Caleb Newquist

Seventy Scottish settlers reached Central America in November 1822, expecting to begin new lives in a thriving country. They’d been promised paved streets, government buildings, a cathedral, an opera house, and farmland that could produce three corn harvests a year. Gold supposedly filled the nearby rivers.

Instead, as Caleb Newquist explains in Episode 117 of Oh My Fraud, “There was only jungle.”

The settlers hadn’t followed a vague rumor. They’d purchased land, exchanged British pounds for Poyaisian dollars, and received documents that appeared official. But Poyais, the country Gregor MacGregor promoted, didn’t exist as advertised.

Its infrastructure existed only on paper.

Before inventing a country, Gregor invented himself

Gregor claimed he was born on Christmas Eve 1786 at his family’s ancestral estate in Glengyle. That story connected him to the MacGregor clan and the outlaw Rob Roy MacGregor. Most historians, however, believe he was born in Edinburgh and was the son of an East India Company ship captain.

His family mythology gave him useful material. The MacGregors claimed descent from ninth-century Scottish kings and used the motto “Royal is my race.” King James VI abolished the MacGregor name in 1603, and the ban lasted until 1774. Gregor belonged to the first generation legally allowed to use it in more than 170 years.

He soon learned to turn status into opportunity. In 1803, when he was 16, his family bought him an army commission for about £450 (roughly £40,000 today). After marrying Louisa Bowater, the daughter of a British admiral, he used her dowry to buy a captaincy. He later began calling himself “Colonel,” “Sir,” and chief of the MacGregor clan without earning those titles.

That pattern followed him across the Atlantic.

One real victory gave credibility to later claims

In 1812, Gregor sailed to Caracas and offered his services to General Francisco de Miranda. He brought a real army commission and exaggerated stories about his experience. Miranda, busy fighting a revolution, “didn’t really have the extra time to run background checks,” Caleb notes. Within two months, Gregor was a colonel.

Gregor did achieve one notable military success. In July 1816, he led his surrounded troops on a 34-day fighting retreat through hundreds of miles of Venezuelan jungle. Simón Bolívar praised the retreat as “superior to the conquest of an empire.”

But Gregor’s later campaigns ended badly. He abandoned the Republic of the Floridas on Amelia Island, escaped an assault on Portobelo while many of his men were captured and executed, and deserted troops again at Rio de la Hacha. Former subordinate Michael Rafter documented these failures in Memoirs of Gregor MacGregor, published in June 1820.

The warning was public before the first settlers ever sailed.

Gregor made Poyais look official

In April 1820, King George Frederick Augustus granted Gregor at least 8 million acres on the Mosquito Coast in exchange for rum and jewelry. The land was real, but it was undeveloped and poorly suited to farming.

Gregor returned to London and transformed it into something else. He declared himself Cacique, or prince, of Poyais and promoted a country with a capital city, a bank, a military, a constitution, paved streets, rich farmland, and rivers full of gold.

Then he surrounded the fiction with convincing materials:

• Land offices in London, Edinburgh, and Glasgow
• Land certificates and government bonds that raised £200,000
• Poyaisian dollars printed using the Bank of Scotland’s press
• A flag, military uniforms, and government officials
• A 355-page guidebook credited to the nonexistent Captain Thomas Strangeways

Each item made the others seem more credible. Yet none proved that the promised country existed. The documents showed how much effort Gregor put into the promotion, not whether his claims were true.

A strong economy made the fantasy easier to sell

Britain’s economy also helped. During the early 1820s, manufacturing and wages were rising while interest rates and living costs were falling. Latin America was the emerging market of its day, with bonds offering returns of about 6% compared with 3% elsewhere.

Gregor’s pitch combined those conditions with familiar human weaknesses: trusting a confident promoter, feeling comfortable with risk during good times, fearing missing out, and wanting to join something exclusive. Doctors, lawyers, former soldiers, craftspeople, bankers, and families all signed up.

Once respectable people began buying land and booking passage, hesitation felt less like caution and more like missing a rare opportunity.

The gap between paper and reality became deadly

The first 70 settlers arrived at the Black River settlement in November 1822. Nearly 200 more came in early 1823. They found no city, government, shelter, or working economy.

