Elon Musk will have to prove the funding at time of Tesla buyout tweet or risk jail like Martha Stewart

Former Securities and Exchange Commission (SEC) Chairman Harvey Pitt says Tesla CEO Elon Musk faces potential civil and criminal charges. Elon Musk needs to demonstrate that at the time he tweeted about the Tesla going private that Elon had a legally enforceable commitment to fund $420 a share, or $70 billion.

Elon indicating that he had funding for $20-30 billion might work. He already own over 30 million shares and Elon was talking about a buyout structure where shareholders could choose not to sell.

Pitt says the penalty for a stock fraud conviction could range from monetary damages to jail time, though he stopped short of predicting Musk would end up behind bars. Martha Stewart served five months in federal prison on insider trading charges.

Elon will have a final fight with the short sellers of Tesla. Those investors could lose hundreds of millions to $2 to $3 billion because of a buyout. They have already started lawsuits against Elon.