Darryl Cutell has confirmed that the IHRA's financial issues were the result of Elon Musk not paying money owed to Darana Hybrid.https://www.dragzine.com/news/darry...a-financial-issues-elon-musk-payment-dispute/
65 Goatboy
Nitro Member
All large business's are going to have accounts receivables and they are considered an asset if current. But if they are 60, 90 or more days old you couldn't even borrow against them. I'm guessing Musk owed Darana a lot for Darryl to make the statement that the IHRA was fully funded for 10 years. We already know he wasn't listening to those around him about basic business accounting.
- Thread starter
- #4
Yes, current receivables are assets. But well-run businesses limit how much they leverage themselves relative to those receivables and projections.All large business's are going to have accounts receivables and they are considered an asset if current.
I also have concerns about Company A overleveraging itself based on receivables due to Company B.
SpaceX is suing Darana for fraud, breach of contract, and overbilling. Now we have heard the other side.
https://competitionplus.com/spacexai-sues-darana-hybrid-alleges-fraud-in-data-center-dispute/
https://competitionplus.com/spacexai-sues-darana-hybrid-alleges-fraud-in-data-center-dispute/
65 Goatboy
Nitro Member
Starting to look like Darryl Cuttell is just a good old fashioned con artist.
Now the lawyers are peeing in their pants with excitement for going forward with back and forth lawsuitsStarting to look like Darryl Cuttell is just a good old fashioned con artist.
Custom Body Fan
Nitro Member
Darryl called Evan Knoll and told him “hold my beer.”Starting to look like Darryl Cuttell is just a good old fashioned con artist.
I suggest even more key would be the "...alleges Darana refused a contractual audit request..." part. Refusing an audit, to me, doesn't look good at all.
Guess we'll just have to wait for the civil action to commence in court, both sides have laid out their respective cases. Anyone posting odds they settle out of court and an NDA will keep us from ever knowing what really happened?
Custom Body Fan
Nitro Member
I really wonder how much money DC will have available to settle. Sounds like he has spent a LOT of money.
I wonder if any of this will lead to criminal investigations if fraud is involved. Wonder if Darryl is regretting his IHRA adventure?
Under_Pressure
Nitro Member
One thing that never sat well with the "Cuttell has big data center contracts with X and that's how he's funding this" was that if I'm the guy paying for that (Musk) and suddenly my contractor is running around basically saying "I've got unlimited funds now due to this sweet contract, it's Christmas time for the racing industry" I'd be like "WTF?" Also, even if we are talking about multi-hundred million dollar contracts, even if X paid... gross margin would usually be maybe 20% of that? Plus all Darana's non-direct operating expenses on top of that. Even if everything went as planned that would most likely give him tens of millions of dollars to play with, not hundreds- provided Darana was actually doing the work they were to be paid for.
Chili
Nitro Member
I think as long as everything was going well on the job, I doubt anybody cares what he is spending his money on. When the job was not getting done correctly or being overbilled, then maybe they kind of thought his priorities weren’t in the right place.
Under_Pressure
Nitro Member
Perhaps, especially in the crazy gold rush world of data center construction when some of the traditional economic rules might not as rigidly apply. However, if you are going to publicly spend so lavishly then you better be ABSOLUTELY DAMN SURE that everything is in fact going according to plan on that job, because if it doesn't then the microscope will be on you in an instant. And from what we've seen in the court filings, it sounds like that's exactly what happened- Musk's people saw what was going on and decided they better take a very close look at what Darana was doing and here we are.
Copy and paste… not my words.
Full Synopsis
You're more than welcome to share and copy/paste my summary - I'm not a lawyer, just had enough free time to read the whole complaint and ask ChatGPT the relevant questions as they arose. I'm sure CompPlus will have a feature length article but in the interim this will at least explain to y'all what you're dealing with.
It is significantly worse than Evan Knoll and I wouldn't be surprised if the feds are monitoring this.
Getting Started
SpaceX routinely contracts out other companies like Darana to help build data centers. There are NO plans to snatch up race tracks and convert them into data centers, that myth is put to rest in the complaint.
Darana Hybrid as a company specializes in helping build warehouses and install things like conveyor belts, electrical systems, lighting, etc. They are a smaller org but they made the most sense being somewhat local to the construction site in Tennessee.
