Tesla is being investigated for securities and wire fraud for self-driving claim
theverge.com
theverge.com
[1] Edit: Founder -> CEO
"Autopilot" may have been colloquially misleading (because of the public's unfamiliarity with aviation), but I don't think that name was problematic. Autopilot in planes can historically look like a basic cruise control.
However, some of the associated statements and demonstrations at that time were problematic. (e.g. "The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.")
"During that time," said Errol, speaking to Elon's college years, "I managed to send money I made from emerald sales to him and [Elon's brother, Kimbal Musk] for living expenses."I don't think "hard time" is appropriate for white collar crimes. Money is how you speak to these people. Martha Stewart is still worth hundreds of millions of dollars.
I'm also not arguing for against jail time for white collar crimes, just disputing that she specifically did hard time. Maybe the FTX guy or Enron guys are more appropriate for a comparison.
From what I recall of studies, and also from what I've heard from criminal defense lawyers, sending someone to jail for even very short amount of times is likely to have a meaningful effect on their behavior. Even sending a white-collar defendant to jail for a few hours can win a lot of cooperation from them; and studies seem to indicate that there's no meaningful difference between a year in prison and 20 years in prison.
You take the billions.
Therefore, I’d think losing money hurts less than spending time in jail no matter how much or how little money you have.
This is ridiculous, practically and morally.
Someone losing their life is far worse than a billion people being defrauded of $10 each, regardless of how the economists decide to value a human.
Yes, people would rather see their enemies punished versus solutions that can actually benefit people, that much is clear by these comments.
Money is amoral. It quickly becomes a calculation of ROI to violate the law. We've been reluctant for some reason to index fines against the wealth of the offender, but what would be a ruinous fine for a poor person is irrelevant to a wealthy person (eg. $1000 gag order violations). Also, the wheels of justice turn inexorably but slowly, and if first-to-market matters a lot with new there may be no fine that could restore things to the way it should have been if everyone acted within the law.
You're describing the current system.
So make them big?
What would you and/or society gain if Musk goes to jail for 10 years? Another mouth to feed in prison, while he continues to accrue wealth in off-shore accounts.
Other than that, the next step depends on what you think the point of the court/prison system is. If the point of the system is to prevent criminals from harming people: white collar criminals do crime at scale. They can hurt many more people than blue collar criminals.
If the point is to reform people, it seems like white collar criminals have an easier time lying to themselves and justifying their actions, because they don’t physically take things from people, it’s all very abstract. So that seems like a harder project that might take longer.
If the point is to prevent others from following their example, there are lots of reasons to punish white collar criminals more harshly. Their crimes are more difficult to work out, so getting caught might be harder. Plus there’s less of a de-facto preventative aspect—with blue collar crimes, depending on the crime, there’s likely a chance the victim might be physically present and quite irate, so they might fight, potentially even kill, the culprit.
Of course there are some reasons that blue collar crimes can be more serious (muggers might physically hurt somebody). But I don’t think hard time is inappropriate in either case.
This imo is less than both Theranos and insider trading like the FSD has disclaimers right? Unless the argument is Tesla is only valuable because of FSD and not best in class EV experience
The pay package being declined by a Delaware court and now this couldnt have come at a worse time for Musk though. Billionaires got their problems too huh
"Stewart was found guilty on charges including conspiracy and obstruction of justice" [1]. She sold shares on inside information. She went to jail for lying to investigators about it.
[1] https://people.com/martha-stewart-fraud-case-prison-sentence...
While lying is bad, this was a case of overzealous prosecution because it was a high-profile case and an inappropriate use of resources. Instead of prison, they should have just had her do some cheezy PSAs and enter in to a deferred prosecution agreement.
I find the members of congress consistently beating the market to be much more troubling.
"Martha Stewart, the founder of Martha Stewart Living Omnimedia, also became embroiled in the scandal after it emerged that her broker, Peter Bacanovic, tipped her off that ImClone was about to drop. In response, Stewart sold about $230,000 in ImClone shares on December 27, 2001, a day before the announcement of the FDA decision" [1].
