Nikola's Trevor Milton is Hilariously Bad at Astroturfing His Hilarious Crimes
A pardon from Donald Trump *definitely* doesn't mean you're innocent. Plus Galaxy's $200m Luna settlement, TWO Elon Musk cons, and some Great Reads.
One of the things I’ve learned over ~15 years investigating technology and investment fraud is this: Fraud is mostly committed by people too incompetent to succeed without it.
Nikola CEO Trevor Milton, a convicted multi-billion-dollar SPAC fraudster of the lowest-brow sort who was just pardoned by Donald Trump, affirmed that dictum with his initial grift: rolling a fake truck down a hill. He’s not just bad at building electric vehicles (Nikola went bankrupt in February and will shut down), he’s bad at lying about it. In fact, the nuance of the lies might be the most important difference between him and Elon Musk, who Milton tried so hard to imitate as part of his con.
Now Milton is proving it again by seemingly hiring the lowest bidder to simulate an army of support, and frame his pardon as an element of “justice reform,” when it’s in fact nakedly transactional: Milton has given nearly two million dollars to GOP and Trump political groups over the past year.
Scroll down for that. First, news of other scammers, and a new feature: a selection of great reads from other Substackers.
Galaxy Digital and the $200 Million Tattoo
Crypto hedge fund Galaxy Digital has reached a staggering $200 million settlement over its role promoting and profiting from the Luna pyramid scheme. As a refresher, Luna was pitched as a financial perpetual motion machine, using a valueless crypto token to “back” a supposedly dollar-value stablecoin, “UST.” In reality, the value of UST was propped up by yield against deposits in a protocol called Anchor - yield that was ultimately being paid by venture capital funds, making the whole thing laughably unsustainable.
The full Luna story is truly bonkers. In early 2023, I wrote, produced, and directed a 4-part documentary podcast on the fraud called “Lunacy” for CoinDesk, and I think it’s still very worth a listen. We correctly inferred at the time that Kanav Kariya and Jump Crypto were also party to the fraud, and though we didn’t know exactly what shenaningans Novogratz had gotten up to, we made his general complicity clear.
While Galaxy admits no wrongdoing in the settlement, it was effectively part of a massive, multi-party fraudulent conspiracy. Galaxy received “18 million [Luna] tokens over the course of a year, in monthly tranches, at a price of $0.22, representing a 30% discount on the market price,” as part of deal with Terraform Labs to promote the pyramid scheme. And boy did they promote it! Novogratz’ infamous tattoo was on the occasion of Luna reaching $100 per token, a more than 400x return for Galaxy theoretically totalling $1.5 billion.
So this fine might not have actually wiped out their gains from dumping worthless dogshit on the public.
What’s most revealing about this, I think, is that Luna founder Do Kwon was both:
a) totally transparent about building a perpetual motion machine that anyone with a single functioning financial brain cell should have instantly recognized wouldn’t work, and
b) scheming behind the scenes with Jump, Galaxy, and probably others to pump up the pyramid.
So Mike Novogratz is either a) a complete idiot in charge of a huge crypto fund, or b) a shameless market manipulator in charge of a huge crypto fund, or c) both.
Again, check out the podcast. It honestly rocks. Start with Lunacy, Episode 1: The Death Spiral.
Tesla’s Canadian Subsidy Shuffle
The biggest difference between Tesla and Nikola Motor is that Tesla’s fraud has generally consisted of subtle line-stepping rather than shameless lies. But that may be changing.
“Somehow, four Tesla-owned dealerships reported to the Canadian government that they sold an astonishing 8,653 cars during a single weekend in January — enough to qualify for 43 million Canadian dollars’ (about $30 million) worth of government subsidies under a program just before it expired,” reports the New York Times. That amounts to selling “two cars a minute off its lots — a rate that assumes those four dealers had stayed open 24 hours from Jan. 10 to Jan. 12.”
A dealer’s association representative also told the Times that “it was physically impossible for the four Tesla dealerships to keep thousands of cars on hand.” Canada is now investigating, and may cancel or retract the subsidy payments.
Wag the Dog: xAi buys X.com
Elon Musk’s xAI is acquiring Twitter/X in an all-stock deal that’s really more of a merger. Musk announced that “the combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt),”
What’s crazy about this (the only other applicable word is “suspect”) is that xAI has grown to that supposed $80 billion valuation after just two years of suckling at the teat of Twitter data. It’s math that reflects our moment’s perfectly inverted values: the machine over the human. “Executives at the companies, which share personnel, believe it will be easier to raise money for the combined businesses under xAI than it would be separately,” the WSJ reports.
The obvious parallel is to Tesla’s 2016 acquisition of SolarCity for $2.6 billion, with Musk the majority shareholder on both sides of the deal, and Musk’s cousin, Lyndon Reeve, SolarCity’s CEO. That payout was approved by 85% of shareholders - but SolarCity’s rooftop solar installations never became a major win for Tesla, and an unsuccessful shareholder lawsuit in 2022 alleged that the buyout was actually a bailout. That certainly seems to be an overriding goal in the X/Xai deal, as well.
