How to Lie Your Way to $34 Billion [Nikola Motors Fraud]

hi welcome to another episode of cold fusion where i cover anything in science technology business or history in front of an enthusiastic audience a 35 year old trevor milton stands on stage proudly proclaiming his latest achievement the year was 2016 and the charismatic energetic trevor seems like he's just about to change the world behind him was his tool to do just that it was a truck running on revolutionary hydrogen technology it could save both money and the environment this truck called the nikola one was going to disrupt the one trillion dollar trucking industry and would go on to make trevor a multi-billionaire bosch general motors and other big names all wanted to work with trevor and his revolutionary company that would later be worth 34 billion the only problem was that none of this was real the vehicle behind him was simply a shell that couldn't even drive itself and none of the technology that he talked about even existed but this would only be the beginning of the lies so how was everyone fooled and how could a man look so confident about his achievements while knowing that none of what he was saying was real you were watching cold fusion tv today it seems like the world of startups is having its fair share of charismatic swindlers from theranos to wirecard the game plan is simple pretend that you have a revolutionary technology or business plan gain billions in investment and finally fake it until you can cash out with billions in the case of nikola motors you might just end up with a 34 billion company to understand how we got here we have to go back our story starts in utah with trevor milton trevor was born in 1982 and had a rough upbringing his mother died of cancer when he was just 14 years of age and he would witness her coughing up blood in her latter days trevor and his four siblings had to learn how to survive with a bedridden mother and a father who worked four hours away it could be said that these experiences made trevor driven he wanted to make something of himself milton and his father were close many years later they would even go into business together but that comes later in the story after high school milton took a mormon missionary trip to the favelas in brazil the experience got him thinking about wider problems particularly environmental ones he would return back to utah in 2003 and would attend the utah valley state college to study sales and marketing but he would drop out after just one semester he had his eyes on bigger things he wanted to start his own company and so he did his first company dealt with security alarm sales and trevor would sell off the company for three hundred thousand dollars but in this deal there were already signs of trouble according to the buyer of milton's company he overpromised the potential of the business resulting in a loss for the buyer milton also allegedly cheated his business partner out of fifty thousand dollars during the sale in 2009 he would move into the online ads business with a website that sold used cars trevor would then move on from selling used cars to building vehicle power plants and if you think this was a bit of a leap it was he had no formal training in the industry undeterred though this effort would come in the form of d-hybrid the plan was to transform existing diesel engines to run on compressed natural gas now this idea was solid natural gas has less emissions lower maintenance costs and is overall safer the execution of his plan however was a disaster [Music] as mentioned trevor had no formal engineering experience but after some good marketing he managed to convince the company swift transportation to invest two million dollars in the deal 10 trucks would be converted as a trial run then later 800 trucks but as it turned out trevor wasn't pulling his weight in the deal a 2012 lawsuit revealed that only five trucks had been delivered in addition the engines had major problems and didn't do at all what they claimed and to top it off part of that two million was squandered on personal living milton was simultaneously bleeding through investor money and needed more in 2012 he tried to find another investor in utah to buy out the company but they smelt a rat and backed out of the agreement to run away from all of his legal problems trevor started a new company with his father it was called d hybrid systems d hybrid systems and d hybrid were completely different companies and the similarities in their names was intentional trevor and his father now had complete ownership and would work on the same technology but now without the legal problems this move left the whole d hybrid partners with nothing as outlandish as this was the plan worked and a new company worthington industries paid 16 million dollars for their company the only problem was that the company was in shambles in private conversations trevor admitted that parts of the engine systems were falling off the trucks something he stated was potentially fatal at the end of the day all that mattered for trevor is that the deal was paid out for him and his father i freaking helped design and develop and fix all these repairs that worthington didn't know about these back of cab units were actually falling off of the trash truck falling off the trash like breaking off they were shearing the damn freaking frames and then coming off like nearly freaking causing deaths and stuff in 2014 trevor founded what would become nikola motors meanwhile worthington was losing millions the faulty engines that dehybride had given them was causing nothing but problems milton was making money while the companies that he sold off were money pits milton would continue to convince people that he had valuable technology on may 9th 2016 nikola motors announced the nikola 1 a semi-truck that would revolutionize the transport industry it could travel a thousand miles without stopping and only took 15 minutes of downtime to refill and do another thousand miles the global trucking market is worth over one trillion dollars so a disruptive technology like this could be a game