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Ben Foldy: From the Wall Street Journal, this is Bad Bets. I’m Ben Foldy. In our first episode, the brand new company Trevor Milton started, dHybrid had passed its first big test. The company had impressed executives at Swift Transportation, one of the biggest trucking companies in America.
We’ll come back to that, but spoiler alert, dHybrid would ultimately fail. There’s a reason you’ve heard of Nikola and not dHybrid. Years later when Nikola went public and Trevor Milton was being hailed as a visionary founder, he talked about his past failures and what he learned from them.
Here he is on a podcast called The Truck Show, saying that Nikola investors were treating it as a company worth billions of dollars in part because of those failures.

Trevor Milton: They want to know that you’ve failed. They want to know that you’ve been destroyed and gotten back up because when times get tough, they want to know you’re the right leader. So all those guys out there listening right now, if you’ve failed, all that means is that you’re going to be a better leader in the future. You’re going to have more compassion, you’re going to understand more, and you’re never going to give up. And people will invest in you because of your failures.

Ben Foldy: That’s how Trevor saw it. But what’s interesting to me, having reported this, is how Trevor pitched and managed the companies that ultimately failed and what happened to some of their investors. Because as I dug deeper into Trevor’s past, I found patterns that repeated themselves. Trevor, a natural salesman, would build up his businesses using charm and a big vision. He had a real knack for raising money, often making big promises to investors. And later, just like they would at Nikola, some investors in those businesses would be left with big life changing losses as Trevor rolled on.
So that’s what we’re going to get into in this episode. And the reporting behind what you’re about to hear. We sent to Trevor Milton’s PR rep and lawyers and asked for Trevor’s side. They didn’t answer our questions.
Okay, let’s start where we left off. It’s March of 2010, Trevor seems to have Swift in his corner and he’s finding it easier to get some local folks, friends, family, church acquaintances to give him money. And a lot of these investors, they’re just regular work a day people who were giving Trevor big sums, sometimes their life savings, towards what they hoped would be the truck of the future.

Rob Chambers: Hi.

Ben Foldy: Hey.

Rob Chambers: Hey, how are you?

Ben Foldy: I’m Ben Foldy from the Journal. How are you?
I met one of these people in Utah this past July. His name is Rob Chambers. We talked in his house in a small town outside St. George. He’d just gotten home from a long day working in the field for a utility company. I asked Rob how he first met Trevor and he said that actually, years before he decided to invest with him, they’d gone to the same high school in Kanab, Utah.
What do you remember of him? What was your impression?

Rob Chambers: Seemed like a nice guy. I feel like he shared the same morals I did and same kind of belief system.

Ben Foldy: Are most people in Kanab, LDS?

Rob Chambers: Yeah, most everybody is LDS.

Ben Foldy: LDS as in the Church of Jesus Christ of Latter Day Saints, the largest religion in Utah, and a social network that ties a lot of its towns and communities together. In 2010, the network of folks from southwestern Utah was buzzing with the story of the new hotshot entrepreneur, Trevor Milton. And soon it reached Rob Chambers, who by then was a sophomore in college, a few hundred miles north. He said his roommate, who was friends with Trevor, would regale him with stories of Trevor’s business savvy.

Rob Chambers: He’d tell us about this new thing that was going on with dHybrid and Swift, and obviously he would use Trevor Milton’s name. Yeah, Trevor Milton, he’s like, he went from high school to some big businessman that does all these great deals with big companies.

Ben Foldy: Rob says he was told the people he respected in the community were investing in Trevor’s venture. And at that exact moment, Rob says he happened to be sitting on a large sum of money, $40,000, most of which he’d just made at his summer job installing alarms. And then his roommate told him, Trevor was looking for a new investor and that he would introduce them.
And what do you remember of that meeting?

Rob Chambers: When I got there, dude, Trevor greeted us, like super charismatic, really nice. And I was like, wow. Yeah, I remember you, yeah, in high school and he treated me like he knew me. Oh, hey man, how’s it going? Like buddies. But I was really never his friend.

Ben Foldy: Did he call you buddy by chance?

Rob Chambers: I actually think he might have, yeah. But he’s really charismatic, really nice. And he took us to his office, which was huge, lots of glass.

Ben Foldy: It seemed fancy.

Rob Chambers: Yeah, super fancy. Yes, especially for me.

Ben Foldy: Rob says right off the bat, Trevor was in full pitch mode, connecting with Rob over his summer sales experience.