It’s far from fact that she did not trade on inside information.
[1] https://en.wikipedia.org/wiki/ImClone_stock_trading_case
[1] https://en.wikipedia.org/wiki/Mark_Cuban#SEC_insider_trading...
Correct. In our courts it’s ambiguously defined.
Colloquially, Stewart got a tip-off that arose from the non-public outcome of a drug trial. Whether she committed insider trading is open; whether she traded—knowingly or unknowingly—on material non-public information is pretty clear.
This is why she wasn't tried on insider trading, but instead on the story she made up to cover the fact that she was given this knowledge indirectly.
Source? Not disputing the broker was facilitating others’ insider trades, but if they were, it takes the suspicion to a whole new level around why this broker is so comfortable with his clients with potential insider status making large bets just ahead of corporate events.
She also previously held securities licenses. That takes entire categories of innocent error out of the picture. I hold securities licenses. I’d be held to a higher standard because plausible deniability is removed.
Not specifically that, but Musk has stated that he sees Tesla as a software company.
That's not how fraud works. Fraud doesn't require that the false claim us the only source of value of the product, it only requires that the false claim is material to the decision to purchase the product at the price offered.
[https://www.theverge.com/23815634/tesla-elon-musk-origin-fou...]
I have an even funnier one for you: That viral video of when he was bald and bought that very expensive McLaren... "It's the highlight of my life" he said shortly before totaling the car with no insurance.
"He's a genius!"
Forget pedo comments on diver because may be he tweeted in the heat of the moment
Forget blaming an engineer at spacex initial days for the launch failure and notacceptimg it later when the truth was known because may be he cares more about the company which is err...
Forget not taking seriously about Tesla safety and firing who brought attention because he genuinely thought it's really not a big deal.
But the following can never be forgiven. Considering the way he projects himself a savior of civilization.
He does not value other human life.
Hiring surrogate mother for his then girlfriends second* child. His probably 9th or 10th child.
How is this ethical. That too it's not like he doesnot have any children.
It's not justified as he has plenty of kids and it's unethical because the mother does not get to see the kid ever. Not saying it's illegal. If you don't see any problem in it, then I have nothing to say.
I was a huge hero worshipper of Elon until I learn d about the surrogacy. He is just like any other rich ass hole.
> In 2020, Musk told a crowd in Shanghai that he remains “confident” that Tesla will achieve “basic functionality for level five autonomy this year,” referring to the SAE’s rankings of autonomy. Tesla’s technology, in 2024, is still at level 2.
This reminds me alot of the Thernos case where she tried to make the case not about fraud but about an overly optimistic CEO promising something and being wrong about that. here Musk has clearly said that full self driving would be available many years ago.
So I guess we're trying to figure out how much lying is ok by a CEO before it becomes fraud to the buyer.
Ran a scammy crypto exchange out of the Bahamas? Took money from investors for a failed blood testing company? Raised money for a political campaign but spent it on hookers? Paid a hitman to kill your spouse? All wire fraud.
To oversimplify, a company is required to disclose risks, and everything is a risk, so it's security fraud if it's not in the disclosure, or if it's misrepresented in the disclosure.
1: https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
IANAL, but I doubt that there's any great alternative that doesn't involve rewriting 100 years' worth of legislation and case law, which generally distinguishes categories of fraud by the medium over which they occur.
If people had to research the CEO of Old Navy before they bought a pair of pants from oldnavy.com, it would be pretty bad for our economy.
And there are markets like this where trust is low, and they don't function well.
Lamborghini and Ferrari take orders, but they tell you what the average wait time is, and you don't have to pay a 100% deposit beforehand.
If you want to say promises of future features is fraud, then surely that would only be in relation to investors?
2018: "By next year, a Tesla should be able to drive around a parking lot, find an empty spot, read signs to confirm it’s valid & park." https://twitter.com/elonmusk/status/1057690425710891009
2016: "In ~2 years, summon should work anywhere connected by land & not blocked by borders, eg you're in LA and the car is in NY." https://twitter.com/elonmusk/status/686279251293777920
It won't be hard to demonstrate some purchasers factored these claims into their decisions.