SpaceX is aware they're the richest company in the world and when partnering with a contractor like Darana, have checks and balances in place to prevent companies like Darana from plundering them. Essentially, when you do work for SpaceX, they are so wealthy that you can effectively charge them whatever you want, and they can easily pay it. SpaceX knows this, so they carefully structure their contracts so people don't get carried away. Otherwise everyone would just milk SpaceX.
The terms to prevent this, were a hard cap of a 10% markup on subcontractor costs. Darana themselves would need to hire more people, and SpaceX was cool with this (pretty standard in construction), but essentially told Darana "don't get carried away with spending our near-infinite money on hiring people."
This is how the main fraud was initially spotted.
How did Cuttell get caught?
SpaceX generally had a ballpark figure of how much they anticipated Darana to spend on subcontractors, based on previous similar projects.
In invoices, Cuttell jacked up subcontractor costs any way he could, basically hoping SpaceX corp wouldn't look too hard at the details of invoices, and pocketed that money for himself to then spend on the IHRA (this is the direct accusation SpaceX makes - this was all an elaborate scheme with the ultimate goal of funding "hot rod racing").
The way the news makes Elon and his companies out to be buffoonish, Cuttell genuinely believed that nonsense, and thought he could pull a fast one on Elon.
In reality, Elon and his teams don't F around. When the subtractor cost on Cuttell's invoices didn't match SpaceX's own known estimations, and was 400% to 800% higher, SpaceX started digging and found exactly what they anticipated.
Following that initial discovery, these things happened:
1) Elon and his guys, are car guys. News of the IHRA's rapid and absurd expansion was on their radar, because it was everywhere in auto racing news. Even before confirming it via invoices, they saw his spending spree and instinctively knew he was milking SpaceX. This was not their first rodeo. They were monitoring Reddit and Nitromater and took note of posts questioning how Cuttell was able to afford all of this, as well as the conspiracy that it was all a land-grab for data centers.
2) They found, in certain invoices, Darana making equipment orders and shipping them to the addresses of IHRA drag strips far away from the data center construction site or the Darana HQ. This is why he named all of the locations DARANA Dragway or some variation thereof. On invoices, all of the locations probably read "DARANA..." and a SpaceX audit skimming through it quickly would just assume the orders were going to the company HQ. But they were actually going to drag strips that were named similarly to the company HQ. The drag strips were all named Darana to make their invoices confusing to read to someone quickly skimming them and not looking into the actual addresses. Someone at SpaceX looked into the addresses.
3) Darana started refusing any/all audits, which was a giant red flag.
4) They found photos of Cuttell wearing xAI/IHRA jackets, which in his contract, he was explicitly prohibited from doing.
5) Cuttell recently demanded a $45 million emergency payment, to supposedly pay subcontractors. SpaceX tracked that money a little more thoroughly just to see what would happen, and found he pocketed that money too.
6) Cuttell trying to sell the IHRA for $500 million, was to prepare for the impending lawsuit against him and the expected damages SpaceX would be awarded.
Conclusion
It's worse than Evan Knoll.
Knoll, for reference, basically labelled Torco as a fuel supplier for interstate construction vehicles and received tax breaks/kickbacks from the government until the feds dug into it. Knoll scammed the government.
Cuttell, at least what SpaceX alleges, was milking SpaceX with falsified invoices approaching one billion dollars, and in the process opened himself up to federal charges. Cuttell scammed a private company so badly that the government could plausibly step in, in addition to what happens in civil court.
I would not be surprised if he takes the easy way out.
The feds are probably monitoring this. Say hi to them, some are probably in this Facebook group!
Full Synopsis
You're more than welcome to share and copy/paste my summary - I'm not a lawyer, just had enough free time to read the whole complaint and ask ChatGPT the relevant questions as they arose. I'm sure CompPlus will have a feature length article but in the interim this will at least explain to y'all what you're dealing with.
It is significantly worse than Evan Knoll and I wouldn't be surprised if the feds are monitoring this.
Getting Started
SpaceX routinely contracts out other companies like Darana to help build data centers. There are NO plans to snatch up race tracks and convert them into data centers, that myth is put to rest in the complaint.
Darana Hybrid as a company specializes in helping build warehouses and install things like conveyor belts, electrical systems, lighting, etc. They are a smaller org but they made the most sense being somewhat local to the construction site in Tennessee.