Rob Chambers: He made me feel like he knew exactly where I was coming from because he had been in alarm sales. And basically told me that you make so much money every summer, why don’t you invest it and double it and you won’t even have to go to work. Right. That sounds pretty good. And it’s somebody who’s friends with people that I trust. And I have heard of this guy, I know him, I know he served his church. And so I thought, well, yeah, great, let’s do it.

Ben Foldy: So Rob told Trevor he wanted to invest in dHybrid, the company that was doing natural gas conversions on trucks. The one he’s founding, we told you about last episode.
Rob said Trevor told him he had something better, shares in Lexon Industries. Lexon was the company Trevor Milton started when he sold his alarm company. We told you about that last episode. Lexon also did business as Upillar.com. It was building an online classified site. Trevor said it would be a competitor to Craigslist and eBay within a few years. And Lexon, aka Upillar was the parent company of dHybrid, the truck company according to the latter’s financial documents.
It might sound a bit complicated, but it’s not. Lexon was Upillar and was the parent of the truck company. We heard from a few people that wanted to put their money into the truck company that said that they were directed to Lexon instead.
Here’s another person from southwest Utah that I talked with, Tad Casebolt. Who invested after coming back from a deployment in Afghanistan.

Tad Casebolt: I was told, yeah, this is really great, dHybrid’s awesome. Do you want to invest in it? Yes, I do. Okay, so here’s the thing, Tad, is that we’re actually going to put your money into this umbrella company called Lexon Industries. So all the documents and stuff that you’re going to see will say Lexon, but you’re really investing into dHybrid. And so I was kind of like, okay, well, I’ve never invested before, I don’t know if that’s normal or not, but why do we have to do that? And I was sold the idea that, hey, what’s great about this is that since you’re investing into Lexon, Lexon also controls this website called Upillar. So if Upillar does well or whatever, then that’s an added bonus.

Ben Foldy: And Tad wasn’t the only person I spoke to who said they were told that if Upillar took off, they’d get an even bigger return. Rob Chambers, the college sophomore who met Trevor in his office, he says he found Trevor’s pitch for Lexon so convincing that he decided to go all in that day.

Rob Chambers: I actually brought three cashiers checks, one for 20,000, one for 10,000 and another one for 10,000. Because I was thinking, well, maybe I’ll go 30 or maybe I’ll go all 40. And when I got done talking to him, I felt like, dude, I want to put my money on these guys because I know they’ll succeed.

Ben Foldy: He says he left Trevor Milton’s office feeling pretty great. There was one detail he remembers though that stuck with him.

Rob Chambers: So I looked at my account history on that account. It was 10 minutes after I gave him those checks, pretty quick, maybe half an hour. So let’s say half an hour after I gave him those checks, they were in the bank, they were cashed.

Ben Foldy: Rob shared with me copies of his checks and bank records that backed up his memory of that day. And looking over the paperwork that Rob signed during that meeting with Trevor, I noticed a couple of things right away.
First, the paperwork, it’s seven pages of text that doesn’t say anything about what Lexon does as a business, and it doesn’t mention dHybrid, the truck company. It does have a paragraph, three pages in, about the risk, “investor understands that an investment in the company involves substantial risks.” And also that the investor attests that they can afford to lose their money.
Rob signed this paperwork, but he said the $40,000 he invested was pretty much all the money he had. He said a few weeks after he gave the checks to Trevor, he chose to move into a storage unit temporarily to save money.
Two other people I spoke with say they borrowed money to invest in Lexon. To help me understand the laws and regulations around investing in startups, I called a lawyer.

Maria Windham: I’m Maria Windham, I’m a securities litigation attorney, I’ve been working in this area since 2005.

Ben Foldy: Do you do both plaintiff and defendant work?

Maria Windham: I do, yes.

Ben Foldy: Okay. I showed Maria the Lexon paperwork and told her about the investors I’d spoken to who’d put money into Lexon despite not having much in the bank. Maria said that the federal rules for these kinds of investments are supposed to keep inexperienced non wealthy investors from taking risks that they can’t afford. But she said she often hears from people like Rob who say they didn’t fully understand what they were signing up for.

Maria Windham: The advice that I give to everybody is, other people might not read it, but you should because you’re going to be bound by what you sign. That said, whatever it is that is being signed by those investors, it needs to be complete. And it’s the company’s job to have made all of the disclosures necessary.

Ben Foldy: Maria says that under the rules, a startup like Lexon should provide its investors with specific information laying out the corporate structure, the business plan, and the specific risk for the business.

Maria Windham: So for instance, if you have technology that doesn’t work yet, that needs to be disclosed, not just we think this technology is going to work in the future and this future is going to be awesome. You also have to tell investors, if it turns out that our technology doesn’t work well, you could lose all of this money.

