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Tesla is reportedly under investigation by the DOJ and SEC over its mysterious 'Project 42'

Elon Musk Tesla
Elon Musk's secretive initiative dubbed "Project 42" could spell trouble for the CEO.Getty Images
  • Tesla is facing a federal probe over its mysterious "Project 42," The Wall Street Journal reported.

  • The SEC is also investigating whether the project involved using company funds for CEO Elon Musk's personal benefit, the Journal said.

  • The project is internally believed to involve building a glass house for Musk, the Journal previously reported.

Tesla is facing scrutiny over its mysterious "Project 42" that was believed internally to involve building a glass house for Elon Musk, according to a recent report from The Wall Street Journal.

The publication said, citing people familiar with the issue, that federal prosecutors are investigating whether Tesla used its own funds for Musk's personal use, and is looking into how much the company has spent on the initiative, as well as its purpose. The US Attorney's Office for the Southern District of New York issued subpoenas to multiple current and ex-Tesla employees, some of which have been asked to appear in court in September, Bloomberg reported on Wednesday.

The Securities and Exchange Commission has also launched a probe into the issue, the Journal said. Though, both investigations are in their "early stages," according to the Journal.

In a statement to Insider, the SEC said it "does not comment on the existence or nonexistence of a possible investigation." The DOJ declined to comment.

A spokesperson for Tesla and Musk also did not respond to a request for comment from Insider.

The billionaire appeared to deny the project involved building a house on X, the social media site formerly known as Twitter.

"I'm not building a house of any kind, let alone a glass one!" he said on the social media site.

In July, the Journal reported that the project involved plans for a glass building that would be set up near Tesla's gigafactory in Austin, Texas and was internally understood to be a house for the Tesla CEO. The project appeared to be for a "dramatic glass-walled building" and concept plans showed differing designs and features, but included residential elements like bedrooms, according to the report.

The project drew scrutiny last year within the company after an order for a special kind of glass was made as part of the building-planning efforts. At the time, the internal inquiry into the order had targeted Omead Afshar, an executive leading Tesla's Texas factory, Bloomberg reported last year. On Wednesday, the publication reported that federal prosecutors were seeking information related to internal communications with Afshar, who was said to be involved in purchasing the construction materials.

Afshar did not immediately respond to a request for comment on X from Insider.

Tesla's board had also inquired into Musk's involvement in the project, and the amount of time any employees had spent on it, according to the Journal's July report.

It can be illegal to use company funds for personal expenses — especially when dealing with a publicly traded company. If a public company were found to have used company funds for an executive's personal use it could lead to an IRS investigation and lawsuits from shareholders.

It's not clear if the building project is still in the works, or whether the glass order was ever delivered, the Journal reported on Wednesday.

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