Good Reads (From Substack and Beyond)
The Average College Student is Illiterate - Hilarious Bookbinder
“Their writing skills are at the 8th-grade level. Spelling is atrocious, grammar is random, and the correct use of apostrophes is cause for celebration. Worse is the resistance to original thought. What I mean is the reflexive submission of the cheapest cliché as novel insight.”
AGI As Infomatic Delusion - Margaret Wertheim
“The mistake here is to think that intelligence is equated with manipulating symbols. It’s a notion permeating western culture inherited from the ancient Greeks then imported into modern science and now hardened into a tech-world ideology. ‘Smart people,’ are those who can play abstract games with symbols – the Abstract Reasoning Corpus writ large. Mathematics, logic, theoretical physics, coding, computer science – these are the things ReallySmartPeople™ do. So symbol manipulation is the benchmark for AI.”
Trump’s War on Education - Chris Hedges
“Totalitarian regimes seek absolute control over the institutions that reproduce ideas, especially the media and education. Narratives that challenge the myths used to legitimize absolute power — in our case historical facts that blemish the sanctity of white male supremacy, capitalism and Christian fundamentalism — are erased. Education is meant to be subversive. It gives students the ability and the language to ask questions about reigning assumptions and ideas. It questions dogma and ideology.”
Finally, this is a new “weird fiction” magazine started by the former editor of Black Static. I’m waiting for my copies, but at a guess, if you’re a fan of J.G. Ballard, Laird Barron, Dennis Cooper, or similar demented atavistic mystics, this is probably for you.
Trevor Milton’s Fake “Justice Reform” Troll Army
As a reporter, your job is often simply to accept gifts from the universe. Back in December, I got what turned out to be one of those, in the form of a Twitter DM from one William Jones, teasing a forthcoming documentary about former Nikola Motor CEO Trevor Milton.
I was successfully baited because I assumed the documentary would be critical - Milton is one of the most obvious con-men of his generation. And after a wait of a couple of months, on the Monday after Trump pardoned Milton, my good buddy William reached back out to let me know the documentary trailer was out. Quite a coincidence!
And then of course I pretty quickly realized the “documentary” would be sympathetic to Milton - that, in fact, it was going to argue he was the victim of a hostile “conspiracy.”
Now, I know Trevor Milton is a fucking liar. Honestly, it was pretty clear from the jump: naming an electric vehicle company “Nikola” to compete with “Tesla” is just so fucking stupid, and so aimed at misleading the stupid, it screams fraud.
But I definitely knew it in June of 2020, well before Hindenburg Research exposed his truck-rolling trick in a report released that September. I was covering Tesla and EVs for Fortune at the time, and I interviewed Milton directly about his claims to have discovered a new battery chemistry (paywalled, I’m afraid). Those claims completely fell apart under scrutiny - Nikola had simply bought an experimental formulation from some university researchers, and despite statements from Milton, was nowhere close to production. Regrettably, my story came out just two weeks after Milton took Nikola public in a brazenly fraudulent SPAC that valued the fraud at a hilarious $3.3 billion.
Anyway, I finally looked closely enough to realize that “William Jones” is not a real person. As a friend pointed out, the “food header image and banal hashtags in bio” is a very common format for bots.
And looking at “William’s” followers, it became clear he was part of an astroturfing campaign.
“Sally Macintosh,” “Jack Stevens,” “Tobias Anderson,” and “Michael Greene” are all synthetic characters created according to the same template as “William Jones.” And they were all sharing the Milton trailer, and news of the pardon, with the #justicereform hashtag.
The goal here seems to be to promote the documentary as if it’s produced by an independent, neutral third party. But it’s also heavily featured on Milton’s personal web site, so it seems clear that he commissioned it. Another interesting detail is how heavily they cite the director, “award-winning British filmmaker Mark Soldinger,” whose IMDB page is a Great Dismal Swamp of mediocrity, embarrassment and failure. I wonder if Soldinger won an award for directing four episodes of “My Big Fat American Gypsy Wedding”? Or for executive producing “Princess Diana’s Dresses: The Auction”?
I bet it would have been fascinating watching this pair perform the illusion of producing a ‘documentary.’ To be a fly on that wall, oh man.
All of this is not exactly, like, a crime, I guess? The real function of propaganda of this sort is not to convince anyone, but to give allies an excuse to take your side. To be blunt, the audience is probably mostly Milton’s fellow Mormons, who Milton needs to give at least a paper-thin excuse to forgive his comically brazen fraud.
Those are people eager to be convinced, so the unsubtle nature of Milton’s reputation-laundering con probably won’t bother them, if they even notice. A Trump pardon can’t make Trevor Milton any less stupid, or any less inept at doing fraud - the real project of his entire life.
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One of the things I’ve learned over ~15 years investigating technology and investment fraud is this: Fraud is mostly committed by people too incompetent to succeed without it.
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I wonder what is “fraud,” “mostly,” “incompetent,” and “succeed.”
Let's start with “fraud.” Fraud isn't always illegal in some senses of the word. In some senses it is just immoral gain. It's not even clear what it is meant to gain: money, property, or some other thing of “value.” But the method to gaining seems to always involves deception, lying, or otherwise misrepresentation.