Then the rainy season brought mosquitoes, fever, and dysentery. One historical account reported that nine people died within the first few days and 120 became sick. In May 1823, the Mexican Eagle evacuated survivors to British Honduras, but more than half of the settlers ultimately died.

Gregor blamed the people he had placed in charge and presented himself as another victim. He fled to Paris, repackaged Poyais for French investors, and was acquitted after his 1826 trial. He continued selling versions of the scheme into the 1830s. He was never convicted and died in Caracas in 1845, where he received full military honors.

Even more remarkably, some survivors defended him. Gregor’s charisma, along with the victims’ shame and trauma, made it easier to blame failed administrators than to accept that the entire project had been a fraud.

Paperwork should begin verification, not end it

Poyais did not lack documentation. It had certificates, bonds, currency, offices, uniforms, and a guidebook. The tragedy was that those materials looked enough like proof to discourage harder questions.

For accounting professionals, the case offers several lasting lessons:

• Confirm claims through sources independent of the promoter
• Verify credentials instead of relying on impressive titles
• Treat high returns, social proof, and confident answers as reasons for more scrutiny
• Take credible warnings seriously, even when they spoil an attractive story

A polished document can still support a fiction. As Caleb concludes, “You can always trust a dishonest man to be dishonest.”

Listen to the full Oh My Fraud episode for the complete story of Poyais and Gregor’s remarkable escape from accountability.

For three years, a bookkeeper at a building-materials yard in South Los Angeles ran one of the simplest schemes you can imagine. Customer checks came in, made out to her employer. She erased the matching invoices from the company’s computer system, walked the checks to an ATM, and deposited them into her own account. They weren’t endorsed. They weren’t even made out to her. The bank credited them anyway. By the time anyone noticed, she had deposited 225 checks worth $1.6 million.

No detective caught her. An auditor did because the volume of goods leaving the yard didn’t match the sales on the books.

On this episode of Oh My Fraud, host Caleb Newquist and co-producer Zach Frank talked with Chris Derry, a former detective with the Los Angeles County Sheriff’s Department. Chris spent 36 years in law enforcement, working fraud and cybercrime for the last 17 of those years.

One idea that came out of the conversation is that fraud is the crime our justice system is least equipped to punish, even though it’s the one you’re most likely to run into. These cases come to light when someone close to the numbers notices the story doesn’t add up and speaks up.

How the schemes surface

“Fraud, like any other type of theft, is driven by two main things,” Chris says, “greed or desperation.”

The bookkeeper was greedy. She bought a house, an expensive car, and a pricey motorcycle for her husband. She decorated her home with autographed sports memorabilia. She wanted to live above what she could afford. When the owner confronted her, she threw herself on the sword and admitted to stealing about $300,000. Once investigators pulled the bank records, the real number was $1.6 million.

It unraveled when the owner brought in an auditor, who found that the goods sold didn’t match the reported sales. The owner called a customer, learned they’d paid for a pallet of concrete, then found no order and no check in his system. He asked the customer for a copy of the check. It had been deposited at a bank that wasn’t his.

Chris’s other early case was greed with a punchline. On an $8 million commercial building sale, the sellers’ attorney slipped a $250,000 charge onto the escrow settlement statement, payable to a company the owners didn’t recognize. When they asked about it, he said they’d needed an environmental impact report. Great, the owners said, and asked for a copy. Three months later, they were still waiting on that copy.

Bank search warrants traced the money to an account in Illinois, then right back out again to a Ferrari dealership in Newport Beach. The deal file showed the car was sold to the attorney. He was prosecuted and disbarred. “That’s just greed,” Chris says. “Straight greed.”

Both cases broke for the same reason. Somebody reconciled, then asked a question. The auditor and the curious property owner were the detection system.

Fraud is a paper war

Catching the anomaly is the easy part. Proving it is a different fight.

When a patrol detective works a liquor store robbery, the owner wants the guy caught and hands over the video. Fraud investigators have to pry records out of what Chris calls “disinterested third parties” like banks, phone companies, and internet service providers. These companies “don’t really care whether you solve your case or not.” They take their time. The records come back incomplete. So you go back again.

That’s why you learn to write narrow, specific search warrants. You learn to interview victims and suspects. And above all, you learn to absorb and organize huge amounts of messy data. On the $1.6 million case, that meant thousands of pages of bank records spanning three years. “You can’t just give that to the DA,” Chris says. Instead, it’s 100-plus hours pulling the relevant transactions, sorting them, and laying them out in a spreadsheet a prosecutor can actually follow.

