The Securities and Exchange Commission is suing a D-FW resident for allegedly submitting a fraudulent $200 million offer to invest in Long Beach, Calif.-based Virgin Orbit, Richard Branson’s defunct rocket ship company which provided launch services to small satellites.
Matthew Brown, owner of Fort Worth-based Matthew Brown Companies LLC, even made appearances on CNBC to falsely tout that he was an “experienced venture capitalist” with “investments in over 13 different space companies” and sent a fake screenshot of his company’s bank account to Virgin Orbit executives, according to the complaint filed Monday in the Northern District of Texas.
During his appearance on CNBC, the network also falsely described him as an “outside advisor” on energy and defense to President Joe Biden, according to the SEC.
Brown made the offer on March 19, 2023, two weeks before Virgin Orbit filed for bankruptcy protection and laid off its entire workforce. His CNBC appearance also came at a time when he had a nondisclosure agreement with Virgin Orbit.
After Brown’s investment offer was made public, Virgin Orbit’s stock price rose 33.1% but it quickly fell after the deal collapsed. The company was delisted from the NASDAQ on May 2, 2023.
Brown also tried to profit from the deal by attempting to convince Virgin Orbit to agree to a “break-up fee,” a penalty applied to companies during mergers and acquisitions if the seller backs out of the deal. Virgin Orbit didn’t agree to that, but if applied, the company would have had to compensate Brown.
To convince Virgin Orbit that his offer was legitimate, he showed executives that his company’s balance was more than $182 million. In reality, his bank account had less than $1 dollar at the time he submitted the offer, the SEC alleges.
“I have invested over $750mm of my personal capital, largely in this [space] vertical, and largely in stealth mode…. I have the bandwidth to write the $200mm,” Brown wrote to Virgin Orbit on March 19, 2023. However, Brown never sent an official offer for $200 million to anyone at Virgin Orbit, the SEC said.
In an effort to lend more credibility to his story, he told Virgin Orbit executives that he had a law degree from Southern Methodist University. However, Brown never graduated from college, according to the SEC.
The SEC also claims that Brown never responded to Virgin Orbit’s “due diligence inquiries” and refused to place any funds in escrow, a financial agreement where money or assets are held by a third party on behalf of separate parties to help complete a transaction.
For his alleged scheme, the SEC is seeking a civil fine and a permanent ban to never allow Brown to serve as a director for a company.
According to a 2023 Quartz article, this wasn’t the first time Brown attempted to profit from a scheme. Brown has previously said he worked as a tech entrepreneur with Mark Zuckerberg, advised former president Barack Obama and Dallas energy investor T. Boone Pickens and claimed he was in a helicopter accident. The Federal Aviation Administration and National Transportation Safety Board have no records of such an accident.
Brown is denying the SEC’s accusations. Instead, he claims that the SEC is unjustly siding with Virgin Orbit’s management, according to a statement from a Brown Companies LLC representative.
“The SEC’s complaint is filled with egregious errors, fabrications and biased allegations that undeniably favor the culprit, Virgin Orbit’s Management,” the company said in a statement.
Virgin Orbit was a failed experiment from British billionaire Richard Branson. The goal was to provide space launch services to small satellite markets. Its first successful launch into orbit in 2021 deployed a rocket from a retrofitted 747 carrying a payload for NASA, but the company saw its sixth and final launch end in 2023 with the loss of nine satellites belonging to seven customers.
Branson said Virgin Orbit ultimately set him back $1.5 billion.
