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A Fort Worth, Texas man is facing serious rebukes after the Securities and Exchange Commission announced plans to sue him for making a “false offer” to buy the now-bankrupt space company Virgin Orbit for $200 million.
The SEC alleges that Matthew Brown and his company, Matthew Brown Companies LLC, engaged in a fraudulent scheme to submit a false proposal to invest $200 million in Virgin Orbit Holdings Inc., a company that was formerly listed on the Nasdaq under the ticker symbol VORB.
According to the complaint, on March 19, 2023, as Virgin Orbit was close to filing for bankruptcy, Braun submitted an unsolicited buyout offer.
Brown reportedly told Virgin Orbit’s CEO that he had invested hundreds of millions of dollars of his “personal wealth” in space companies, and to prove his offer was legitimate, he sent the company “fake screenshots” of his own bank accounts that showed a balance of more than $182 million.
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The SEC filed criminal charges against Matthew Brown and his company, Matthew Brown Companies LLC, for offering to bail out Virgin Orbit for $200 million even though the company had less than $1 in its accounts. (Rafael Enrique/SOPA Images/LightRocket via Getty Images / Getty Images)
But in reality, less than $1 ended up in the bank accounts, the SEC alleges.
The SEC also alleges that Brown told the company he had a law degree from Southern Methodist University in Dallas, even though he never graduated from the university.
Still, word of the proposal was leaked to the media, sending Virgin Orbit’s shares soaring 33.1%.
Brown reportedly signed a non-disclosure agreement with Virgin Orbit about the deal, but later appeared on CNBC on March 23, 2023 to discuss the proposal and promote himself and his firm as a venture capitalist “with affiliations to over 13 space companies.”
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The SEC alleges that at the time, Brown had a negative net worth and had no past or present holdings in the space industry.
The committee also alleges that Brown refused to put funds into escrow and reportedly refused to respond to Virgin Orbit’s due diligence inquiry, causing negotiations to collapse.
On April 4, 2023, Virgin Orbit filed for bankruptcy and on May 2, 2023, it was delisted from the Nasdaq.
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The U.S. Securities and Exchange Commission (SEC) headquarters in Washington, DC, on January 28, 2021. (SAUL LOEB/AFP via Getty Images/Getty Images)
The SEC is seeking a permanent injunction barring Brown from holding any such position at a company, civil penalties and disqualification as an officer or director.
Brown told FOX Business he plans to file a response within 21 days of receiving the complaint.
Matthew Brown Companies LLC issued a statement in response to the SEC’s lawsuit, denying the allegations and claiming that the complaint is filled with “gross falsehoods, fabrications and biased allegations.”
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“We were approached by representatives of Virgin Orbit to invest in 2023. We engaged in commercial negotiations and, during our evaluation, Virgin Orbit provided us with a non-binding letter of intent. However, after due diligence, we have decided not to invest,” the statement read. “The SEC’s complaint is packed with egregious errors, fabrications and biased allegations in favor of Virgin Orbit’s management, who are arguably the real culprits. Mr. Brown is a respected businessman, community member and philanthropist. This matter concerns a single potential transaction, a non-binding indicative term sheet unrelated to Mr. Brown’s core business, and this marks the first time that Mr. Brown has elicited false, inaccurate and exaggerated allegations from the SEC, despite his deep involvement in the investment community.”
“If any issues arise, our commitment to vigorously fight them through the courts remains firm. We have the utmost respect for the judicial system and our stance in this civil litigation is firm and we will not settle until we are proven innocent by the rule of law,” the company added.