Then prosecutors screen it. They may reject the case outright, or send it back and ask for more work first. And they watch the clock. In California, you generally have four years from the date of discovery to bring fraud charges, but case law says the clock can start when a victim should have discovered it. Chris shared an example of a fraudulent deed mailed to a victim in March, but they didn’t call the police until August. Delays like that can sink a case.

Doing more with less

That painstaking work is being done by a unit that keeps shrinking.

When Chris moved into major fraud in 2007, Los Angeles County had a little over 90 investigators spread across the county, including a southwest team, a north team, an east team, two elder abuse teams, a real estate team, and identity theft teams north and south.

When he left 17 years later, they were down to a little over 40. “Two people would retire, and then they would hire one to take your place.” Priorities shifted, and budgets tightened. The real estate fraud team alone went from six investigators to four.

With fewer investigators and more cases, screening tightens, and anything not complicated enough gets kicked back to station detectives. The math does not favor victims.

When a neighbor is all that stands between you and losing your house

Nowhere is that clearer than in equity theft. Fraudsters comb public real estate records for properties loaded with equity. For example, a property bought in 1975, paid off in 2001, and now worth $1.5 million with no loan on it. Then they steal the owner’s identity and either borrow against the property or sell it outright.

The damage adds up fast. Real owners get evicted, sometimes by buyers two transactions downstream. In one Long Beach case, an older woman was evicted from a home she still legally owned, and it took about a year to unwind.

But the transaction takes time, and that creates a window. In one case, an appraiser showed up at a rental house. A neighbor chatted him up, noting he wasn’t aware the property owner was selling. The appraiser said the property owner was selling. So the neighbor called the owner, who wasn’t selling anything. Investigators got a warrant, traced the imposter’s burner phone to a Starbucks, and found him sitting there with a laptop and a fake ID, working the sale. He’d been laundering the proceeds by directing escrow funds to out-of-state gold dealers, then having the coins shipped to mail drops in Southern California.

Caleb notes that embezzlement is almost a sad story. It’s usually a boneheaded decision by someone in over their head. Real estate fraud is something else. “Diabolical is the word that comes to mind,” Chris says. “It’s calculated, it’s cold, and it takes place over an extended period of time.”

Which raises the question Chris lived with every day: even when you catch them, what does justice look like?

You’re the tripwire

Look at the pattern across every case. An auditor reconciled goods to sales. A property owner asked for the $250,000 report. A neighbor chatted up an appraiser. Fraud surfaced because someone close to the numbers, or close to the property, noticed the story didn’t add up.

Then consider what happens next. Point a gun at a liquor store clerk for $100 in California, Chris says, and you’re probably going to state prison. Put together an elaborate fraud and take “grandma’s last $100,000,” and there’s a good chance you get probation. People love to say it’s only money. “Well, is it only money to grandma who’s gonna have to eat cat food for the rest of her life?” Early in his career, Chris taped the Serenity Prayer next to his monitor. It encouraged him to do thorough work, then accept that charging and sentencing belong to prosecutors, judges, and juries.

Here are the lessons for those of us who live in the books:

• Reconciliation is often the only detection tool that works.
• A prosecutor needs clear, chronological records. Fraud hides in sloppy ones.
• Ask the question. Asking for a copy of a report turned a line item into a conviction.
• Don’t count on the system. Fewer investigators, a four-year statute, and probation sentences mean enforcement is the backstop, not the front line.

Law enforcement is unlikely to catch the fraud in your client’s books. In most cases, you’ll notice it first and speak up. Listen to the full episode to hear Chris’s full account of life inside LA County’s major fraud unit.

It’s December 1971, in a comfortable living room in Toluca Lake, Los Angeles. Two men sit on a couch, sharing some Scotch and maybe a Quaalude. One is Art Lewis, a 28-year-old executive. The other is Alan Green, a 21-year-old actuary who’s been working at Equity Funding for over a year while finishing his senior year at UCLA. They’d become friendly. Alan and his wife had even gone skinny-dipping in Art’s pool on a previous visit. This wasn’t a smoke-filled backroom of hardened criminals plotting a heist. It was a casual evening between a young employee and his boss.

