Federal prosecutors are expanding their investigation into potential wrongdoing at Tesla, delving into perks and benefits provided to CEO Elon Musk since 2017. This newly revealed aspect of the criminal investigation suggests a broader focus on Musk’s actions and raises the possibility of criminal charges. The U.S. Attorney’s Office for the Southern District of New York is also looking into transactions between Tesla and other entities connected to Musk, possibly involving a grand jury. One of the key elements of this investigation revolves around a secretive project within Tesla known as “Project 42.”
This project aimed to construct a grand glass building near Tesla’s Austin factory and headquarters, referred to internally as a house for Elon Musk. The Securities and Exchange Commission (SEC) has initiated a separate civil investigation into this project. On the social media platform X, previously Twitter, Musk denied the existence of any glass house in construction, but he did not comment on past efforts or plans. Musk and his representatives have not provided any comments in response to these investigations. In an authorized biography, it was revealed that Musk had considered building a home near the Giga Texas factory but ultimately postponed the project.
The book even mentioned Musk’s creative idea of incorporating a shard of glass into the design. Federal prosecutors are examining whether Tesla appropriately disclosed the perks Musk received during this period. Typically, disclosures of such benefits are handled by internal or external lawyers, but in some cases, Musk has been personally involved in these decisions. Tesla, however, maintains that it generally does not provide personal benefits to its top executives. Additionally, prosecutors have sought information concerning the driving range of Tesla’s electric vehicles.
This indicates a multifaceted investigation into various aspects of Tesla’s operations. Project 42 was a closely guarded secret within Tesla, prompting concerns among employees about the use of large-format glass panels ordered by the company. Questions arose regarding reimbursement by an LLC called Peninsula LLC, managed by Musk adviser Jared Birchall. Whether Tesla was reimbursed and whether the glass panels were ever delivered remains uncertain.
It’s worth noting that the Justice Department and the SEC have been raising questions about executive perks at several companies recently. Corporate policies on executive spending can vary, and the SEC requires public companies to disclose perks and personal benefits exceeding $10,000 in value, which may encompass housing allowances, private security, or airplane use. Stephen L. Cohen, a lawyer at Sidley Austin, emphasized the SEC’s aggressive stance on disclosure standards, leading companies to tighten controls and increase transparency in the area of executive perks. The regulations also mandate the disclosure of transactions over $120,000 involving executive officers or related parties.
Elon Musk’s involvement with multiple companies, including SpaceX and X, adds complexity to the investigation, especially considering financial transactions between these entities. Musk’s borrowing of $1 billion from SpaceX and its subsequent repayment drew attention, as did Twitter’s expenses associated with agreements with Tesla and SpaceX. Elon Musk’s immense wealth, largely tied to his Tesla holdings, has made him the world’s richest person. Notably, Tesla’s proxy statements revealed that Musk received no new compensation from the company in 2020, 2021, or 2022. In conclusion, the ongoing investigation into Tesla and Elon Musk’s actions continues to expand, with a focus on executive perks and undisclosed projects, indicating a broader legal scrutiny of the electric car company and its enigmatic CEO.