Ben Foldy: The investors I spoke with said they did not receive any documents like that. One investor, Darren Brooks, told me he didn’t get any documents at all. Not even the one that Rob signed. His involvement with Lexon started when Trevor, who was a friend of his, pitched him on the company.

Darren Brooks: Late one night, we’re talking on the phone and he said, look, he goes, we’ve got to have some investment capital. And I didn’t have a lot. I mean, I’m a nobody at that time. And I’m like, what are you talking? He goes, as much as you’ve got. And I’m like, well, I don’t have a lot. And he goes, can you do 30,000? And I’m like, maybe I could probably scrap it together and borrow some. And he’s like, it’s going to turn into a tremendous amount of money, I need it right now. And yeah, I believed him to the point where I scraped it together and wrote a personal check.

Ben Foldy: Darren says he was able to pull together 30 grand partly by taking out cash advances on his credit cards. And he said when he handed a personal check to Trevor, he never got any paperwork at all to sign, nothing about risk whatsoever. All he got was a Lexon stock certificate.

Darren Brooks: I was scared, but at the same time I’d had enough history with him, and really his energy that I kind of trusted. I just kind of trusted his passion more than I really knew about the underpinnings of his product.

Ben Foldy: So Trevor Milton raised money for the company from investors in his community. Next we’ll see some of the things that the company was spending its money on. After the break, I’ll take you to a silly string rave.
So remember the big successful test drive that Trevor Milton and Mike Trout did in the last episode. The one Mike told us about, where an executive from Swift Transportation figured out how much money dHybrid’s tech could save on fuel.

Mike Trout: And figuring in the price and the cost per mile savings, he wrote 61% on that piece of paper, and we were all just, oh wow. Everybody was freaking out, they’re like, wow.

Ben Foldy: A few months later, Swift, one of the biggest trucking companies in the US signed a contract with dHybrid. I’m holding a copy of it. It’s really Trevor Milton’s first big deal with a major company.
According to the contract, dHybrid was given $2 million up front. They would need to test their systems on a handful of Swift’s trucks. The stakes were huge. If the systems worked well, it could unlock a deal for hundreds more trucks. Potentially providing tens of millions of dollars for their tiny startup. Their tiny startup.
That was how Mike Trout says it had been promised to him, a 50:50 proposition sealed with a handshake in his kitchen. But Mike says he learned soon after that Trevor had actually gone ahead and applied for a patent on the system that Mike had put on Trevor’s truck. And this application, it listed Trevor as the sole inventor. And Trevor had incorporated the company with himself in every leadership position.

Mike Trout: That same week that he’s up there filing my design as his design and saying that he’s the inventor, he has his lawyer create dHybrid Incorporated, and he’s the CEO and he’s the treasurer and he’s the-

Ben Foldy: And the original agreement was that it would be a 50:50 venture?

Mike Trout: That’s how he got me to agree to do the deal with him. It’s a handshake and it’s in front of my wife. She’s the only witness. Why the hell would I even do this if I didn’t have equity in it?

Ben Foldy: Mike says he refused to do more work on the technology. And so Trevor relented. Just a little bit though. His lawyers filed a new application listing Mike Trout as a co-inventor. And instead of a 50:50 partnership, he gave Mike some equity in the parent company, Lexon. And offered him a $54,000 a year salary. Mike accepted. But when the paychecks started coming in, Mike says they were erratic and not always for the full amount.
Mike’s wife, Miranda, says Trevor told them that inconsistent paychecks were normal for a startup. That they would make sacrifices in the beginning, but the Lexon stock would be worth a lot more down the line.

Miranda Trout: Mike’s paycheck came in monthly and I’m like, wow, I can barely pay the mortgage and get groceries, but it’s all for the cause, right? Like we’re building for our future, so okay, we just have to sacrifice now because it’ll pay off later, right?

Ben Foldy: From what Mike and Miranda Trout could see though, Upillar, the online classified ad company Trevor ran, seemed to be spending a lot on marketing. Around the time the Swift deal came through, Miranda and Mike noticed …

Miranda Trout: A lot of things seemed to change. Trevor was buying things, not just trucks, but things were showing up like travel trailers and he got a nicer boat.

Mike Trout: It looked really good parked right in the middle of the dHybrid factory too.

Miranda Trout: And it said Upillar on it.

Ben Foldy: Upillar, aka Lexon.

Miranda Trout: Got a nicer boat, hosted the silly string event in Salt Lake City.