It ended with Alan agreeing to help fabricate tens of thousands of fake insurance policies.

On this episode of Oh My Fraud, host Caleb Newquist, joined by co-producer Zach Frank, sits down with Alan, an actual insider from the Equity Funding scandal of the early 1970s. Alan wasn’t just another participant. He automated and scaled the creation of phony insurance policies at the center of one of the largest financial frauds in American history. (If you’re not familiar with the Equity Funding case, listen to Episode 66, The Case of Equity Funding Corporation of America. You’ll need the full backstory to understand the magnitude of what Alan is describing.)

What makes Alan’s account so unsettling is that he wasn’t a criminal mastermind. He was a talented kid who said “yes” because being chosen felt good. When Art revealed the scheme and asked for help, Alan didn’t hesitate. He felt “special.” His story shows the most devastating schemes aren’t built by obvious villains. They’re built by ordinary, capable people who are seduced by a sense of belonging and reassured that no one’s really getting hurt.

The Price of Belonging

The line between an honest employee and a convicted conspirator often has nothing to do with greed. For Alan, it was about something far more ordinary: the human need to belong.

Alan was exactly the kind of hire any company would want. The son of a pension consultant, he’d discovered his gift for numbers early. At UCLA, he took a computer programming course in Fortran, aced it, and switched his major to the brand-new field of math computer science. When he started working afternoons at Equity Funding in 1969, he was newly married and still finishing school.

His first day at the small Beverly Hills office felt “like walking into a party.” The entire actuarial department worked in one room, everyone young and friendly. “All my future friends were there,” Alan recalled. “It really was family.”

For over a year, Alan did normal actuarial work, like calculating insurance premiums using massive paper spreadsheets and projecting income and expenses. He had no idea that Mike Keller, working in the office next door, was creating fake insurance policies.

Then Mike quit at the worst possible time. It was December 1971, year-end was approaching, and Equity Funding needed certain numbers on the books. That’s when Art invited Alan to his house.

Sitting on Art’s couch, both men feeling good from drinks and drugs, Art revealed the scheme, or at least the part he wanted Alan to know about. The company had been creating fraudulent insurance policies and selling them to reinsurance companies for cash. They needed Alan’s programming skills to continue the work.

“How did you feel?” Caleb asks Alan about that moment.

“Special,” Alan answers. He said yes immediately. No negotiation or agonizing. Art valued his abilities, and that recognition was everything.

Decades later, Alan still wrestles with that moment. “Why did I say yes? Why was I so flattered?” The answer he’s found has little to do with money. Art offered membership in what Alan privately called “the fellowship,” his name for the scheme, borrowed from Tolkien. “We want you to be in our group,” is how Alan describes the appeal. “We’re inviting you to have a secret family.”

How Talent Became a Weapon

Once Alan said yes, his professional instincts took over, and that’s when a crude fraud became an industrial operation.

The numbers tell the story. When Mike left at the end of 1971, about 10,000 phony policies existed. By the end of 1972, after Alan’s improvements, that number had exploded to between 64,000 and 66,000.

Nobody told Alan to automate the fraud. “That was just my inclination,” he said. He did what any good programmer would do. He streamlined the process, built flowcharts, wrote programs, and documented everything so clearly that “it could easily be handed to the next person.”

The mechanics were sophisticated. Equity Funding sold the fake policies to reinsurance companies for cash. To keep the books consistent, Alan had to weave the fraudulent data through multiple systems. Fake policies required fake commissions. The computer even determined when fake policyholders would “die” so the company could collect death benefits. A $50,000 payout then equals about $500,000 today, Alan notes.

Most cleverly, Alan embedded hidden codes in each fake policy. They were markers only he could read. This let him mix real and fake policies so seamlessly that “you can’t tell the difference when looking at a listing.” When investigators later tried to separate legitimate from fraudulent policies, they discovered Alan was “the only one who could do that.”

The lesson is chilling. The same qualities that make employees valuable, like initiative, systematic thinking, and technical skill, can scale a fraud beyond anyone’s imagination. Alan turned forgery into an assembly line, complete with documentation for the next shift.