SpaceX is aware they're the richest company in the world and when partnering with a contractor like Darana, have checks and balances in place to prevent companies like Darana from plundering them. Essentially, when you do work for SpaceX, they are so wealthy that you can effectively charge them whatever you want, and they can easily pay it. SpaceX knows this, so they carefully structure their contracts so people don't get carried away. Otherwise everyone would just milk SpaceX.
The terms to prevent this, were a hard cap of a 10% markup on subcontractor costs. Darana themselves would need to hire more people, and SpaceX was cool with this (pretty standard in construction), but essentially told Darana "don't get carried away with spending our near-infinite money on hiring people."
This is how the main fraud was initially spotted.
How did Cuttell get caught?
SpaceX generally had a ballpark figure of how much they anticipated Darana to spend on subcontractors, based on previous similar projects.
In invoices, Cuttell jacked up subcontractor costs any way he could, basically hoping SpaceX corp wouldn't look too hard at the details of invoices, and pocketed that money for himself to then spend on the IHRA (this is the direct accusation SpaceX makes - this was all an elaborate scheme with the ultimate goal of funding "hot rod racing").
The way the news makes Elon and his companies out to be buffoonish, Cuttell genuinely believed that nonsense, and thought he could pull a fast one on Elon.
In reality, Elon and his teams don't F around. When the subtractor cost on Cuttell's invoices didn't match SpaceX's own known estimations, and was 400% to 800% higher, SpaceX started digging and found exactly what they anticipated.
Following that initial discovery, these things happened:
1) Elon and his guys, are car guys. News of the IHRA's rapid and absurd expansion was on their radar, because it was everywhere in auto racing news. Even before confirming it via invoices, they saw his spending spree and instinctively knew he was milking SpaceX. This was not their first rodeo. They were monitoring Reddit and Nitromater and took note of posts questioning how Cuttell was able to afford all of this, as well as the conspiracy that it was all a land-grab for data centers.
2) They found, in certain invoices, Darana making equipment orders and shipping them to the addresses of IHRA drag strips far away from the data center construction site or the Darana HQ. This is why he named all of the locations DARANA Dragway or some variation thereof. On invoices, all of the locations probably read "DARANA..." and a SpaceX audit skimming through it quickly would just assume the orders were going to the company HQ. But they were actually going to drag strips that were named similarly to the company HQ. The drag strips were all named Darana to make their invoices confusing to read to someone quickly skimming them and not looking into the actual addresses. Someone at SpaceX looked into the addresses.
3) Darana started refusing any/all audits, which was a giant red flag.
4) They found photos of Cuttell wearing xAI/IHRA jackets, which in his contract, he was explicitly prohibited from doing.
5) Cuttell recently demanded a $45 million emergency payment, to supposedly pay subcontractors. SpaceX tracked that money a little more thoroughly just to see what would happen, and found he pocketed that money too.
6) Cuttell trying to sell the IHRA for $500 million, was to prepare for the impending lawsuit against him and the expected damages SpaceX would be awarded.
Conclusion
It's worse than Evan Knoll.
Knoll, for reference, basically labelled Torco as a fuel supplier for interstate construction vehicles and received tax breaks/kickbacks from the government until the feds dug into it. Knoll scammed the government.
Cuttell, at least what SpaceX alleges, was milking SpaceX with falsified invoices approaching one billion dollars, and in the process opened himself up to federal charges. Cuttell scammed a private company so badly that the government could plausibly step in, in addition to what happens in civil court.
I would not be surprised if he takes the easy way out.
The feds are probably monitoring this. Say hi to them, some are probably in this Facebook group!
none
Nitro Member
Just my observation. SpaceX wasn't originally involved. Darana initially worked for XAI. And as long as shit was getting done, nobody looked to closely. And I do think I know one thing about Darryl, he got shit done. The Colossus computer was completed faster than anyone thought possible. The "Expets" said two years to build it. Darryl did it in 122 days. So nobody was questioning the cost. What would it have cost if you paid everyone for two years?
Anybody (besides me) ever have a car in painter prison for three+ years? Would you have questioned extra cost to have it back in 122 days?
I have ZERO actual knowledge, but it looks to me like when SpaceX and XAI merged, the discrepancy came to light.
Any merger would cause a close look at the books, but before then.......
Alan
Anybody (besides me) ever have a car in painter prison for three+ years? Would you have questioned extra cost to have it back in 122 days?
I have ZERO actual knowledge, but it looks to me like when SpaceX and XAI merged, the discrepancy came to light.
Any merger would cause a close look at the books, but before then.......
Alan
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