Ben Foldy: I’m sorry, just what do you mean by a silly string event?

Miranda Trout: So Mike brings home this, it was like a printed flyer to come to the world’s largest silly string event.

Ben Foldy: Silly string event. It doesn’t really do it justice.
That’s video on YouTube of the actual event itself, which was called The Countdown. In the video, you can see what looks to be thousands of people dancing and bouncing to a DJ, strobe lights flashing deliriously, while they’re shooting 8,000 cans of silly string on one another. It was all sponsored by Upillar and Trevor hoped it would set a world record for the world’s largest silly string fight.
Mike and Miranda Trout, they said they weren’t invited, but they decided to make the four hour drive to Salt Lake City anyway, to see what it was all about.

Miranda Trout: We go into this warehouse and we’re just taking it in. And I’m just seeing dollar signs everywhere. With all the printing that was done, the clothing, the advertising, the cases of silly string.

Ben Foldy: We found footage of the silly string event, and it also featured what Upillar called money canons. Multiple guys on stage in Upillar shirts had this long barrelled tube that blasted money over the screaming crowd as party goers tried to snatch the bills as they fluttered down. A promo video for the event pledged that $500 would be given away every 10 minutes. With the event scheduled to run from 9:30 PM to 1:00 AM. If they stuck to the schedule, that’d mean roughly $10,000.
And a few weeks after that rave, Lexon investors got an update from Trevor celebrating the event. One of them showed the email to me. April, 2011, “our hard work has paid off. After two months of planning and promoting, we had nearly 3000 young men and women attend the countdown. We broke the world record for the largest silly string fight, handed out Upillar advertising apparel to help brand our name. And finished the night off with the Upillar car giveaway.”
I asked Rob Chambers, the Lexon investor, what he made to this email. Rob, you’ll remember, was the investor who moved into a storage unit.

Rob Chambers: I guess I was kind of confused thinking, I don’t know how that gets us anywhere, but they gave away like a car. I remember thinking, man, I could really use a new car.

Ben Foldy: Did it seem like they were being careful with your money as you read those?

Rob Chambers: I didn’t really feel that way, no. And then I remember the updates on dHybrid were, yeah, like pretty mediocre, didn’t really give a lot of information.

Ben Foldy: I got my hands on dHybrid’s financials from this time period. And throughout those years I could see the truck company had loaned $2.6 million to Lexon interest free. The documents don’t say what it was used for.
Rob Chambers says he never saw those financials. But at the time he and other investors I spoke with said they were still excited about the original vision they were sold. The vision of a revolutionary semi-truck.
Remember, designing a better semi-truck was a huge, huge business opportunity. dHybrid’s financial documents show that the company was forecasting hundreds of millions of dollars in profit within a few years. In this moment, dHybrid’s projected profits weren’t going to happen unless the technology was actually viable. And according to Mike Trout, the guy who built the dHybrid prototype, he said the technology still had a long way to go. He told us about one of the company’s first big setbacks.
Mike says Swift had asked dHybrid to test it system with Swift’s engine manufacturer, Cummins. Cummins is one of the world’s leading manufacturers of diesel engines. In this test, it wasn’t going to be like the one we heard about last episode. It wouldn’t be scored by a guy doing calculations on a sheet of paper, but rather by expensive, highly calibrated equipment.
In July of 2010, Mike Trout and Trevor Milton flew to the engine maker’s headquarters for the test. Mike felt like the system wasn’t ready. It was just a couple of months after he’d built the prototype on his kitchen table. And now he found himself on the test track with some of the best engineers in the world.
So you’re alone in this truck with the engineers and the testing guys.

Mike Trout: Four or five guys, there’s a driver, there’s two or three of these guys that actually help developed this engine. Like what am I doing here? This is nuts. How do I not screw this up? I’m not lying about a bunch of stuff, but I’m not just blurting out, hey, I have no freaking clue what I’m doing here and I don’t belong here.

Ben Foldy: Mike Trout said that unlike the first test, this one was a disaster. The natural gas system added plenty of power, actually too much power, it shredded the tires on the test equipment. And not only was it too powerful, it failed another critical test.

Mike Trout: They do emissions testing on this thing. And we made them 20 times worse. Okay. I think the CO2 was like 2000% higher than normal. And oxides and nitrogen were just stupid off the chart and just everything was askew. Like this is nuts. It had an absurd amount of power, destroying equipment amount of power, but we haven’t saved the planet, you guys, we just haven’t.

