Musk sues Sam Altman for Fraud

COUNT II: CONSTRUCTIVE FRAUD (Against Altman, Brockman, and OpenAI, Inc.)

175. Plaintiff re-alleges and incorporates by reference paragraphs 1 through 174 inclusive, as though fully set forth herein.

176. As a charity and as persons soliciting contributions on behalf of a charity, OpenAI, Inc., Altman, and Brockman are in a fiduciary relationship with, and each owe a fiduciary duty to Musk, from whom charitable contributions were solicited, including under Cal. Bus. & Prof. Code § 17510.8.

177. As fiduciaries, Altman, Brockman, and OpenAI, Inc. owe Musk a duty to use his contributions for the declared charitable purposes for which they were sought, and are liable for constructive fraud for any advantages they gained by misleading Musk with their repeated promises, representations, and reassurances, regardless of whether they intended to deceive him.

178. Altman and Brockman solicited and obtained contributions from Musk by making repeated and material promises, representations, and reassurances to him that they would develop AI for the benefit of humanity, would predominantly open source their technology, avoid concentrating it, and would not operate for the profit of any person or company, as evidenced in, without limitation, the emails, corporate filings, and online advertisements alleged above.

179. Defendants knew or could have reasonably foreseen that their promises, representations, and reassurances would be relied upon by and were material to Musk.

180. Defendants misled Musk by providing him with information that was inaccurate and/or incomplete and/or by failing to disclose to Musk Altman and Brockman’s true commercial intentions, which were known to them.

181. In 2023-2024, Defendants began keeping OpenAI, Inc.’s technology—including GPT-4, GPT-4T, GPT-4o—secret and closed, and concentrated it in the hands of Microsoft for private profit—all in knowing violation of their promises and representations to Musk.

182. Altman and Brockman also engaged in unfettered self-dealing as alleged hereinabove. On information and belief, after developing the non-profit’s valuable technology with Musk’s contributions, they, with the assistance and/or cooperation of the OpenAI For-Profit Entities, manipulated and leveraged the non-profit’s assets for their own personal gain and profit. Undeterred, Defendants are presently working to collapse the non-profit into an entirely forprofit enterprise, further defying their promises, representations, and reassurances to Musk.

183. Defendants intentionally concealed their fraudulent conduct, which prevented Musk from discovering their scheme, notwithstanding his exercise of due diligence.

184. As a direct and proximate result of Altman, Brockman, and OpenAI, Inc.’s conduct, acts, and omissions alleged hereinabove, Musk is entitled to recover the damages he sustained and will sustain, including any income, gains, compensation, profits, and advantages obtained, received, or to be received by Defendants, or any of them, arising from the wrongful acquisition of Musk’s contributions to OpenAI, Inc., including prejudgment interest. Musk is entitled to an order requiring Defendants, jointly and severally, to render an accounting to ascertain the amount of such proceeds.

185. As a direct and proximate result of Defendants’ wrongful conduct, acts, and omissions alleged hereinabove, Musk has been damaged, and Defendants have been and will continue to be unjustly enriched, in an amount that shall be assessed at trial, but which vastly exceeds $75,000, and for which restitution and/or non-restitutionary disgorgement is appropriate. Such should include the imposition of a constructive trust; a declaration by this Court that Defendants are jointly and severally the constructive trustee(s) for the benefit of Musk; and an order that Defendants convey to Musk all of the profits, assets, property, and ill-gotten gains received or to be received by Defendants, which are traceable to Musk’s wrongfully acquired financial and other contributions to OpenAI, Inc.

186. Defendants’ wrongful conduct, acts, and omissions have proximately caused and will continue to cause Musk substantial injury and damage, much of which cannot be reasonably or adequately measured or compensated in money damages. The harm this wrongful conduct will cause to Musk is both imminent and irreparable, and the amount of damage sustained by Musk will be difficult to ascertain if such wrongful conduct is allowed to continue without restraint. Musk is therefore entitled to an injunction during the pendency of this action, and permanently enjoining Defendants, their officers, agents, and employees, and all persons acting in concert with them, from engaging in such further tortious conduct.

187. Defendants’ wrongful conduct constitutes oppression, fraud, and/or malice under Cal. Civ. Code § 3294, entitling Musk to an award of punitive damages appropriate to punish or set an example of Defendants in an amount to be determined at trial.