The Architecture of Denial

How did twenty-five people participate in this fraud for years without anyone stopping it? The answer lies in how Equity Funding compartmentalized the conspiracy and delayed the victims’ appearance.

Alan’s isolation was nearly complete. In his entire time at Equity Funding, he never once met CEO Stanley Goldblum. “Never saw him,” he emphasizes. He barely knew President Fred Levin or executive Lloyd Eaton beyond glimpsing them at parties. When asked about the accounting department that was cooking the books at the corporate level, Alan says he was “completely” isolated from them.

He knew nothing about the other frauds happening simultaneously, like the forged bond certificates, the gold-plated bricks placed in the vault to fool auditors, or the bugging of the conference room where auditors worked. As Alan learned later, “the higher up they were, the more they knew.” Everyone else saw only their piece.

The culture helped maintain the illusion of normalcy. Alan tells a story about Fred calling down from the 28th floor one night because he’d received a delivery of cannabis but didn’t know how to roll joints. Could anyone in the actuarial department help? Alan could and did, keeping a little for himself. “He had a lot better stuff than we could afford,” Alan notes. In his telling, drugs were “an equalizer” that dissolved hierarchy and made the company feel like a family rather than a criminal enterprise.

Even the fraud itself felt routine. The infamous “signing parties” gathered department heads around a conference table to forge signatures on fake policies—doctors approving medical exams, agents closing sales. Ordinary managers, sitting together, manufacturing fraud like it was paperwork.

Most importantly, while the scheme ran, there were no visible victims. “When it’s going on, there are no victims,” Alan explained. “The victims come at the end.” The stock kept climbing. Reinsurance companies collected their premiums (funded by selling more fake policies to other reinsurers). Everyone was “getting what they expected to get.”

There was also a comforting story that this was temporary. Art told Alan they wanted to wind it down. According to Art’s later recollection, executives even pleaded with Stanley Goldblum to pause the scheme for just one year. Stanley refused. Earnings per share had to rise from $1.80 to $2.00 to $2.25, no exceptions. “Growth at all costs,” as Caleb puts it.

When the Music Stopped

Alan left Equity Funding in January 1973, not from guilt, but from wanderlust. “My lifestyle was really turning very bohemian,” he explains. “I really needed to cut free and go explore the world.” Art wanted him to stay but didn’t push hard. Alan suspects Art’s first thought was, “Are you going to talk to anybody?”

Alan didn’t talk. But three months later, in April 1973, another employee named Ron Secrest did. When the scandal broke, Alan got a call from a friend still at Equity Funding warning him to cooperate now, and there might be immunity. Alan immediately agreed to help.

The investigators couldn’t tell which policies were fake. Alan was the only one who could identify them, thanks to his hidden codes. He returned on a contract basis, spent about a week reversing his own work, and gave investigators the evidence they needed.

The meeting location shows how serious things had become. Investigators first met Alan on a golf course road where “you can see anyone coming.” They knew it might be dangerous.

When sentences came down in October 1974, Alan got the lightest, with three months at minimum-security Lompoc. He brought his own box of books and played bridge nightly with three fellow conspirators: Attorney Jim Banks, head of policy service Bill Symonds, and Larry Collins, the head of underwriting. They never discussed the fraud.

Stanley Goldblum got eight years, served four, and paid a $10,000 fine, pocket change for a fraud this size. He kept his Beverly Hills house and later got caught in a 1990s workers’ comp scheme. In his seventies, he was arrested again for trying to get a bank loan with fraudulent information.

The real victims appeared when the company collapsed. Shareholders lost everything when the stock went to zero. Legitimate insurance agents lost their careers. Alan tells one story that haunts him. A friend’s father, an agent who’d been advised to hold the company stock, lost everything when it crashed. He had a heart attack and died.

Lessons from the Fellowship

Alan’s story isn’t about a criminal mastermind. He was a talented young programmer who wanted to belong, said yes to feel special, and automated a fraud because that’s what good programmers do—they make things efficient.

The warning signs aren’t always in the numbers. Watch for cultures where forgery becomes routine, departments are so isolated that no one sees the full picture, and growth targets are so sacred that leadership won’t pause even for a year. Watch for the quiet seduction of the inner circle, the promise of belonging to something special.