Ben Foldy: We asked Cummins about this test, it declined to comment. But we know in the end the company didn’t work with dHybrid. So now dHybrid was on its own. Mike Trout says that after the big failed test, he was working feverishly to solve the performance issues. He had to. He’d put everything into somehow pulling this off. But he says he was told that there was no money for the equipment he needed. Somehow dHybrid, despite the $2 million advance from Swift, seemed to be short on cash. Its financial documents show that it only had $453 in the bank at the end of 2011.

Mike Trout: We weren’t very many months into it until I’m hearing, oh, we got to raise money, this project’s been expensive, we got to raise money. What do you mean we got to raise money? They gave us two million bucks to do this. I don’t see two million bucks around here. I would’ve spent most of it. I was the guy buying the parts. I was the guy ordering this and that and all that. Yeah, I didn’t spend anywhere near that.

Ben Foldy: Mike started to worry that perhaps something strange was going on here. And Mike being a natural archivist was saving documents like his pay stubs. He showed them to me. You see them being paid by a mix of company names.

Mike Trout: Every time I get a little chunk of change for monthly maintenance, it’s either out of his account or it’s from Upillar or it’s from Lexon or it’s from whatever. It’s from a whole bunch of different random bank accounts and stuff. Sometimes it’s meet him at the bank, I’ll do a withdrawal and just super random.

Ben Foldy: On top of that, Mike’s paychecks were continuing to shrink. By 2012, his tax returns show he got about $11,000 from dHybrid for the whole year.

Mike Trout: And it’s not enough to live on. But I’m still busier than I’ve ever been. I mean, it’s not like the work cut in half. The work got worse.

Ben Foldy: So Mike is working day and night. And his wife Miranda is working construction to help keep the household afloat. They told me a story about a very bad setback they had around this time. And for me, what’s striking about it isn’t the setback, it’s the reaction to it. It shows how pretty much no matter what happened to them, they both kept laser focused on trying to make this dream of a new kind of truck into a reality. So one day, Miranda’s on the job.

Miranda Trout: Mike’s at work, I knew that he had this deadline, and it’s 4:15 and I fall. I fall into a basement hole and I break my back. I fracture three vertebrae. At this time, I don’t know that I have a broken back, but I know that I free fell nine feet. And I can wiggle my toes, but I can barely breathe. So I crawl out of this basement hole. And I honestly could not bring myself to tell Mike because I knew if he just had a couple more hours to work, he could probably get the deadline done and he’ll be able to help me for the rest of the weekend.

Ben Foldy: There’s a term in business, sweat equity. Basically it’s the contribution of labor rather than capital that people put in towards making a business or investment succeed. And I’ve heard some pretty wild stories about startups and the sacrifices in sweat equity that people put into them in their early days. But I don’t think I’ve heard anything quite so brutal.
And in the end, all that work and the broken bones, it was all for nought. By the end of 2011, dHybrid was in rough shape according to its financials. Remember that $2.6 million it loaned to its parent company, Lexon. Much of that, about 1.9 million, had been repaid to dHybrid. But the documents show that the truck company ended the year with just over $450 cash on hand. They don’t explain what happened to that $1.9 million that had been repaid. dHybrid’s financials also show the company borrowed $800,000 and paid more than $40,000 in interest on those loans.
One of those loans it took from Trevor’s father, Bill Milton. We reached out to Bill Milton, who declined to comment while his son’s trial is ongoing. And then in 2012, dHybrid lost its major customer, Swift. Two years after signing their deal, Swift sued dHybrid. Swift said that the trucks dHybrid provided for testing had engine issues and didn’t perform as promised. And while Trevor was not named as a defendant, Swift alleged that some of the $2 million advance was spent on dHybrid’s “officers or directors personal use and/or other purposes unrelated to the technology.”
dHybrid counter sued alleging that Swift and its chief executive had taken advantage of Trevor Milton, “a young unsuspecting entrepreneur”, and was attempting to steal his company’s trade secrets. Both sides denied the others’ allegations and they settled in 2015. Details were kept private. But in a letter to Lexon investors, Trevor wrote that dHybrid received $1.7 million as part of the settlement.
But this is one of those tough lessons that years later, Trevor would cite as crucial in his becoming a businessman who could raise more than a billion dollars. For instance, here he is on a podcast called Rise of the Young, saying that back then dHybrid had been doing great but got involved with the wrong partner.

Trevor Milton: We did really well, but we ended up with some intellectual property lawsuits where we were … It was just a really tough time in my life where we ended up having to close that company down, not because of our fault, but primarily because people wanted our IP and they came after us and sued us for it. And I didn’t have the resources or the people to defend me at the time.

