- The SEC has sued a Texas man who proposed investing $200 million in Virgin Orbit.
- According to the SEC, Matthew Brown claimed to have $182 million but didn’t have a dollar in his bank account.
- Virgin Orbit, which was aiming to compete with Elon Musk’s SpaceX, filed for bankruptcy in 2023.
In March 2023, beleaguered rocket company Virgin Orbit thought it had found a lifeline.
Texas-based investor Matthew Brown has reportedly offered to invest $200 million in the rocket company, which is on the brink of bankruptcy.
But in a complaint filed Monday, the SEC alleged that the proposal was false and that Brown’s net worth at the time was negative.
Regulators accused Brown, who is said to be from the Dallas-Fort Worth, Texas, area, of engaging in a “fraudulent scheme” to submit and publicly promote a “false” $200 million rescue offer for Virgin Orbit, which emerged from bankruptcy in April 2023.
Virgin Orbit, backed by British billionaire Richard Branson, has raised millions of dollars to compete with Elon Musk’s SpaceX in the private space industry, which the World Economic Forum estimates will be worth $1.8 trillion by 2035.
However, the company has struggled to raise funds after a failed rocket launch in January 2023.
In its complaint, the SEC alleges that Brown misrepresented his personal wealth in conversations with Virgin Orbit, including sending screenshots of the company’s fake bank accounts showing more than $182 million when the actual balance was less than $1.
Brown also appeared on CNBC shortly after entering into talks with Virgin Orbit despite having signed an NDA.
According to the lawsuit, he told the agency that he planned to close the investment “within the next 24 hours” and that as a result of the investment he would “essentially become the owner of Virgin Orbit.”
The SEC also said Brown told Virgin Orbit that he graduated from Southern Methodist University in Dallas with a law degree. “Mr. Brown never graduated from college, let alone attended law school,” the SEC wrote.
Virgin Orbit’s shares rose more than 33% after word of Brown’s proposal was leaked to the media.
The SEC said the deal fell apart because Brown demanded a “breakup fee” if the deal didn’t go through and refused to comply with Virgin Orbit’s due diligence investigation.
The company was once valued at $3.7 billion but filed for bankruptcy less than a month later.
The SEC is seeking civil monetary penalties and a permanent ban on Brown from buying and selling securities.
A representative for Brown and his firm, Matthew Brown Companies, told Business Insider in a statement after the story was published: “We remain committed to fighting allegations, if any, through the courts. Our position in this civil lawsuit is firm and we will not settle until we are proven innocent by the rule of law.”
The attorneys alleged that the SEC complaint contained errors and fabrications and that SEC investigators had conflicts of interest.
The SEC did not respond to BI’s request for comment outside of regular business hours about the representatives’ allegations.
June 20, 2024: This article has been updated to add statements from Brown and representatives of his company.
