The feds are investigating Tesla’s use of funds for a secret “greenhouse” project

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Federal prosecutors in Manhattan and the Securities and Exchange Commission are separately investigating the use of Tesla funds to fund a secret project described internally as CEO Elon Musk’s greenhouse, according to the British Daily Mail. a report From the Wall Street Journal, which cites people familiar with the matter.

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.

Sources told the WSJ that the US Attorney’s Office for the Southern District of New York sought information about the interest paid to Musk, the amount Tesla spent on the project, and the project’s purpose. The SEC, which sources say is seeking similar information, has opened a civil investigation into Project 42.

TechCrunch was unable to confirm investigations with SDNY or the SEC, and Tesla could not be reached for comment.

The SEC requires public companies to disclose transactions greater than $120,000 in which the related party has a material interest. The agency also requires that any liens of more than $10,000 paid to senior executives be disclosed to investors.

The cost of Project 42 could not be known, but the glass building was to be built near Tesla’s corporate headquarters in Austin.

Musk and Tesla have invested heavily in Texas in recent years. Aside from personally moving 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 has no individual income or capital gains taxes, which is a real draw 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”. And 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 vehicle manufacturer has a storied history with the SEC. The agency opened an investigation into Tesla after Musk tweeted in 2018 that he had obtained “guaranteed funding” to take Tesla private (but did not), allegedly causing fluctuations in the share price. As part of a settlement with the Securities and Exchange Commission, 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 remove this requirement ever since, which he has referred to as a “gag” on his right to free speech.

And in August, the SEC said investors who incurred financial losses as a result of the tweet could soon receive compensation from a $42.3 million fund set up as part of a securities fraud settlement.