Ben Foldy: That’s the Trevor version of the story, that none of the drama was his fault and that Swift was out to steal his ideas and his IP.
What is certainly true is that by 2012 operations at dHybrid were starting to wind down. The looming legal fights and debt really were strangling Trevor’s companies. That May, Trevor texted Mike Trout and it sounded dire. In the text, Trevor wrote “I feel like you’re mad at me and I don’t know why. I’m trying to get us out of this mess we are in. We owe millions of dollars and no way to pay it.” The next month, Trevor called Mike.

Mike Trout: Hey buddy. Yeah. We’re just, yeah, there’s like no more money and just there’s no money to pay you. And I just hung up on him.

Ben Foldy: A beaten down Mike Trout called it quits. He was broke and his marriage was in crisis. And just some two years after shaking hands with Trevor Milton in his kitchen to start a 50:50 partnership, he was left with no savings, a worthless stake, and a failed company, and a hell of a grudge.
What Mike didn’t know, what most of the investors didn’t know, is that Trevor Milton was quietly building himself a lifeboat. Within a few months, he and his father, Bill Milton, would start another company. And this new company sounded a lot like the old one. It was called dHybrid Systems LLC instead of dHybrid Inc. And it took with it some of the natural gas tank systems that Mike Trout had been working on at the original dHybrid.
And the thing that happened next was pretty remarkable. Trevor would somehow roll the failures at dHybrid into much more money, much more investment, and a much larger stage.
In late 2014, another big national company, Worthington Industries, bought into the promise of Trevor Milton. Worthington makes things like the special steel tanks that dHybrid Systems LLC was buying to store the gas in their system. And it purchased a majority stake in the new dHybrid Systems LLC for $12 million in cash.
I heard from people involved at both dHybrid Systems and Worthington that there wasn’t much due diligence done on the deal. And that dHybrid’s technology ultimately had crucial engineering issues and led to costly recalls. We reached out to Worthington, it declined a comment.
So after Trevor negotiated the sale of this new company, dHybrid Systems LLC, news of his successful exit reached some of his early investors, the ones who had invested in Lexon hoping to fund the new truck technology. At this point, some of those people I talked to thought that their long awaited payoff had finally come. Like Rob Chambers, the college student who’d invested his life savings with Trevor four years earlier. After hearing about the sale, he heard that some investors were getting paid back. But he wasn’t able to find out what the process was. He asked his college roommate who’d first introduced him to Trevor for advice on what to do. He said the roommate told him to forget about his money.

Rob Chambers: He’s like, dude, your best option is to write it off and take the tax right off as a loss, take pennies on the dollar.

Ben Foldy: We tried to reach the roommate but didn’t get a response. But Rob said at that point when the roommate told him that he wasn’t ready to just walk away.

Rob Chambers: I was just like, well, I’m going to try my luck with Trevor. So I actually ended up calling Trevor. And I have that audio recording.

Ben Foldy: Now our eyes light up.
Rob Chambers went upstairs to grab a laptop with the recording. It’s from 2015, a few months after the multimillion dollar sale of the second dHybrid, he played it for us.

Trevor Milton: This is Trevor.

Rob Chambers: Hey Trevor, how you doing?

Trevor Milton: Good.

Rob Chambers: Awesome man. This is Robert Chambers, probably don’t ring a bell.

Trevor Milton: Rob, just give me a, if you can hold on, I got to get off the other line, it’ll take me a minute. Okay.

Rob Chambers: I can’t. I need to talk to you about it. I mean, I’m not upset or anything and I know … they explained to me that you’re working on-

Trevor Milton: You’ve got to hold on, I’m on a conference call, you got to hold on a second, give me about 30 seconds to drop off.

Rob Chambers: Okay, thank you.

Trevor Milton: Hold on one second.

Ben Foldy: Trevor put him on hold for almost two minutes, and then …

Trevor Milton: All right, I’m back. So who am I speaking to, I’m sorry, I’m completely lost.

Rob Chambers: Oh no, you’re fine. My name is Robert Chambers. (inaudible)

Ben Foldy: Unlike when Trevor Milton first pitched Rob, when Rob said Trevor remembered him from high school, he had to remind Trevor of who he is and all their friends in common. And then Rob got to the point. He heard from a mutual friend that Trevor had a plan to pay back his investors.

Rob Chambers: He said that you guys are working on some things to pay back those that needed to be paid back or whatever. He said you were working on something.

Trevor Milton: Yeah, I mean, me personally, I’m working on buying some people back. I can only do so many, we can’t do everyone at once. And it’s not anything … in other words, what we’re trying to do is just help some people out.