Most unsettling of all, watch your best young hires. The same talents that make them valuable, like systematic thinking, technical skill, and the drive to improve processes, can transform a small deception into an industrial fraud. As Alan still asks himself: “Why did I say yes?” His answer has less to do with greed than with being human.

Listen to the full conversation with Alan on this episode of Oh My Fraud. Because sometimes the biggest frauds are orchestrated by ordinary people, one yes at a time.

In January 2018, a video exploded across social media. It showed a massive, futuristic semi-truck silently gliding down a desert highway. The caption read, “Behold the 1,000-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 with hydrogen fuel and zero emissions. The future had arrived.

There was just one problem. The truck had no motor, no fuel cell, and no gears. It wasn’t driving. It was rolling.

In a recent Oh My Fraud episode, host Caleb Newquist traces Trevor Milton’s journey from a college dropout with a string of failed ventures to the founder of a $30 billion public company built on claims that were, in the most literal sense, rolling downhill.

 

The Making of a Serial Entrepreneur

Trevor Robert Milton was born in 1982 in Layton, Utah. He grew up in Kanab, a small town in southern Utah with a population of a few thousand and more red rock than anything else. His dad worked for Union Pacific Railroad. His mom was a realtor. She died of cancer when Trevor was 15. 

By any normal resume standard, Trevor wasn’t the obvious candidate to become a billionaire truck company founder. He dropped out of Utah Valley University after one semester. He had no engineering background, no finance background. But he could walk into a room, start talking, and make people feel like whatever he was selling was the future.

He later described his learning style this way: “I gained all my knowledge in the real world. I like to learn by touching things.” As Caleb observes, this was “a charming way of saying ‘I figured it out as I went.’”

For a surprisingly long while, that worked.

A Pattern of Failure and Forward Motion

Trevor’s first company was St. George Security and Alarms, a home security installation business. He sold it to a Nevada businessman named Glen Pilz, who drained his 401(k) and savings account to buy it. Glen later told CNN the books weren’t what they appeared to be. He described the experience as a section of his life that “sucked.”

Then came uPillar, an online classified site for used cars. Trevor later said, without apparent irony, the company “would have ended up being Amazon, but they grew too fast.” As Caleb notes, “uPillar was not Amazon. It was a used car website in Utah.”

Around this time, while investors were waiting for revolutionary technology, uPillar sponsored what it hoped would be the world’s largest silly string fight. Thousands of people, strobe lights, 8,000 cans of silly string, and money cannons blasting cash into the crowd. What did this have to do with selling used cars online? Nothing. Nothing at all.

Next was dHybrid, a company that converted diesel truck engines to run on compressed natural gas. This venture landed a deal with Swift Transportation, one of the largest trucking companies in the United States. Swift gave Trevor $2 million up front and a $322,000 loan to get conversions rolling. By the time the money was gone, dHybrid had completed exactly five test conversions. Swift and another investor sued. The company failed.

These early investors weren’t all sophisticated funders. One man put in $40,000, which was basically everything he had. Another scraped together about $3,000, partly with credit card cash advances. All of it was gone, but Trevor kept moving forward.

The Birth of Nikola and a Very Expensive Prop

In 2015, Trevor founded Nikola Motor Company in Salt Lake City. The name wasn’t subtle. Nikola Tesla’s last name was already on Elon Musk’s electric car company, so Trevor took the first name.

Trevor talked about Elon constantly, sometimes admiringly, sometimes competitively, often both at once. When Elon announced it was time to go all out on the Tesla Semi, Trevor responded publicly, saying, “He doesn’t like us, and that’s okay.” He told journalists with complete sincerity, “There are very few people who can out-Elon in this world, and I’m one of them.”

The pitch for Nikola was ambitious. He wanted hydrogen-electric semi-trucks to replace diesel across the American trucking industry. And not just the trucks. Nikola would build hundreds of hydrogen fueling stations across the U.S. and Canada, bundling the trucks and the fuel together. Nikola was going to be the next Tesla AND the next ExxonMobil, too.

On December 1, 2016, Trevor walked onto a stage in Salt Lake City. Behind him, hidden under a large white sheet, sat the Nikola One. Trevor built to the reveal, addressing his doubters. “For every person out there that said, ‘There’s no way this can be true. How can that be possible?’ We’ve done it.”