That's just not going to go very well for the people litigating that he made false claims. Which gives the impression that the litigation isn't so much about punishing the wrongs he has committed, as they are about punishing the person that no one likes.
Maybe there are other tweets that are better examples of your argument, I'll wait to see if they come up in any of the umpteen fluff articles we'll see over the next few months. In the meantime though, this seems more than a little unfounded.
Cool. Is there a single Tesla currently capable of it eight years on?
> If his press releases are to be treated like contracts that he can be held to, then the verbiage needs to be parsed as if his words were contracts.
Contracts aren't the only way to make a fraudulent marketing promise. You can be sued for false advertising, for example.
Are you familiar with Carbolic Smoke Ball?
https://www.thedrive.com/news/38129/elon-musk-promised-1-mil...
That was a lie.
[1] https://www.businessinsider.com/elon-musk-doubles-down-on-cl...
Stretching contracts in the way you'd do it wouldn't be good for anyone.
False statements were made that induced consumers to sign contracts to purchase cars and the FSD add-on. This is fraud.
Musk doesn't have to personally sign your car's contract for that to be a thing, or your credit card APR would be unenforcable.
My point was just to say that "future promises" are not something that can just be disregarded.
* Falsity: did the person knowingly make a false statement?
* Materiality: was the false statement something that could reasonably influence someone's decision to agree to a contract?
* Reliance: did the other party actually use the false statement to decide to agree to the contract?
Claims of future capabilities are necessarily going to be evaluated differently from claims of current capabilities, since it's going to be harder to demonstrate all of these points. But for Tesla's FSD promises, we're at 7-ish years now of "coming soon" promises, with marketing materials outright saying it's only regulatory reasons that a driver is needed. Materiality and reliance are slam-dunks at this point; the only out Tesla really has at this point is falsity. Essentially, Tesla has to argue that its engineers were all high on their own hype (which I have to admit it as at least plausible).
https://www.tesla.com/blog/all-tesla-cars-being-produced-now...
That was a lie.
Yes, it sounds like you and I are in complete agreement:)
Right, and that fell apart with, well, many things, but the one that stands out to me - upcoming FDA inspection, and Holmes (in something out of a cartoon) literally had someone put a filing cabinet in front of the door to the lab where they were doing actual work to hide it, and direct inspectors to a faked up lab, i.e. outright fraud and deception.
Theranos claimed to already have created their magic machine, which was a blatant lie. They intentionally misled investors by pretending to put samples into a fake testing machine, secretly removing the samples to test them in a lab elsewhere, then putting them back into the machine to make it look like the machine was doing the testing. That's careful, calculated fraud, which was obviously a criminal act.
Musk, by contrast, never claimed to have something that he did not have. He made overly-optimistic claims about product development. There is no reason to assume that these projections were lies, given that everyone else in the space was making similarly aggressive projections.
Musk was wrong for selling FSD-related features before they were ready, and Tesla should obviously make that right. But pretending that being wrong (in good company) is the same thing as calculated fraud is just goofy.
... but even if there is no calculated fraud, I think some Tesla buyers are owed refunds or other compensation. If a company promises me X, I pay for it, and years later has not delivered X, eventually I need a refund.
After 7 years or whatever you can’t keep being “overly optimistic”. At some point it becomes clear it’s just not ready and you need to give people their money back and stop selling it until it is.
If all FSD things were sold with a “really will be in 2 years or 80% of your money back” clause that would be different in my mind.
But taking money and just never delivering is flat out fraud. No matter how many times you say “just one more year”.
IIRC, wasn't the video that claimed to demonstrate a full trip conducted by FSD actually like 100 different splices? That right there would be a claim of something that didn't exist.
And to this day, you can go on Tesla's website, configure a car, and be offered the option to purchase "Full Self Driving Capability" which does not offer a fully self driving vehicle.
You wouldn't consider this a fraudulent claim?