Ben Foldy: Rob Chambers asked if Trevor could help him out.

Rob Chambers: What can I do to get on that list?

Trevor Milton: Well, everyone’s on the list. I can’t show preference. It has to be random.

Rob Chambers: Okay.

Trevor Milton: So I mean, there’s certain things, there’s certain people that have their stuff collateralized, they’ll obviously come first. But essentially what I’m doing right now is I’m working through. Kind of depends on what kind of money I have and who I’m able to buy out at the time.

Ben Foldy: Rob asked about Trevor’s deal with Worthington and wondered if it meant that he’d get paid back from that money.

Rob Chambers: And I know dHybrid was sold to Worthington, correct?

Trevor Milton: No. So dHybrid’s still operating. That’s dHybrid Systems, completely different company, that was involved around just doing natural gas tanks. That’s completely different, it has nothing to do with dHybrid Inc.

Rob Chambers: Okay, well, I don’t understand.

Ben Foldy: Rob told us he was confused. Because for years he thought his money had gone towards a company called dHybrid, run by Trevor Milton that did natural gas conversions on trucks. But now he was being told that actually the company that just sold for $12 million wasn’t the dHybrid he had invested in. It was called dHybrid Systems LLC, run out of same office and making natural gas delivery systems for trucks. But Trevor was telling him this new company had nothing to do with the one that Rob had sunk his life savings into.
And public filings by Worthington confirmed that. It purchased dHybrid Systems LLC, a separate entity from the other dHybrid. So Rob just goes back to the question that he started his call with. A mutual friend had told him that there was a plan to pay investors back. Could he get on the list?

Rob Chambers: He is the one that told me that you guys had something in the pipeline to get everybody paid back pretty quickly.

Trevor Milton: That would be me, just buying people back as I can. I mean, I can’t do everyone. We got over $8 million invested.

Ben Foldy: $8 million. That’s the only time I’ve ever heard Trevor acknowledge just how much money he brought in from investors in those years. The SEC documents filed in 2009 show Lexon was only aiming to raise $2 million. No subsequent documents were filed with the SEC.
By the end of the call, Rob was left just trying to get any kind of acknowledgement that he’d invested with Trevor Milton at all. He told Trevor he’d never received his actual stock certificate.

Rob Chambers: Just for my situation, my sake, can you look and see the documents that were signed or maybe send me an email of documentation of it?

Trevor Milton: Yeah, it’s going to take, I mean, honestly, it’ll probably take me a good two months to get there because all the documents are at a different location. I’m working out of Salt Lake and Columbus. They’re all in St. George’s. I don’t have those documents. I got to go down and dig them out of the safe. So it’s a really big process.

Ben Foldy: The whole call, not that long, just 15 minutes, but it feels like a slog. And Rob says that when he hung up, he felt sure that his 40 grand was gone.
I asked him what it would mean to not get that money back.

Rob Chambers: Oh dude, that was everything I had. Looking back on it, I was so stupid. Who dumps their life savings into a company that isn’t verified, isn’t publicly traded or doesn’t have that behind them?

Ben Foldy: Rob looked a little defeated. When we talked, we were sitting at his kitchen table, it had been a long work day supporting his two young kids and his wife.

Rob Chambers: So I’m going to be working a nine to five forever, man. I don’t have anything to fall back on.

Ben Foldy: This was the impact that losing all that money had on Rob Chambers. And Trevor said the company had raised so much more, $8 million, from investors who thought they were buying into the truck of the future in dHybrid Inc. Or soon to be competitor to eBay in Upillar.
Darren Brooks, the friend of Trevor’s, who after a late night phone call borrowed money to invest in Lexon, he was also trying to get his money back. In 2015, after Swift and the old dHybrid settled their lawsuits, Trevor wrote emails to some Lexon shareholders offering investors a small cut of the settlement proceeds if the investors agreed to give up any legal claims they had against Trevor and his father. Darren read to us from that email.

Darren Brooks: We wish to make each of the remaining stockholders the offer noted below, which is contingent upon receiving a full release of any claims that you feel you may have against me, my father, Lexon or dHybrid. Let me be clear that I do not believe that there are any basis whatsoever for any such claims and this is simply an effort to try to help repay those that have invested and waited so patiently for so long. We know it does not represent the full amount you’ve invested, but it’s a lot better than just calling it quits and losing everything. This offer is above and beyond what is obligated in a fiduciary duty.

Ben Foldy: Darren came to the offer for his amount based on the $30,000 he’d invested more than five years earlier.