When the sheet dropped, the crowd went wild. The truck was enormous and futuristic, with swooping lines and aggressive angles. It looked like someone asked a Hollywood designer to imagine trucking in 2050.

Trevor told the crowd, “This thing fully functions and works.” He joked about putting up a chain to keep people from driving off. He explicitly stated the truck was “not just a pusher,” which is industry slang for a vehicle that looks real but has to be pushed around.

The crowd didn’t know that a few weeks earlier, Nikola’s chief engineer had told Trevor the truck wouldn’t be functional for the unveiling. He recommended postponing, but Trevor proceeded anyway. According to Bloomberg, gears and motors were missing, and there was no fuel cell on board. The Nikola One was, in the most literal sense possible, a very expensive prop.

The Video That Changed Everything

More than a year later, in January 2018, Nikola posted a video called “Nikola One in Motion.” It showed the truck cruising down what appeared to be a flat desert highway. The company framed it as proof the technology worked.

But remember, the truck had no motor, fuel cell, or gears. So how was it moving?

Hindenburg Research, the short-selling firm that eventually exposed everything, sent an investigator to find the filming location. They found it on a remote stretch of road on the old Mormon Trail south of Grantsville, Utah. Straight, lightly traveled, and sloped downhill just enough to get a 21,000-pound truck rolling at what looked like highway speed.

Nikola had towed the truck to the top of the hill, positioned cameras so the road looked flat (even slightly uphill in some shots), and filmed it rolling down. When challenged, Nikola’s official response was that it “never stated its truck was driving under its own propulsion in the video.” 

An Ocean of Lies

The false claims cascaded across nearly every aspect of Nikola’s business. Trevor claimed Nikola was producing hydrogen at costs that undercut competitors. If true, Nikola would have the trucks, the fuel, and the stations. But Nikola wasn’t producing hydrogen.

The Nikola Badger pickup truck, announced in 2020, was described as “built from the ground up” using Nikola’s own technology. The actual plan was to rely on General Motors technology through a partnership the company hadn’t yet finalized.

Trevor talked constantly about billions in reservations, a backlog proving the market wanted what Nikola was building. He didn’t emphasize that most were non-binding, there were no deposits, and customers could cancel their orders anytime for free.

Then there was Trevor’s brother, Travis, appointed director of hydrogen production and infrastructure. This job required deep technical expertise in engineering and manufacturing. According to Hindenburg Research, Travis’s prior experience “appeared to consist largely of construction and remodeling work in Hawaii.”

The Perfect Storm for Fraud

Nikola went public on June 4, 2020, by merging with a special purpose acquisition company (SPAC) rather than going the traditional initial public offering (IPO) route. This gave Trevor far more room to promote future projections than he would have had in a traditional IPO process. And Trevor, as Caleb says, “exploited that room with everything he had.”

The timing was perfect. The pandemic had shut down the economy and trapped millions at home with stimulus checks they weren’t sure what to do with. Commission-free trading apps like Robinhood made buying stocks feel as easy as ordering takeout. A new generation of retail investors piled into the market, many for the first time.

These people hadn’t spent years looking at balance sheets. They’d watched the market recover from 2008 and missed it. They’d seen early Tesla investors become millionaires and were looking for the next Tesla. People who were home, online, scrolling, and susceptible to a great story told with confidence.

Trevor went straight for this audience. 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.” He answered questions from random retail investors like they were old friends. When skeptics pushed back, he made doubt look like jealousy. They were haters, paid attack accounts, Tesla fans trying to tear down a competitor.

Within five days of going public, Nikola’s stock had more than doubled. On June 9, it peaked near $80 a share. The market cap briefly touched $30 billion, surpassing Ford, a company that had been manufacturing vehicles for 117 years. Nikola had zero revenue and hadn’t delivered a single truck. Trevor’s personal stake was worth around $12 billion. He bought a $6 million Gulfstream jet with Nikola stock from a Nikola board member.

The Two-Day Partnership

On September 8, 2020, Nikola announced a partnership with General Motors. GM would receive an 11% stake, valued at roughly $2 billion, in exchange for supplying technology and manufacturing the Badger. Trevor called it “a partnership made in heaven.”

General Motors had just legitimized Nikola. Trevor had parlayed what Hindenburg called “an ocean of lies into a partnership with the largest auto OEM in America.”

It lasted two days.

