Federal Tesla (TSLA) probe examines perks given to Musk going back several years

September 19, 2023 3:01 PM EDT

An exclusive story by the Wall Street Journal Tuesday reports that federal prosecutors in a probe of electric vehicle maker Tesla (NASDAQ: TSLA) are scrutinizing personal benefits the company may have provided to CEO Elon Musk since 2017. The inquiry is part of a criminal investigation examining issues including a proposed house for the multi-billionaire executive.

The U.S. Attorney's Office for the Southern District of New York is actively seeking details regarding transactions between Tesla and various entities linked to Musk. According to individuals familiar with the investigation, prosecutors have made mention of a grand jury's involvement.

This recent development suggests that federal prosecutors possess a more expansive interest in the conduct of both Elon Musk and Tesla than what was previously disclosed. They are actively exploring the possibility of pursuing criminal charges. Last month, reports surfaced that the Justice Department is conducting an inquiry into Tesla's utilization of company resources for a covert housing project for Musk.

Internally, the housing project was dubbed "Project 42" at the car manufacturer. The project's blueprints entailed the construction of a spacious glass structure in close proximity to Tesla's facility and corporate headquarters located in the Austin area.

Tesla's legal team and board questioned the project following concerns raised by employees regarding the utilization of millions of dollars worth of large-format glass panels that the company had procured.

Zach Kirkhorn, who was Tesla’s chief financial officer before stepping down last month, was among those who raised concerns internally about the project.

ON X, the social media platform, formally known as Twitter and also owned by Musk, the CEO said there isn’t a glass house “built, under construction or planned.”

Prosecutors are currently investigating whether Tesla appropriately disclosed any perks that Elon Musk may have received. Typically, such disclosures are managed by internal or external legal counsel. However, there have been instances at Tesla where Musk himself has been involved in determining what information should be disclosed to shareholders.

It remains unclear whether this was the case regarding the perks under scrutiny by prosecutors. Tesla has previously stated that it generally does not offer perks or personal benefits to its senior executives.

Shares of TSLA are up 0.30% in afternoon trading on Tuesday.

By Michael Elkins | [email protected]

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