I think you're misunderstanding that Elon has not made this statement just once. He's literally said it every year multiple times per year and he still has not delivered. At this point it truly is fraudulent.
I do understand to have an international base of few dozens to few hundred scientists on Mars who will be studying it 24/7. But that's about it.
Just to clarify, this is the same one as this HN thread from October 2022,
https://news.ycombinator.com/item?id=33348388 ("Tesla faces U.S. criminal probe over self-driving claims (reuters.com)", 469 comments)
—Matt Levine
https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
The basic idea here is that you lied, the share price went up because of your lies, and that makes it security fraud. From one viewpoint it’s a useful tool to punish fraudsters and con men, and from another view it’s an overreach by the FTC. Maybe a more reasonable view is somewhere in the middle—it’s both a good tool and an overreach.
Unfortunately for me, I soon discovered that I did not like the car driving me around. No matter how good it got, I would almost always have made a different decision in most traffic situations. So it was a huge loss, but for me it doesn't even have to do with the fact the technology doesn't do what their hype claimed. It has to do with the fact that letting FSD drive is more stressful than if I just drive the car myself.
I think all these systems* could benefit from earlier braking to give the “supervisor” more piece of mind.
* including my wife in this.
It remains a far cry from this, which Musk tweeted (https://twitter.com/elonmusk/status/686279251293777920) eight years ago:
> In ~2 years, summon should work anywhere connected by land & not blocked by borders, eg you're in LA and the car is in NY.
It also picked up the mannerisms of human drivers like hitting the brakes at a yellow light and then accelerating and in my case tried to run a red.
"Eventually" wasn't the sales pitch.
Is FSD an awesome technology? Yes. But I've watched enough YouTube videos of it, including by superfans, that I know if you set the navigation and climbed in the back seat, that car is not making it to its destination without getting in an accident.
That's why the safety vs no FSD comparisons are so silly: you have a person intervening. How would it look if you didn't? Guess we'll find out!
It's like a bully trying to chase someone but tripping over their shoelace in the first step, love it.
On self-driving: For several years the guy has been saying "next month" "next year" it's been like 10+ years at this point. He's a bigger grifter than the Ashes of Creation guy (8 year long Kickstarter MMO that never launched and still collects payments to this day). Wonder why anyone falls for it, feel bad for the gullible.
1. Made optimistic claims about future product.
2. Some of the people tasked with implementation disagreed about optimistic claim.
3. Those people got fired for underperforming.
4. All people on the team tasked with implementation agree with optimistic claim.
5. Doubled down on the promise.
Repeat every year.
I can't see how a CEO could be blamed in this scenario, as clearly they were lied to by their subordinates.
Lying about features or the number of cars being produced etc. can't be limited to mere optimism because they mentioned specific numbers in a public way that were not true.
> fired for underperforming
The irony, since Musk destroys every brand and product he's ever touched. I've never seen a more polar opposite to the Midas effect at work. It has to be intentional.
That too was sarcasm :-)
You shouldn't be too hard on Musk regarding the "destroys" though: Many people are so incompetent you don't even get to hear about their failures! And others loot professionally without you ever getting to know about it. You have to ignore a lot to state "it has to be intentional".
See also: Poe's Law.
Unless you include some clear indicator that you are being sarcastic, posts like this will be seen as fully sincere by many, many people.
Musk: Hey get your shit together I want this done by the end of the year
Team: Okay we'll try
Musk: Okay we'll plan on that
Citation needed. The platform is more open and vibrant than ever, even going so far as to reinstate free speech that old Twitter shut down at the request of the US government. If anything, he liberated free speech and it shows.
You reveal your lack of experience with Twitter, it's declined a lot.
Pretty sure you can't even link to a tweet (a xweet?) from a news article or blog post - they totally killed the platform, not sure where you've been.
I of course disagree - I don't see the "huge service". Everything from defrauding investors, customers, speaking out of school (saying he's a physicist in the early days), hanging out with Ghislaine Maxwell, stealing then tanking Tesla, destroying Twitter, he's a walking disaster to the point I believe it's intentional.