On September 10, Hindenburg Research published its report. It included text messages from former employees, recorded phone calls, private emails, and behind-the-scenes photographs. It detailed everything, including the hill, the hydrogen claims, and the Badger.

Trevor’s response was to call it a hit job on Twitter. “It will take the rest of the day to address the one-sided false claims,” he wrote. “In the meantime, troll on.” He never addressed them. Ten days later, he resigned as executive chairman and deleted his social media accounts.

Trial, Conviction, and a Presidential Phone Call

The Securities and Exchange Committee (SEC) and the Department of Justice (DOJ) launched investigations. The GM deal fell apart. In July 2021, a federal grand jury indicted Trevor on securities and wire fraud charges.

The trial testimony was devastating. CEO Mark Russell testified he learned only after joining that the Nikola One never had a working turbine or fuel cell when Trevor unveiled it. He, CFO Kim Brady, and chief counsel had staged what he called “an intervention” with Trevor over his public statements. Mark threatened to quit but didn’t, worried it would destabilize the company.

Kim offered perhaps the most revealing detail. When Nikola’s stock fell by $5 on its first day of trading, Trevor called Kim to ask if something was wrong with the Nasdaq. Kim explained it was simply supply and demand. Trevor insisted Kim contact the exchange. Kim didn’t because, as Caleb puts it, “that would be insane and humiliating.”

The jury convicted Trevor on three of four counts. Judge Edgardo Ramos sentenced him to four years in prison, a $1 million fine, and sought $660 million in restitution for investors.

Then, on March 27, 2024, while Trevor was still free on bail, President Trump called him personally to offer a full and unconditional pardon. Trevor posted a celebratory video, calling it a “pardon of innocence.” That’s not what a pardon is. As Judge Emmet Sullivan noted in the Michael Flynn case, “The Supreme Court has recognized that the acceptance of a pardon implies a confession of guilt.”

Trump’s explanation was straightforward. Trevor “was one of the first people who supported a gentleman named Donald Trump for president.” Trevor had donated almost $2 million to Trump’s efforts. The pardon wiped away the prison sentence and the $660 million in restitution. Nikola had already filed for bankruptcy. The investors got nothing.

By October 2025, Trevor was CEO of SyberJet Aircraft, staffed with former Nikola employees. He told the Wall Street Journal, “I love to find products that are unreal and need someone with vision or guts to be able to bring it to market.” Unreal is right.

Lessons for Accounting Professionals

Caleb distills several crucial lessons from the Nikola fraud:

• “Fake it till you make it” isn’t a legal defense. There’s a difference between selling a vision and stating things as fact when you know they’re false. Founders are allowed to be optimistic. They’re allowed to sell the vision. They’re not allowed to tell investors they’re producing hydrogen when they’re producing no hydrogen at all.
• SPACs deserve extra scrutiny. The SPAC structure gave Trevor far more room to promote future projections than a traditional IPO would have, and he used it like a personal marketing budget. The SEC has since tightened disclosure rules around SPACs, but the lesson stands. If a company goes public via a SPAC, consider whether what the founder has said publicly is actually verifiable.
• Watch the people around the founder, not just the founder. If a company promises to build a national hydrogen infrastructure network, and the person running that effort has a background in home remodeling, that’s a red flag.
• Retail investors can be a target. Trevor went looking for people who were emotionally invested, unlikely to do professional due diligence, and hungry for the next Tesla. Green tech companies that promise to save the world still have to deliver the goods. 

The Truck That Couldn’t Drive, But Almost Got Away With It

Trevor built a $30 billion company on a truck that rolled downhill. He was convicted on three counts of fraud, sentenced to four years in prison, and then pardoned before he served a single day by a president he’d donated nearly $2 million to support. The retail investors who lost everything got nothing.

What makes the Nikola story worth studying is how long the lies worked, and who bore the cost when they didn’t. The engineers and executives knew. The CFO testified that Trevor’s statements “could be inaccurate or exaggerated.” And yet the company kept going, the stock kept climbing, and ordinary people kept buying in.

That’s the part that should keep accounting professionals up at night.

For the full story, including Caleb’s breakdown of the infamous downhill video, the GM partnership that lasted 48 hours, and the pardon that wiped away $660 million in restitution, listen to the full Oh My Fraud episode.