Musk Testifies Against Altman, Alleging OpenAI Diverted Charitable Assets for Private Gain

In an Oakland, California courtroom this week, two of the most powerful figures in artificial intelligence squared off over a question that sounds simple but carries hundreds of billions of dollars in consequences: Can you take a charity and turn it into one of the world's most valuable companies?

Elon Musk, who co-founded OpenAI in 2015 and donated roughly $44 million to fund its early research, took the witness stand on April 28 and 29 to testify that CEO Sam Altman and President Greg Brockman did exactly that [1][2]. OpenAI's defense team countered that Musk is a spurned co-founder whose lawsuit amounts to "sour grapes" — filed only after he launched his own competing AI company, xAI [3].

Of the 26 claims Musk initially asserted when he filed suit in 2024, only two remain before the jury: unjust enrichment and breach of charitable trust [4]. But the stakes — Musk is seeking damages exceeding $130 billion and the unwinding of OpenAI's 2025 conversion to a public benefit corporation — make this one of the largest civil trials in American history [5].

From Nonprofit Lab to $852 Billion Colossus

OpenAI was incorporated as a nonprofit in December 2015, with a stated mission to develop artificial intelligence "in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return" [6]. According to IRS Form 990 filings, the nonprofit's total assets in its early years were modest — funded primarily by Musk's donations alongside contributions from other Silicon Valley figures including Peter Thiel and Reid Hoffman [7].

In 2019, OpenAI created a "capped-profit" subsidiary, OpenAI LP, with the nonprofit retaining sole controlling shareholder status and a fiduciary responsibility to the charitable charter. The original profit cap was set at 100x — meaning that for every dollar invested, returns were limited to $100 [8].

The trajectory since then has been extraordinary. Following the release of ChatGPT in late 2022, OpenAI's valuation exploded: $29 billion in early 2023, $86 billion by October 2023, $157 billion a year later, and $300 billion by March 2025. In April 2026, the company announced $122 billion in new investment at an $852 billion valuation [9][10].

Source: CNBC, TechCrunch

Data as of Apr 30, 2026CSV

In October 2025, OpenAI completed a recapitalization that converted the for-profit subsidiary into OpenAI Group PBC (a public benefit corporation) while renaming the nonprofit the OpenAI Foundation. The Foundation retained a 26% equity stake valued at approximately $130 billion [11]. Critics, including Public Citizen, have argued this grossly undervalues the nonprofit's true share, noting that control premiums in normal market transactions are typically 20 to 30 percent of enterprise value — which at an $852 billion valuation would imply a fair value north of $170 billion [12].

What Musk Said on the Stand

Musk's testimony across two days was combative, emotional, and punctuated by clashes with OpenAI's lead attorney, William Savitt of Wachtell, Lipton, Rosen & Katz.

During direct examination by his attorney Steven Molo, Musk told the jury: "I co-founded OpenAI to prevent a Terminator outcome — a dystopian future where superintelligent AI escapes human control. Sam Altman took that charity and turned it into something else entirely" [13]. Asked whether he would have donated money, time, and energy if OpenAI's mission had not been nonprofit, Musk said no: "I came up with the idea, the name, recruited the key people, taught them everything I know, provided all of the initial funding — besides that, nothing. It was a lot" [1].

Musk's sharpest line came during his characterization of the restructuring: "They can't have a nonprofit and free funding and the positive halo effect of being a nonprofit charity and also enrich themselves greatly" [14].

Cross-examination grew heated. Musk repeatedly accused Savitt of trying to "trick" him with misleading questions, at one point telling the attorney: "Your questions are not simple. They're designed to trick me, essentially" [15]. When Savitt confronted Musk about whether he had actually donated $100 million — as claimed in an earlier deposition — Musk accused the lawyer of being "misleading" [16]. The judge intervened, asking both parties to "calm down" [15].

OpenAI's Defense: Sour Grapes and a Rival's Agenda

OpenAI's legal team has mounted a defense built on two pillars: that Musk knew about and supported the for-profit transition, and that his lawsuit is motivated by competitive self-interest rather than charitable concern.

