FORT WORTH, Texas — The Securities and Exchange Commission is suing a North Texas man with allegedly submitting a fraudulent offer to invest $200 million in Virgin Orbit, Richard Branson’s now-defunct satellite launch services company.
Matthew Brown, owner of Matthew Brown Companies based in Fort Worth, appeared on CNBC last year to falsely claim he was an “experienced venture capitalist” with investments “in over 13 space companies,” and tout his offer, according to the SEC complaint.
At the time of his CNBC appearance, Brown had a non-disclosure agreement with Virgin Orbit, the complaint states.
Brown also sent a fake screenshot of his bank account to Virgin Orbit, according to the complaint.
Brown made his offer March 19, 2023, according to the complaint, shortly before Virgin Orbit filed for bankruptcy and laid off its workforce April 4, 2023,
After Brown made his offer, Virgin Orbit’s stock rose about 33.1%, but dropped after the deal fell through, according to the complaint. The company was delisted from the Nasdaq on May 2, 2023.
Brown also tried to convince Virgin Orbit to pay him a “break-up fee” if his proposed investment didn’t close, but the company didn’t agree to it, the complaint alleges.
To convince Virgin Orbit executives his offer was legitimate, Brown sent executives a screenshot of his company’s bank account purporting to show a balance of more than $182 million, but in reality his account had less than $1 at the time of 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 March 19, 2023, according to the SEC complaint.
Brown also told Virgin Orbit representatives that he had a law degree from SMU, but hadn’t actually graduated from college, the SEC alleges.
The SEC alleges Brown didn’t respond to Virgin Orbit’s “due diligence inquiries” and “never funded the offer,” the complaint alleges.
The SEC is seeking a civil fine and to permanently bar Brown from serving as a director of a company, according to the complaint
Brown is denying the allegations.
As Reuters reported, the defendants said the SEC complaint was filled with "egregious errors," "fabrications" and "biased allegations" that favored Virgin Orbit management.
"We are steadfast in our commitment to thoroughly contest these issues, if they arise, through the trial process," the defendants said, as reported by Reuters. "We will not settle until we are vindicated by the rule of law."
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