Musk Risks Losing Tesla Fraud Trial If He Takes Lawyers’ Bait

Elon Musk needs a jury to believe him if the Tesla Inc. boss is to avoid being socked with potentially billions of dollars in damages at a securities fraud trial.

(Bloomberg) — Elon Musk needs a jury to believe him if the Tesla Inc. boss is to avoid being socked with potentially billions of dollars in damages at a securities fraud trial.

The chief executive officer is scheduled as soon as Friday to face off with lawyers representing investors taking him to trial in San Francisco. The shareholders contend his 2018 tweets about a plan to take the electric-car maker private with “funding secured” amounted to lies that cost them big losses from stock price swings over a 10-day period before the plan was abandoned.

The trial requires jurors to delve into Musk’s state of mind when he posted the messages, and to determine whether the billionaire’s tweets really influenced investor trading. 

In his defense, Musk’s lawyers told the jury during opening statements that while his tweets were rushed and contained technical errors, they accurately conveyed that he was sincere about taking Tesla private. 

What matters most when Musk is called to the stand, legal experts say, is how he reacts to his adversaries trying to nudge him into the sort of sardonic — and sometimes downright mean — observations for which he’s famous.

“He is the guy everybody is going to have their eyeballs on,” said Tim Crudo, a securities and criminal defense lawyer at Coblentz Patch Duffy & Bass in San Francisco. Lawyers representing the shareholders “are going to try to goad him,” Crudo said. “They’re going to try and get him to crack wise, make disparaging comments about lawyers, not answer their questions.”

Read More: Musk Jury Should Be Warned Ahead of His Testimony, Opponents Say

“If he comes across as not credible, if they don’t like him, I think it’s going to seep into the big-dollar legal questions that the jury is going to consider,” Crudo added. 

Musk has publicly expressed hostility to his legal adversaries. The case he’s fighting now mirrors a lawsuit filed by the Securities and Exchange Commission, which resulted in his reluctantly agreeing to have his future social media posts screened by a Tesla lawyer. He has railed against the agency ever since, saying at a Ted Talk last year that the pressure to settle the case was like having a gun held to his “child’s head.”

Musk is no stranger to the witness stand. In a recent court fight, he showed more restraint. At a November trial in Delaware over his pay package, he sparred with a lawyer for investors. But he was subdued and calm compared with the hostile days he spent on the stand at the same court in 2021 defending his acquisition of SolarCity.

Musk may not testify in San Francisco until Monday. When he does, the plaintiffs’ lawyer has to be careful not to cross a line in trying to provoke the CEO, Crudo said. Musk can afford to be a little combative if it comes across to jurors as a fair response to the questions, he said. 

“If they get the sense the lawyer’s goading him and baiting, and they don’t like the lawyer, then they’re going to give Musk permission to tee off on the lawyer because they’re going to think the lawyer deserved it,” Crudo said. Lawyers for the shareholders “want to let his inner Elon Musk come out. All the things that make him very popular and successful are things that may not serve him well on the stand.”

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