In opening statements, Savitt told the jury this was "a simple case" — Musk "didn't get his way at OpenAI" and is now attacking a rival. "My clients had the nerve to go on and succeed without him," Savitt said [3]. He pointed out that in 2017, Musk himself proposed converting OpenAI into a for-profit entity with himself as CEO — a proposal the other founders rejected because they "refused to turn the keys of artificial intelligence over to one person" [3][17].

OpenAI has published internal emails and documents on its website supporting its position that Musk was part of early discussions about the need for a for-profit structure to attract the capital required to compete with Google and other well-funded AI labs [17].

Microsoft's counsel added that Musk's legal action came only after he launched xAI in 2023 — a direct competitor to OpenAI — arguing the lawsuit is a strategic weapon rather than a principled stand [4].

The Standing Question

A threshold legal issue that has drawn significant attention from nonprofit law scholars is whether Musk has standing to bring these claims at all.

Jill Horwitz, a law professor who studies nonprofit law at Northwestern University, has described Musk's standing as "pretty puzzling," noting that "typically, it's up to the attorneys general to bring such a claim to enforce the charitable purposes" of a nonprofit [18]. Under California law, the attorney general — not individual donors or former board members — is generally the proper party to enforce charitable trusts.

Musk departed OpenAI's board in 2018 after what has been described as an acrimonious power struggle over leadership of the organization [19]. He continued donating through 2020, with total contributions reaching $44 million [19]. Five years later, in March 2023, he founded xAI, and filed his first lawsuit against OpenAI in 2024 [20].

The timeline matters. OpenAI's defense rests partly on the argument that the gap between Musk's departure, his founding of a competitor, and his subsequent legal action reveals a commercial rather than charitable motivation [4].

Board Conflicts and the Equity Question

One of the trial's most consequential threads involves who benefited financially from the restructuring — and whether those beneficiaries were the same people who approved it.

A June 2025 report from the Tech Oversight Project documented that at least seven directors of OpenAI's nonprofit board, or their spouses, hold significant investments in companies that do business with OpenAI [21]. Board chair Bret Taylor founded Sierra, a $4.5 billion AI startup that is an OpenAI customer. Adam D'Angelo's company Quora is also an OpenAI customer. Adebayo Ogunlesi's firm Global Infrastructure Partners owns data centers that profit from AI infrastructure demand [21].

Sam Altman's situation is particularly fraught. Reports surfaced in 2024 that OpenAI's board was considering granting Altman a 7% equity stake, potentially worth $10 billion or more given the company's valuation trajectory [22]. Altman told employees these reports were "just not true" [22], though the question of whether and when Altman receives equity in the restructured entity remains unresolved.

Eight of the OpenAI Foundation's board members also sit on the for-profit corporation's board, raising questions about whether the foundation can exercise genuinely independent oversight of the business [21].

The California Attorney General's Role

California Attorney General Rob Bonta's office conducted what it described as a "robust investigation" into OpenAI's restructuring over roughly 18 months, ultimately signing off on the recapitalization in October 2025 [23].

Under the agreement, the OpenAI Foundation received its 26% equity stake (valued at approximately $130 billion) plus a warrant for additional shares tied to valuation milestones. Bonta secured commitments that "charitable assets are used for their intended purpose," that safety would be prioritized, and that OpenAI would remain headquartered in California [23].

Critics were not satisfied. A coalition of more than 50 organizations, led by the San Francisco Foundation, wrote to Bonta arguing that the nonprofit's assets could be worth up to $300 billion and that the deal undervalued the charity's interest [24]. Public Citizen sent four separate letters to Bonta's office, asserting that the conversion should require at least $30 billion in payments to an independent charity — not back to the OpenAI Foundation itself, which they argued remained too entangled with the for-profit entity [12].

CalMatters reported that independent analysts found the restructuring deal "full of holes," particularly around the question of whether the Foundation's board — largely overlapping with the for-profit's board — could meaningfully enforce the charitable mission [25].

Historical Precedents: Blue Cross and Beyond

OpenAI's conversion is not without precedent, though the scale dwarfs prior cases.

