A former Tesla employee has filed a sensational SEC complaint alleging that the Elon Musk-led company tried to cover up drug trafficking operations at its Nevada Gigafactory. Karl Hansen, a former member of Tesla’s internal security team, also alleged that the company was illegally spying on some of its (former) employees’ smartphones.
Tesla is already under scrutiny from the Securities and Exchange Commission (SEC) over Elon Musk’s controversial tweet to take Tesla private at $420 per share. Musk clarified in a media interaction that he was “not on weed” when he tweeted “Funding secured.”
Am considering taking Tesla private at $420. Funding secured.
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— Elon Musk (@elonmusk) August 7, 2018
Tesla chose not to disclose drug trafficking to authorities, alleges SEC complaint
In his SEC complaint, Karl Hansen accused the EV maker of failing to disclose to stakeholders a massive drug trafficking operation being run out of its Nevada Gigafactory. Hansen added that at least one of Tesla employees at the Gigafactory was dealing cocaine and methamphetamine.
Per the formal complaint, the Drug Enforcement Administration (DEA) and the Storey County Sheriff’s Office Task Force informed the California company in May this year that “several Tesla employees” were part of a “substantial” narcotics trafficking ring. They were allegedly dealing on behalf of a Mexican drug cartel.
The Storey County Sheriff’s Office declined to confirm or deny whether they were investigating the drug activity at the Gigafactory, though they have received two reports of theft. Hansen said he was “disturbed” by Tesla’s “highly unusual response” to people who uncovered the illegal activities.
Hansen claims he uncovered connections between a Tesla employee and various members of a Mexican drug cartel in June. When he reported it to the company seniors, the company said it would handle the problem internally rather than reporting the findings to the DEA. Tesla even failed to report the findings to its shareholders or board of directors. He alleges Tesla assured him that it would hire a third-party to conduct a fair investigation. Unfortunately, it seems like the investigation never happened.
Karl Hansen’s lawyer Stuart Meissner of Meissner Associates said in a statement that by asking Hansen not to report the issue to the authorities, Tesla has raised the issue of “potential obstruction of justice, which is a serious crime.” Tesla fired Karl Hansen on July 16, only a month after he reported the issues.
Was Tesla illegally spying on the whistleblower?
Stuart Meissner also represents another Tesla whistleblower Martin Tripp, who used to work at the Nevada Gigafactory. Tripp had accused the EV maker of using damaged batteries and scrap materials to build the mass-market Model 3 vehicle. The use of poor quality materials made the cars unsafe for buyers.
Tesla has denied Martin Tripp’s claims, and Elon Musk has called him a “horrible person.” Last month, Tripp filed a counterclaim accusing Tesla and Elon Musk of defaming him. He has also shared pictures, emails, and other documents to strengthen his claims that the company used inferior materials in Model 3.
In his SEC complaint, Karl Hansen alleged that Tesla was illegally spying on Martin Tripp. The EV maker allegedly installed “specialized router equipment within its Nevada Gigafactory designed to capture employee cell phone communications and/or retrieve employee cell phone data” even after Tripp was fired.
Employees stole company-owned materials
Hansen alleged that he had also discovered that copper and other raw materials worth roughly $37 million were stolen from the Gigafactory in the first half of this year. His seniors in the company asked him “not to report the thefts to outside law enforcement.” Hansen was also asked to stop his investigations into the issue.”
It corroborates with an earlier report from Jalopnik that an operations manager at the Fremont factory was fired after he informed supervisors that one of his colleagues was stealing company-owned parts and materials.
We contacted Tesla for their comment on Hansen’s allegations. A company spokesperson said, “We don’t have any comment.” However, Elon Musk said in a Twitter DM to Gizmodo that “This guy is super ? (that’s the emoji for nuts).” Musk pointed out that on one hand Hansen is saying “that our security sucks” and on the other hand he says “we have amazon spying ability.” But according to Hansen’s SEC complaint, the company put the illegal surveillance measures in place after Martin Tripp was laid off in June.