An investor is suing
The lawsuit filed in Delaware seeks documents from the world’s largest electrical vehicle maker to investigate claims that a secret project—involving millions of dollars worth of construction materials for Musk’s home—has drawn the scrutiny of Tesla board members, company lawyers, and federal agencies.
The work, dubbed “Project 42,” allegedly led to an internal investigation after “suspicious” expenditures were flagged. Omead Afshar—a top Musk aide who oversaw the project—was later moved from Tesla to a new role at SpaceX, Musk’s rocket company, according to the complaint, which cites media reports.
Probes by the Justice Department and the Securities and Exchange Commission “also concern conduct dating back to 2017 and include potentially improper perks for Musk in addition to Project 42,” the suit says. Tesla’s policies and SEC rules allegedly require board approval of expenditures greater than $120,000 that could benefit a company executive.
Musk isn’t named as a defendant. Tesla didn’t immediately respond to a request for comment Monday.
Musk, the world’s wealthiest person, is no stranger to litigation in Delaware’s Chancery Court, the leading US forum for M&A fights and other high-stakes business disputes. His net worth is around $226 billion, according to the Bloomberg Billionaires Index.
The court’s chief judge, Chancellor Kathaleen St. J. McCormick, is expected to rule soon in a case challenging Musk’s $55 billion in compensation at the automaker, the largest pay package for the CEO of any public company. She’s also weighing a proposed settlement valued at up to $919 million to resolve a shareholder case over equity awards for Tesla board members including Musk.
McCormick previously presided over litigation between Musk and the former
The new lawsuit was filed Dec. 8 by Ronald Hodge, who says he owns about 1,500 shares of Tesla stock. The complaint seeks internal files under a state law giving investors broad access to corporate records if they credibly suspect wrongdoing. Records cases often reflect an attempt to drum up fiduciary breach claims for future litigation.
Hodge is represented by Cooch & Taylor PA, Glancy Prongay & Murray LLP, and Alfred G. Yates Jr. of Pittsburgh. Tesla hasn’t yet made a court appearance.
The case is Hodge v. Tesla Inc., Del. Ch., No. 2023-1226, complaint filed 12/8/23.