wire fraud. The
185. 6:58conviction was a stunning fall for a man
186. 7:00who had been hailed as a visionary just
187. 7:013 years earlier. In December 2023,
188. 7:04Milton was sentenced to 4 years in
189. 7:06federal prison and ordered to pay a fine
190. 7:08and forfeit $1 million. The judge said
191. 7:11Milton's lies had caused real harm to
192. 7:13investors. Milton maintained his
193. 7:15innocence and said he would appeal.
194. 7:18Meanwhile, Nicola Corporation struggled
195. 7:20to survive without its founder. The
196. 7:22company brought in new leadership and
197. 7:24scaled back its ambitious plans to focus
198. 7:26on battery electric trucks. In late
199. 7:282021, Nicola finally began delivering
200. 7:31its first trucks, the Nickeola Trey,
201. 7:33designed for short hall routes. But the
202. 7:36company faced continued financial
203. 7:37challenges, production delays, and
204. 7:40market skepticism. Its stock price
205. 7:42remained a fraction of its 2020 peak. By
206. 7:452024, Nicola was fighting for survival,
207. 7:48cutting jobs, and trying to raise
208. 7:50capital. The Nickeola scandal became a
209. 7:53cautionary tale about the dangers of
210. 7:54hype, the excesses of the spa boom, and
211. 7:57the risks of investing in pre-revenue
212. 7:59companies based solely on promises. It
213. 8:02showed how a charismatic founder could
214. 8:03attract billions in investment without
215. 8:05having a viable product. It highlighted
216. 8:08the need for greater scrutiny of
217. 8:10companies making bold technological
218. 8:12claims. And it demonstrated that even in
219. 8:14an era of rapid innovation and
220. 8:16disruption, the fundamentals of business
221. 8:18still matter. Companies need real
222. 8:21products, real customers, and honest
223. 8:24leadership. The case also raised
224. 8:26questions about the role of social media
225. 8:28in corporate fraud. Milton had built his
226. 8:31reputation largely through Twitter,
227. 8:33where he had hundreds of thousands of
228. 8:35followers. He used the platform to make
229. 8:37sweeping claims about the company's
230. 8:38technology and engage directly with
231. 8:41retail investors. This allowed him to
232. 8:43bypass traditional media and create his
233. 8:45own narrative. But it also meant his
234. 8:48full statements reached millions
235. 8:50instantly, magnifying the impact of his
236. 8:52fraud. Prosecutors cited numerous tweets
237. 8:55as evidence showing how Milton used
238. 8:57social media to mislead investors
239. 8:59systematically.
240. 9:01The Nickeola case was part of a broader
241. 9:02pattern of electric vehicle startups
242. 9:04that promised revolutionary technology
243. 9:06but failed to deliver. Companies like
244. 9:09Lordstown Motors and Faraday Future made
245. 9:11similar bold claims, attracted
246. 9:13significant investment, and then faced
247. 9:15serious problems. The pattern revealed a
248. 9:18troubling dynamic in the EV sector where
249. 9:20investor enthusiasm for the next Tesla
250. 9:22led to insufficient due diligence. The
251. 9:25spack boom of 2020 and 2021 amplified
252. 9:28this problem by allowing companies to go
253. 9:30public with minimal scrutiny and make
254. 9:32projections that would not be allowed in
255. 9:34traditional EPOS.
256. 9:36For investors who lost money on Nicola,
257. 9:38the collapse was devastating. Retail
258. 9:41investors who bought the stock at its
259. 9:42peak saw their investments evaporate.
260. 9:45Some had invested their life savings,
261. 9:47believing Milton's promises.
262. 9:49Institutional investors also suffered
263. 9:51significant losses. Lawsuits were filed
264. 9:54against Nicola Milton and the banks
265. 9:56involved. While some settlements were
266. 9:58reached, many investors never recovered
267. 10:00their losses. Trevor Milton's story is a
268. 10:03reminder that no amount of marketing
269. 10:04spin can substitute for the truth and
270. 10:07that fraud, no matter how sophisticated,
271. 10:09will eventually be exposed. His
272. 10:11conviction sent a message to other
273. 10:13executives that misleading investors,
274. 10:14carries serious consequences. But it
275. 10:17also serves as a warning to investors to
276. 10:19look beyond the hype and demand evidence
277. 10:22before putting money into speculative
278. 10:24ventures. In an age of rapid
279. 10:26technological change and ambitious
280. 10:28startups promising to revolutionize
281. 10:30industries, skepticism and due diligence
282. 10:32are more important than ever. The Nicola
283. 10:35saga shows what can happen when those
284. 10:36safeguards fail and when charisma and
285. 10:39storytelling are mistaken for substance
286. 10:41and achievement.