changer if someone could make it work that is in a bizarre twist allegedly nicola bought the design from a man in croatia for a few thousand dollars but this didn't stop the company from suing tesla for 2 billion claiming that tesla had stolen their design unaware of milton's past the world was abuzz with the news of the revolutionary truck so how were they going to do this exactly well with the same technology that had been a complete failure in the dehybrid companies of course compressed natural gas technology the truck was to be revealed in a live event in december of 2016 a very tight deadline could nicola pull it off they must have thought that because they began to take pre-orders they stated that the nikola one was engineered developed and is finalizing assembly but what did they actually have by august of 2016 the nikola one was just a frame on wheels the body hadn't even arrived yet there were no production facilities either and according to a source familiar with the project the workers were scrambling to the hardware store to pick up basic parts meanwhile the nikola motor company twitter account was hyping up the event they stressed that the truck would be fully functioning i missed all of this at the beginning of august while the truck was still a frame the company abruptly announced that it had pivoted from compressed natural gas to hydrogen fuel cell technology the hydrogen fuel cell announcement was even a shock to those within the company in mid-november as the show was drawing closer the team was hard at work slapping the truck together there were no electric motor cores or gears only axles in an empty shell the body finally did arrive in late november roughly a week before the show h2 the chemical formula for hydrogen was decald proudly on the side of the truck even though there was no such technology inside so i can understand that building a prototype can be less than elegant but to call this fully functioning was at the very least a bit misleading a fact that would later come back to haunt nicola but more on this later in the episode [Music] when the big day came trevor seemingly couldn't hold back his emotion when talking perhaps it was an appeal to one's emotional side to shut down rational thinking and skepticism bloomberg would later state that the statements made by trevor had alarm some people familiar with the truck's capability they told bloomberg that the truck was inoperable and had missing key components to power itself the whole truck was powered by a mains power cord that was connected under the stage trevor would put an emphasis on the touchscreens within the cabin seemingly the only part of the truck that actually functioned the whole thing was essentially a big shiny decoration so how long have you been working on this because this is this is a fully functioning truck right here that we're sitting in so how long have you guys been working on this uh years in secrecy it's been very hard um some of the some of the people have found out about us over the last four or five months as we announced some of the the lead up to this big event but it took years and years to get here um this isn't just a pusher like a lot of vehicles that they unveil or just vehicles that don't actually function there's a fully functioning uh you know vehicle which is really incredible you can go through you can you know functional or not trevor had smoothly talked his way to entrepreneurial fame the internet was ablaze with buzz and from there they were off to the races following the event in january of 2017 the company raised capital as part of its series a round nikola also signed with bosch as well as fuel cell and hydrogen partners the plan may have been to leverage existing suppliers to deliver on their promises but as time passed and the hype from the december 2016 show faded people that were following closely began talking about the company stating that nikola needed to show some updates on their truck the nikola one so in early 2018 a video of the nikola one was produced to dispel the rumors that it wasn't a functioning truck the video was called nikola one in motion and the video seemingly worked even arizona governor doug ducey was impressed he agreed to host the nikola manufacturing headquarters in his state and even played a video during his announcement and once again there was now a tremendous amount of buzz and excitement a lot of people were looking forward to the pre-production units to be released the following year but this was never to be it seems that trevor was up to his old tricks again he never really had any plans to finish developing the nikola one truck he was only interested in one thing raising more money after the 2016 announcement to the shock of all of those involved in the nikola one project the truck's development was abandoned but nobody outside the company knew this the promotional nikola one video proved to be a sham itself according to a former employee he spoke with the nikola chief engineer kevin link the video was simply the result of nicola towing the truck to the top of the hill and letting it roll back down unsurprisingly those who worked on the video had to sign ndas by september of 2019 trevor milton owned 40 of the company and by age 37 he was now a billionaire [Music] so the company was going to use compressed natural gas technology and then pivoted towards hydrogen technology they were going to use hydrogen as a kind of fuel to power an electric motor and why the difference well hydrogen goes further than a battery electric truck does and it's a lot lighter to operate so ultimately it's just a lot of like juggling these different things but we're we're pretty close we just ordered the largest order ever of electrolyzers that i know of it was a an order yesterday it was over 30 million dollars for to produce over 40 000 kilograms of hydrogen we just made that order yesterday from nail out of norway so we're already prepping our first five stations to be up and running we're breaking ground we should be breaking down this year on these stations okay as good as this sounds hydrogen is expensive