Feds investigate Tesla’s use of funds for secret ‘glass house’ project

Feds investigate Tesla’s use of funds for secret ‘glass house’ project

Manhattan federal prosecutors and the Securities and Trade Fee are individually investigating the usage of Tesla funds to bankroll a secret challenge that’s described internally as a glass home for CEO Elon Musk, in response to a report from the Wall Road Journal that cites individuals acquainted with the matter.

WSJ reported in July that Tesla board members have been investigating potential misuse of firm assets on the challenge, often known as “Challenge 42,” and whether or not Musk was personally concerned. In keeping with the newspaper, Challenge 42 includes a big glass construction to be inbuilt Austin, Texas.

The U.S. Legal professional’s Workplace for the Souther District of New York has reportedly sought details about what advantages have been paid to Musk, how a lot Tesla spent on the challenge, and what the challenge was for, WSJ’s sources mentioned. The SEC, which sources say is searching for related info, has opened a civil investigation into Challenge 42.

TechCrunch couldn’t verify the investigations with the SDNY or the SEC, and Tesla couldn’t be reached to remark.

The SEC requires public corporations to reveal transactions above $120,000 during which a associated celebration has a cloth curiosity. The company additionally requires any perks price greater than $10,000 paid to senior govt officers be disclosed to buyers.

The price of Challenge 42 couldn’t be realized, however the glass constructing was to be constructed close to Tesla’s Austin headquarters.

Musk and Tesla have invested closely in Texas lately. Other than personally transferring to the state, Musk introduced his resolution to relocate Tesla headquarters from Palo Alto, California to Austin in October 2021 after a collection of clashes with California’s “overregulation, overlitigation, overtaxation.” Texas doesn’t tax particular person revenue or capital beneficial properties, a real draw for the world’s richest particular person.

Tesla additionally celebrated the opening of its Austin gigafactory in April 2022 with a so-called “Cyber Rodeo.” Earlier this yr, Tesla mentioned it had greater than tripled its gigafactory workforce in Austin.

Tesla is going through separate investigations from the Division of Justice and the SEC into the automaker’s daring claims relating to the capabilities of Autopilot, Tesla’s superior driver help system.

The EV maker has a fraught historical past with the SEC. The company opened an investigation into Tesla after Musk tweeted in 2018 that he had  “funding secured” to take Tesla non-public (he didn’t), allegedly inflicting volatility within the share value. As a part of a settlement with the SEC, Tesla and Musk each paid separate $20 million penalties, and Musk agreed to have a lawyer evaluation his tweets. Musk has been attempting to throw out the stipulation ever since, which he has known as a “muzzle” on his proper to free speech.

In August, the SEC mentioned buyers who suffered monetary losses on account of the tweet would possibly quickly obtain a payout from a $42.3 million fund established as a part of the securities fraud settlement.


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