The sweeping investigation by Manhattan federal prosecutors into Tesla’s use of company funds suggest they are pursuing potential criminal charges.
According to the Wall Street Journal, the US Attorney’s Office for the Southern District of New York is closely examining personal benefits the electric carmaker may have given its chief executive.
Mr Musk, the richest man in the world, does not draw a cash salary from Tesla but is compensated in stock options.
But prosecutors are reportedly investigating whether Tesla properly disclosed any perks Mr Musk might have received in his role.
The investigation includes a proposed house for the billionaire known as “Project 42”.
Plans for the structure suggested it would be “an expansive glass building” near Tesla’s Austin-based headquarters.
Mr Musk has stated there is no glass house “built, under construction or planned”, joking “metaphors don’t count”.
He did not address past plans for a home, but said on Twitter, which he has renamed X: “I’m not building any house of any kind anywhere.”
In 2020, Mr Musk said he intended to sell “almost all” his physical possessions and vowed to “own no” home.
His primary residence is reported to be a “Spartan” $50,000 two-bed home in Boca Chica, Texas.
But an authorised memoir of Musk suggests the billionaire considered building a home on a horse farm near a Tesla factory in Austin, Texas last year.
Musk mused it could incorporate a pane of glass emerging from a lake, according to the biography by Walter Isaacson released this month.
“It should be like something fell out of space, like a structure from another galaxy landed in the lake,” Musk is quoted as saying.
He met with an architect but “put off building it,” according to the memoir.
Its construction, “Project 42”, and its purpose, was reportedly a closely guarded secret within Tesla.
But it reportedly came to the attention of the company’s lawyers and board after staff grew concerned about an order for millions of dollars of specialised glass panels.
It is unclear who paid for the glass and whether it was ever delivered to Tesla.
Manhattan prosecutors have reportedly sought information on how much Tesla spent on the project and what it was for.
A separate civil investigation into the project is also underway, the Wall Street Journal reported.
Federal regulations require perks or personal benefits for company executives exceeding $10,000 to be disclosed.
Things like housing allowances, planes, tuition fees for offspring can all be considered personal benefits.
Company transactions above $120,000 in which an executive has a material interest must also be reported.
SpaceX suing US government
In a separate development, Mr Musk’s company SpaceX has sued the US government in a case relating to its hiring policies.
It came in response to the Department of Justice accusing the rocket and satellite company of refusing to hire refugees and asylum seekers.
It said SpaceX routinely refused to hire people who were not US citizens or green card holders from 2018 to 2022 in a complaint filed last month.
The company said it has employed hundreds of non-US citizens, but that some of its projects have national security implications and it could face steep fines for employing foreign workers.