and requires a lot of engineering to store and transport safely the plan for nikola motors was to have 700 hydrogen stations around north america and 70 in europe within the next decade nikola planned to make its own hydrogen by using energy from solar and renewable sources this all sounds amazing but when you look into the details of who was spearheading a lot of the key technology aspects things get a little suspect nicholas director of hydrogen production is none other than trevor milton's brother previously to joining nicola his work consisted of pouring concrete and building a barn as a subcontractor not exactly the experience needed according to those familiar with the matter travis really didn't do much of the company he was kept around to do a few odd jobs hold a rope here fetch those tools and that kind of thing trevor had given travis along with other family members nikola motorstock worth over 110 million dollars [Music] nicholas head of infrastructure development in charge of building out those 700 plus hydrogen station networks was previously a general manager of a golf club in idaho again not exactly the experience one would expect for the job as pointed out by kathy wood ceo of arc invest hydrogen on average cost three times as much as electric trevor needed a way to fix this in an interview trevor claimed that nicola produces hydrogen for under three dollars a kilogram 81 percent cheaper than the rest of the world representing a major breakthrough in the hi we're really a hydro an energy technology company we sell the energy to consumers you know we're not consumers but i'm sorry businesses that are buying the trucks that's where the money is um obviously we want to reduce the cost of our truck but we're now cheaper to drive than a diesel is per mile and we make five times the revenue of our competitors so it's awesome i mean that's why niko's really cracked the chicken in the egg the generation that's investing now they care more about the the environmental impact of what you're doing than they do like oh you're six months or eight months from revenue they don't care they're like you know what you're changing the world you're gonna reduce emissions more than anyone else we're invested into you when pressed trevor later acknowledged that nicola produces no hydrogen at all but this didn't stop bp later pledging to join nikola to build out their hydrogen fuel network it really is amazing when you think about it trevor had perfected a devious game he would act as a spokesperson for nicola and make up lofty claims to gain partners essentially trevor would use these claims to get investors and more partners and then use the brand recognition of those partners to get even more investors ultimately all of this didn't matter though because the next piece of technology that trevor was going to announce was going to change the world in late october 2019 trevor began teasing on twitter that nicola was going to change the world with an upcoming announcement that was bigger than anything that he had announced in the past [Music] while he was tweeting up a storm in november of 2019 milton cashed out 70 million dollars and bought the most expensive house in utah a 33 million mansion on a 2 600 acre ranch he told the wall street journal that this place was quote a sanctuary for my family friends and others to enjoy on november 18 2019 nicola began negotiations to go public the very next day the company announced that it had solved one of the greatest challenges facing sustainable energy a high density battery this new prototype battery would provide four times the energy density of lithium ion and could power a tesla model s for over 600 miles on twitter trevor claimed that he had seen this technology perform with his own eyes and promised a major demonstration riding high off the announcement nikola motors began to receive serious attention and husa bush was first to jump on board placing a pre-order for 800 trucks trevor estimated that the value of this new technology was to be worth hundreds of billions the thing was nicola had no patent engineers chemists or research papers published the truth was nicola had acquired the battery maker zap go for 56 million dollars as it turned out zapgo's technology was vaporware it was a scam it didn't exist and so there it was nicola who had misled so many had been misled themselves interestingly zap go was headed by charles resnick a shady character who had just scammed nasa a few months before the nicola deal charles used the money from nasa to hire numerous adult workers certainly not a business expense charles would plead guilty in january of 2020 but once again all of this didn't matter to trevor he was still on twitter touting the non-existent battery technology with nothing more than the promise of a revolutionary truck that rolled down a hill and a game-changing battery technology that was purchased from a company that was a scam nicola went public on june 4th 2020. they did so through a technique called a reverse merger the thing is with reverse mergers you don't have to disclose all the intricate details of your company something that a regular ipo would require this should have raised some red flags for investors if they knew more about the history of nikola but alas investors were euphoric and nicolas shares spiked within one week of going public the market value of nicola surged past that of ford over 30 billion dollars to put things into perspective ford sold 5.5 million vehicles in 2019 with a revenue of 155 billion and had a market cap of around 28 billion nicola on the other hand sold nothing and was valued at 30 billion making it the world's biggest truck maker without selling a single truck and with that overnight trevor became a multi-billionaire it was settled the markets had spoken he was the next elon musk things would soon change for trevor though but not before one last cash grab on september 8th 2020 nikola motors announced a 2 billion partnership with general motors gm was going to take an 11 stake in the company and manufacture their electric pickup truck the nikola badger so