Judge cites “plenty of evidence” in Musk – OpenAI fraud fight

A federal judge in California has cleared the way for Elon Musk’s lawsuit against OpenAI and its leaders to go before a jury in March. The case centers on Musk’s claim that the company abandoned its original nonprofit mission when it restructured into a for‑profit business tied to major commercial deals.

U.S. District Judge Yvonne Gonzalez Rogers said at a recent hearing in Oakland that there is “plenty of evidence” that OpenAI leaders assured donors the nonprofit structure would stay in place. She said the record contains enough disputed facts that a jury, not a judge, should decide what happened.

Musk’s allegations about OpenAI’s shift

Musk co-founded OpenAI in 2015 with Sam Altman and Greg Brockman, and he left the organization in 2018. Court filings say Musk claims he contributed roughly $40 million and that his support covered about 60% of OpenAI’s early funding. He argues he did so on the understanding that OpenAI would remain a nonprofit focused on artificial intelligence “for the benefit of humanity broadly,” in line with its founding mission and charter.

According to the complaint, Musk accuses Altman and Brockman of engineering a move to a for‑profit structure that allowed insiders and major partners to benefit from OpenAI’s later commercial success. He points to deals including an extensive partnership with Microsoft as proof that the organization now operates as a profit‑driven enterprise. The lawsuit seeks damages Musk describes as “ill‑gotten gains” and argues that his donations and early backing were induced by promises that were later broken.

Evidence and legal issues in dispute

Judge Gonzalez Rogers noted that the case hinges heavily on credibility and timing. She indicated that a jury will likely need to decide when any alleged fraud occurred, as that question connects directly to the statute of limitations for fraud claims under U.S. law. If jurors find that any deception happened within the three‑year window before Musk filed suit in 2024, his fraud claims can proceed in full.

Court records referenced at the hearing include a 2017 diary entry attributed to Brockman, in which he allegedly wrote about the appeal of becoming a billionaire and about flipping OpenAI to a for‑profit structure. In that entry, he wrote: “We’ve been thinking that maybe we should just flip to a for profit. Making the money for us sounds great and all.” Musk’s lawyers say this undercuts public assurances that the nonprofit model would remain intact.

The judge said she will still rule in writing on certain legal questions, including challenges to parts of Musk’s claims and separate arguments raised by Microsoft. Yet she was clear during the hearing that the core fraud issues will go to trial.

OpenAI and Microsoft deny wrongdoing

OpenAI, Altman and Brockman reject Musk’s allegations and say the lawsuit misrepresents both the restructuring and their motives. In public statements, the company has called the case “baseless” and argued that Musk’s claims are colored by his competitive interests, as he now runs rival AI firm xAI.

Microsoft, which holds roughly 27% of OpenAI after a multibillion‑dollar partnership, is also a defendant. Company filings and public reports value Microsoft’s stake around $135 billion following OpenAI’s 2025 recapitalization. Microsoft has asked the court to dismiss claims that it was unjustly enriched or helped any alleged fraud, saying Musk has not shown evidence that the company participated in misconduct.

OpenAI’s leaders say the shift to a capped‑profit structure and later reorganization complied with nonprofit and corporate rules. Regulators in California and Delaware reviewed OpenAI’s recapitalization in 2025 and allowed the new structure to proceed, including a large equity position held by the OpenAI nonprofit foundation.

High stakes for AI and Philanthropy

The trial comes at a time when OpenAI has become one of the most valuable technology companies in the United States, with private estimates placing its valuation around $500 billion. The company continues to build products such as ChatGPT and license its technology to partners, while it sets aside a large stock pool for employees and contractors.

Musk, meanwhile, has pushed deeper into the artificial intelligence sector through xAI, which recently raised about $20 billion at a $230 billion valuation. Investors include major chip and technology firms, according to news reports and company announcements. xAI’s Grok chatbot competes directly with OpenAI’s systems in the fast‑growing generative AI market.