Darren Brooks: Here’s my proportionate payout amount to the stockholder, $931.06.

Ben Foldy: In return for an original investment of?

Darren Brooks: 30,000. I mean, it’s just a slap in the face, right? That just doesn’t make any sense to me. It just doesn’t make any sense at all to me.

Ben Foldy: Darren refused the deal. Rob Chambers got a similar offer and also refused it. In 2019, Darren got another offer. Trevor would repay him $15,000, half of what he had invested. And Trevor sent him an email saying the offer was “out of the goodness of my heart.” Darren accepted.
A few months later, he saw an article that Trevor bought the most expensive home in Utah for $32 million. As we were finishing this episode, Darren received another letter from a lawyer representing Trevor, offering him another $15,000. Again, the letter specified that Darren would waive all potential claims if he took the money. He’s told us he’s discussing it with a lawyer.
The stories we heard from early investors and partners in Trevor’s businesses were a lot different than the stories Trevor himself tells about those days. Here he is back on The Truck Show podcast, shortly before Nikola went public in 2020, talking about how his failures made possible what would come later.

Trevor Milton: Then I finally got my break, I sold my hydrogen storage company to a big group called Worthington Industries. And that’s what propelled me in my life to build Nikola.

Ben Foldy: Just to clarify, dHybrid Systems LLC sold storage systems for natural gas, not pure hydrogen.

Trevor Milton: Because at that point, I had money and I was able to pay off all my debts. I went back and I actually paid off a lot of my old investors that were in my old companies that failed. And I didn’t have to do that. I was like, I’d made amends. I was like, you know what? I’m going to, even though I’m not obligated to do it, I want you guys to know that I know how much your money meant to you. And I paid off almost all of it.

Speaker 9: Did any of those people come back to you? Was that relationship building where they were obviously thankful to get their money back. But did they believe in you?

Trevor Milton: No. Actually many of them tried to sue me again. It was really sad. It was like, no good deed ever goes unpunished in this life, there’s no doubt about that.

Speaker 9: But you know that you did the right thing.

Trevor Milton: Hell yeah. You know what? I woke up, I never felt better in my life.

Ben Foldy: Last episode, Mike Trout couldn’t possibly imagine that the young alarm salesman who charged him $99 for a free alarm install could ever be in charge of a company with a multi-billion dollar market value doing deals with GM.
Now, Darren Brooks and Rob Chambers say they couldn’t possibly fathom that the man that they had invested with would be a billionaire within a few years. But they didn’t have Trevor’s vision. Trevor still had his big idea, the locomotive semi truck, and he was about to share it with the world.
On the next episode of Bad Bets, Trevor starts building Nikola and a new truck. And a pivot to hydrogen leads to his biggest sales pitch yet.

Speaker 12: I asked some of the engineers, what’s the plan for hydrogen? And they were like, we have no idea. We have no hydrogen anything that we’re working on.

Speaker 10: He’s telling everybody, all these diplomats and the governors a big fat lie.

Ben Foldy: And Nikola goes public with Trevor at the helm.

Speaker 11: So I think the first time I heard about Nikola was someone saying to me, this is going to be the next Tesla.

Speaker 13: I just see this Nikola stock, something, something, a higher market cap than Ford. I’m like, wait, Nikola, like Trevor Nikola, like what?

Ben Foldy: That episode is out next week on October 21st. Bad Bets is a production of The Wall Street Journal. This season is produced with Jigsaw Productions in collaboration with Story Force Entertainment. This episode is hosted by me, Ben Foldy.
The series is directed by Saruthie Pinamanini. Scott Soloway is the supervising producer. Ken Brown is WSJ’s financial enterprise editor. Shane McKean, Frank Matt and Garrett Graham are the producers. Editorial consulting by PJ Vote. Fact checking by Elizabeth Moss. Sound Design, original composition and mixing by Armen Bazarin.
For The Wall Street Journal, Daniel Rosen is the co-executive producer of WSJ Studios. Ben Weltman is the senior executive producer. For Jigsaw Productions, Stacey Offman and Richard Perello are executive producers. For Story Force Entertainment, Bly Pagan-Faust and Corey Shepherd-Stern are executive producers.
Special thanks as well to WSJ’s Charles Pharell, Jamie Heller, Brent Kendall, Christina Rogers, Corey Ramey, James Fanelli, Mike Colias, Rick Brooks, Emma Moody, and Jessica Fenton.
If you’re enjoying the series, please take a moment to subscribe and rate us on your favorite podcast platform. And thanks for listening. See you next week.