questions have to be asked did general motors do no research or was something else at play here despite the chaos nicola was again accepting pre-orders for their badger truck to date no one has ever seen a nicola badger they only exist as a rendering as far as the public is concerned finally after lying for years and roping in some of the biggest companies two days after the gm deal on september 10th the short-selling investment firm hindenburg research released a scathing report calling nikola motors an intricate fraud the firm said it had gathered extensive evidence including recorded phone calls text messages private emails and behind the scenes photographs detailing dozens of false statements by milton they accused him of lying about nicholas technology this was a bombshell report and soon the gates were blown wide open we believe this is only the beginning of nicholas unraveling nico's almost no intellectual property products or revenue to fall back on we think the company's key asset was its founders ability to raise money through hype and then the hindenburg are saying outright trevor milton knew that this was the end and he publicly promised a full rebuttal to all the damaging claims but instead he deleted his social media accounts and disappeared trevor milton the founder of electric truck company nikola is voluntarily stepping down as executive chairman and giving up his board seat this move comes after short seller hindenburg research accused milton of making false statements about nikola's technology in order to try and grow and secure partnerships with automakers both the justice department and the sec are investigating allegations made by hindenburg on the 21st of september trevor steps down from the chairman position and former vice chairman of gm stefan gursky takes over nicholas stock plunged by 40 and negotiations between nicola and other partners stalled and finally a sexual assault allegation by trevor's own cousin just added to the horrible mess many banks liquidated their nicholas stock seemingly in disgust the company received a myriad of subpoenas and investigations by the department of justice and the securities and exchange commission commenced his company marketed as a game changer we've built something that no one else thought was possible cleaner vehicles powered by hydrogen and electricity for every doubter out there that said that there's no way this is true abs how can that be possible we've done it but now the billionaire founder of nikola motor company trevor milton is being charged with securities fraud do you have anything to say we have a statement check it out milton seen leaving a manhattan courthouse thursday charged by federal prosecutors who say he lied about every aspect of his truck of the future milton claimed that the nikola one could be driven when in fact the closest it ever came to driving was when a group of nikola engineers took it to the top of the hill and rolled it down so it could be filmed for a commercial prosecutors claiming the truck's door even had to be taped up for the video so it wouldn't fall off at the end of july 2021 a federal grand jury charged trevor milton with three counts of criminal fraud the u.s attorney's office in manhattan accused the 39 year old billionaire of lying to investors making false statements about the company and wire fraud the sec also filed civil securities fraud charges against him requiring the court to permanently buy him from acting as an officer and ordered him to pay fines as well as give back any revenue gained by his deceit trevor milton of course denies all wrongdoing and has pleaded not guilty to the charges but this will be a matter for the course to decide since the charges nicholas stock has been steadily falling following the indictment the company stated quote we remain committed to our previously announced milestones and timelines and are focused on delivering nikola tray battery trucks later this year from the company's manufacturing facilities nikola continues to move forward under new management but it has to be said correcting the course of a company built on fraudulent claims by a compulsive liar is not going to be easy the gm deal lies in limbo and the stock price is at an all-time low and faith in the company dwindles every day bosch general motors and a slew of investors are left holding the bag on a wider point it's becoming clear that investors have collectively lost their minds it seems as if they're only driven by lofty promises without doing a shred of research everyone was just so excited that they didn't want to look deeper and herein lies the problem think of yourself as an inexperienced investor you heard about this new company and it just showed off a revolutionary truck it was powered by new hydrogen technology and also had amazing new battery technology they'd partnered with major companies like bosch and bp and this company has raised a lot of money you'd think you've hit a gold mine you'd also think that you've gotten in on the next tesla this whole train wreck really is the old adage fake it until you make it but what happens if the things that you promise turn out to be much harder than anticipated when do you pass the point of no return and just keep lying until you get caught for milton he just kept lying until the very end in a way the story of trevor milton and nicola motors would almost be impressive if it wasn't so morally bankrupt maybe he did this all to provide for his family that had suffered so much during those early years but it could have just as easily been pure greed i guess we may never know and with that that is the wild and twisting story of nikola motors so let me know what you think in the comment section below so thanks for watching my name is tagogo and you've been watching cold fusion and i'll catch you again soon for the next episode cheers guys have a good one [Music] [Music] you

Channel: ColdFusion

Views: 5,099,025

Keywords: Coldfusion, TV, Dagogo, Altraide, Technology, Apple, Google, Samsung, Facebook, Tesla

Id: 88fWUZhYb04

Length: 25min 50sec (1550 seconds)

Published: Mon Oct 25 2021