Federal prosecutors in Manhattan and the Securities and Exchange Commission are separately investigating the use of Tesla money to finance a secret project described internally as a greenhouse for CEO Elon Musk, according to the British newspaper “Daily Mail”. a report From the Wall Street Journal, which cites people familiar with the matter.
The Wall Street Journal reported In July That Tesla board members were investigating possible misuse of company resources in the project, known as “Project 42,” and whether Musk was personally involved. According to the newspaper, Project 42 includes a large glass structure that will be built in Austin, Texas.
The US Attorney’s Office for the Southern District of New York sought information about the benefits paid to Musk, the amount Tesla spent on the project, and the purpose of the project, WSJ sources told WSJ. The Securities and Exchange Commission, which sources say is seeking similar information, has opened a civil investigation into Project 42.
TechCrunch could not confirm the investigations with SDNY or the SEC, and Tesla could not be reached for comment.
The SEC requires public companies to disclose transactions worth more than $120,000 in which a related party has a material interest. The agency also requires that any perks worth more than $10,000 paid to top executives be disclosed to investors.
The cost of Project 42 cannot be known, but the glass building was to be built near Tesla’s Austin headquarters.
Musk and Tesla have invested heavily in Texas in recent years. Aside from his personal move to the state, Musk announced his decision to move Tesla’s headquarters from Palo Alto, California, to Austin in October 2021 after a series of clashes with “over-regulation, over-litigation, and over-taxation” in California. Texas does not tax individual income or capital gains, which is a real attraction for the world’s richest person.
Tesla also celebrated the opening of its giant factory in Austin in April 2022 with a so-called “Cyber Rodeo.” Earlier this year, Tesla said it had more than tripled its workforce at its giant factory in Austin.
Tesla faces separate investigations from the Department of Justice and the Securities and Exchange Commission into the automaker’s bold claims regarding the capabilities of Autopilot, Tesla’s advanced driver-assistance system.
The electric car maker has a fraught history with the Securities and Exchange Commission. The agency opened an investigation into Tesla after Musk tweeted in 2018 that he had “secured financing” to take Tesla private (but did not), allegedly causing fluctuations in the stock price. As part of a settlement with the SEC, Tesla and Musk each paid separate $20 million fines, and Musk agreed to hire a lawyer to review his tweets. Musk has been trying to repeal the requirement ever since, which he referred to as a “gag” on his right to freedom of expression.
In August, the Securities and Exchange Commission said that investors who suffered financial losses as a result of the tweet may soon receive compensation from a $42.3 million fund established as part of a securities fraud settlement.