I'd hold the "visited decisive politics" hypothesis at a much higher probability over "celebrity parasocial loyalties" for down and up voting in this case.
That said, trying to guess at the motivations of the diverse crowd here is fraught at best.
> celebrity loyalty
You must have missed that meme https://i.kym-cdn.com/photos/images/original/002/477/624/072...
It was in response to the insufferable worship happening in comment sections everywhere. I wonder how much he was paying for PR each month back then, and what agency he uses. At any rate, that there was a good meme.
Regardless, I've only noticed for my own account. Perhaps you own both accounts?
I completely miss all the memes as a rule, thanks for sharing.
I only have 1 account, though I probably should create a burner for certain topics... it seems that just 1 bad take here can destroy a career. Can't wait til this authoritarian phase is over, just want to share opinions again and it not matter that much.
Turning otherwise intelligent people against one another is an old and battle tested control and mitigation strategy but yeah, it feels bad. Turns out nothing inherently keeps us from just doing better.
May have to start a company though.
People have strong opinions about celebrities they don't know, don't have any control over and have zero material stake in; news at eleven. (The last is the only one that isn't sometimes true about Elon.)
Everyone must remember that "they" and "their side" are capable of the same evil as their enemies. The existence of a truly open discussion must be sacred, or we might as well dismantle it all.
Or, if your goal is to dismantle instead of building or fixing things, remind me to never let you have any power.
What are you trying to refer to here? Because the most politically extreme and anti-constitutional subculture I can think of right now is QAnon, which has not (nor is not) in control of Twitter.
The major handicapping of the platform compared to earlier is that only the post linked to is now visible to non-users, whereas the whole thread it was part of was previously visible.
No, they don't. https://en.wikipedia.org/wiki/Community_Notes
"In November 2022, at the request of new owner Elon Musk, Birdwatch was rebranded to Community Notes..."
2) According to their own released numbers (which you may or may not trust), the usage of the platform is at a record high.
3) They've unbanned many accounts that were previously banned and seem to display a wider tolerance for free speech on the platform. The innovative community notes feature is sometimes helpful to point out misinformation, but misinformation thrives on the platform.
4) They've pushed back on various foriegn governments requesting data on users and requesting users or posts be banned (see the ongoing dispute with Brazil.)
It seems more free, not less free.
... was built and released pre-Musk, when it was called "Birdwatch".
https://en.wikipedia.org/wiki/Community_Notes
As for government requests, for every Brazil there's an India. https://theintercept.com/2023/03/28/twitter-modi-india-punja...
"Twitter accounts from over 100 prominent politicians, activists, and journalists in India and abroad have been blocked in India at the request of the government. On Monday, the account of the BBC News Punjabi was also blocked — the second time in a few months that the Indian government has used Twitter to throttle BBC services in its country."
"At the time that Musk took charge of the company, it had a mere 20 percent compliance rate with Indian government requests. Following massive layoffs that reduced 90 percent of Twitter India’s staff, the platform appears to have become far more obliging in the face of government pressure, as its actions to censor its critics now show."
But not in India, nor Turkey, there Twitter under Musk has abided by the requests to silence people.
Why is that is a good question, it could be political alignment (Modi and Erdogan are from a different political stance than Lula), it could be because Musk seeks to exploit Brazil's lithium, we can't know but he's been pretty selective in where to pick a fight so we can only assume is due to other circumstances than anything to do with freedom of speech.
Regardless of whether or not that statement made is true - the problem is that of misinformation distribution. Social media isn't socially useful if it's being leveraged to influence ideas that are not factual.
Given that the owner of the platform has pushed misinformation and also sells products that don't align with what he's promised, at least to me, would lead me to question the statistics that are self-published and unable to be publicly validated.
The investigation doesn’t interest me much. He has gotten slaps on the wrist before. Wake me up when he gets jail time.
It's just that Tesla demands gag clauses in the settlement which may be accepted by many people and we might never know how many settlements are out there. Thankfully the author in this instance knew they were going to win and there would be no gag clauses then. So why accept them in the settlement? Tesla caved, because they knew this too.