Source: Community Catalyst, CalMatters

Data as of Apr 30, 2026CSV

The closest analogy is the Blue Cross of California conversion in the 1990s. When Blue Cross sought to transfer assets to a for-profit subsidiary, California's commissioner of corporations rejected the initial proposal as inadequate and forced the company to contribute $3.2 billion in stock to two independent charitable foundations [26]. In Virginia, Blue Cross/Blue Shield converted to the for-profit Trigon in 1997, paying $175 million to a state-run trust fund [27].

In the hospital sector, attorneys general have repeatedly challenged nonprofit conversions. In the Banner Health System case, attorneys general in New Mexico, North Dakota, and South Dakota challenged the company's ability to remove sale proceeds from their states, arguing the funds were held in charitable trust. The South Dakota Supreme Court affirmed the attorney general's authority [28]. The Manhattan Eye, Ear, and Throat Hospital case in New York established that good business sense alone is insufficient justification for a nonprofit to abandon its charitable mission [28].

The pattern across these cases is consistent: courts and regulators have generally required that when nonprofit assets are converted to for-profit use, the full fair value must be preserved for charitable purposes, typically through transfers to independent foundations. The question in the OpenAI case is whether the Foundation's $130 billion stake — controlled by a board that overlaps with the for-profit — meets that standard.

Witnesses and Competing Declarations

The trial's witness list reads like a who's-who of artificial intelligence. Beyond Musk and Altman, expected witnesses include OpenAI co-founder Greg Brockman, Microsoft CEO Satya Nadella, and several researchers and engineers involved in OpenAI's early years [29].

During the trial's first days, Musk's counsel read emails from OpenAI co-founder Ilya Sutskever and Brockman to Musk, in which they thanked and praised him for supporting their work [1]. These emails are central to Musk's narrative that the company's leaders understood and accepted the nonprofit's charitable constraints when they solicited his money.

Molo, Musk's lead attorney, opened the trial with an analogy: "A museum store can't loot the museum, steal all the Picassos, and use them to turn a profit" [13]. OpenAI's Savitt countered that Musk's framing ignores the reality that the nonprofit lacked the resources to compete in an AI race that required billions of dollars in compute infrastructure [3].

Musk testified that he "literally was a fool" for trusting OpenAI's leadership to maintain the nonprofit mission, characterizing his donation as having been made under false pretenses [30].

What a Musk Loss Would Mean

If the jury finds that OpenAI's restructuring was legally permissible — or if the court determines Musk lacks standing — the implications extend far beyond this case.

Meta warned California's attorney general that approving OpenAI's conversion could have "seismic implications for Silicon Valley," effectively creating a playbook for startups to incorporate as nonprofits, attract tax-deductible donations and the reputational benefits of a charitable mission, and then convert to for-profit status once the technology proves commercially viable [31].

Nonprofit law scholars have raised similar concerns. If a donor worth $200 billion who co-founded the charity cannot successfully challenge a conversion of this magnitude, it is difficult to identify who — other than a state attorney general — could. And Bonta's office already signed off [23].

The trial's liability phase is expected to conclude by May 21 [4]. Altman has yet to testify. The nine-person jury seated in Oakland will decide whether OpenAI's transformation from a $100 million nonprofit lab into an $852 billion commercial enterprise represents the legitimate evolution of a mission-driven organization — or the largest misappropriation of charitable assets in American history.

The Broader Stakes for AI Governance

The trial arrives at a moment when the structure of AI organizations carries direct policy consequences. Several of the leading AI research labs — including Anthropic, which was founded by former OpenAI researchers — adopted nonprofit or hybrid structures in part to signal commitment to safety and public benefit.

If the legal system ratifies OpenAI's path from nonprofit to near-trillion-dollar corporation without meaningful consequence, other AI organizations may face pressure from investors and employees to follow suit. Conversely, if Musk prevails, the ruling could establish that charitable assets developed with public subsidy (through tax-deductible donations) carry permanent restrictions that survive corporate restructuring.

Either outcome will set precedent. As Musk told the jury, borrowing language from his own legal team: "If you allow this, it sets a precedent for looting every charity in America" [32]. OpenAI's response, through Savitt, is equally stark: the company needed billions to fulfill its mission, and "no one donates billions of dollars to a charity" [3].

The jury will decide which story is true. The rest of the technology industry is watching.