Basically “fraud” seems to simply mean lying to gain, likely financially, likely illegally.
Then there is “mostly.” Mostly in both the grandiose and pedestrian sense? Because pedestrian fraud might be often, but it could also be fairly inconsequential. Someone lies that a product is on sale, but the 10 cent discount is actually the same price it was before. Enough times and by enough people and pedestrian fraud may aggregate into being important. But pedestrian fraud doesn't make the news, because, well, it's pedestrian. And likely not as impactful as, say, the fraud committed by billionaires who deal with inconceivable amounts of money. And when frequency is weighted by importance/impact, is it still “mostly?”
“Incompetent” kind of depends on the type of fraud. Because I could see a pedestrian, street con of fake speakers in a trunk being easier, but also not very sustainable. Those conmen very well may not be competent in many areas. But the grandiose frauds and fraudsters, those are never one transaction or one person deceived. That takes a kind of competence in deception that frankly would be surprising to suggest all other competence completely lacking. It requires a skill set, not just a single skill.
“Succeed” also is ambiguous. Perhaps success is just contained in what is gained directly from the deception. But that means the fraud pretty much has to be a success, as if it failed, there would be arguably no harm, which I think is generally needed to be demonstrable in criminal or civil cases. And presumably if a fraudster lost such a case that might undo their success. But if they didn't lose, or are never tried, then they theoretically keep their narrow definition of success. Essentially, fraud always succeeds, except it sometimes then loses. But if it doesn’t first succeed, then it's not fraud, it is merely be an attempt at fraud.
So the narrow definition doesn't help much.
I think most would agree that to succeed in fraud doesn't necessarily make one a success in a more broad sense. Or, for that matter, to fail (or rather have their success undone) in fraud wouldn't make one a failure in a broad sense. Certain not a complete failure. Even the most unsuccessful-at-fraud fraudster in the world has probably succeeded in something, like tying their shoes, at least once (SBF certainly must have managed it at least once).
So what about the broad sense? If you look at fraud as just lying to gain, and just one fraud makes one a fraudster, and success in the broad sense as power/money, well let me just gesture generally to all the rich and powerful people running things right now. And you tell me if fraudsters are successful.
However, I do not think they are all morons. I think instead they were all born privileged. And I think for that reason alone they would probably still be a “success,” even without fraud, based on our Western ideals (though I doubt fetishized capitalism has really been contained to a geographical area, that seems even more Western to assume exotic Eastern sensibilities) . Would they have succeeded /as much/ without fraud? Maybe it depends on cultural climate. At this exact moment in history, it looks like anyone who isn't a fraudster is seen as a threat to try to neutralize. I hope I, and everyone else, lives to see a day when that's not the case.
But I just don't know. I don't know for a fact how fraudulent it is or has been in other times and places. I don't know about the pedestrian fraud not considered worth reporting. Nor much about the grandiose fraud unknown and thus unreported. I don't know what kind of fraud we are considering mostly. I don't know if incompetence is about just the fraud act or beyond. I don't know if success is just the fraud act or beyond. I don't know if DZM has exact meanings for these words where his statement is definitely and definitively true. But I wouldn't be surprised if he could come up with them if he hasn't already. I could probably come up with definitions that would make it a fairly robust statement. But ultimately, I don't know what the definitions are, so I don't know what to think about that.
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In early 2023, I wrote, produced, and directed a 4-part documentary podcast on the fraud called “Lunacy” for CoinDesk, and I think it’s still very worth a listen.
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What I can personally attest to, is it is worth a read. As a read, it is insanely entertaining and informative. I don't listen to anything crypto, and I definitely don't watch videos about it. I think fraud is easier when you can manipulate emotions, and emotions are easier to manipulate through video and sound.
Look at the debate between Trump and Biden. A transcript would clearly make Trump look completely “incompetent.” But he is very competent at seeming confident while spouting complete gibberish. A decline is not very steep when it's already pretty close to the ground, so he's had his entire life to practice being confident while spouting nonsense. Further one could consider that a moral or mental ground, either way one is spouting nonsense. Any decline by Biden would be far more sudden and unfamiliar. Thus it may be forgivable that he was perhaps slow to realize or, more importantly, adapt. Further, the time leading up to the debate could very well have been much harder on him. He might have spent it cramming on actual facts, and late night cramming is definitely a young man's game. His opponent has never seemingly needed those. Thus, whatever crackpot anecdote he might have heard on a recent flight he could end up misremembering and spouting at the debate. Sadly, confident and incompetent seemingly trumps timid and inconsequential. Seemingly, as we'll never really know had he not dropped out. But of course, maybe none of that matters as much as voter suppression. https://www.gregpalast.com/trump-lost-vote-suppression-won/
I have definitely digressed.
Anyway, I believe that avoiding emotional manipulation is necessary for critical thinking. Which means relying on reading icky books by irrelevants like Shakespeare. If this means I miss out on good audio-visual content by those I /do/ trust to not be a fraud, like DZM, then so be it.
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