Richard Branson, 71, was sued after he “deliberately sent faulty rockets into space,” the lawsuit says.
- Sir Richard Branson, 71, knowingly sent faulty passenger rockets into space, Virgin Galactic’s shareholders say in a lawsuit.
- He is accused of covering up problems with his spacecraft and selling £346 million worth of shares in the company while the share price was “artificially inflated”.
- The lawsuit also alleges that the spacecraft “was not designed for commercial purposes.”
Sir Richard Branson deliberately sent faulty passenger rockets into space, according to a lawsuit filed by Virgin Galactic shareholders.
The 71-year-old is accused of covering up problems with his spacecraft and selling £346m worth of shares in the company while the share price was “artificially inflated”.
Legal documents claim that prototype designs for the Virgin Galactic Unity spacecraft and the Eve launch vehicle used to launch it into space were “seriously flawed” and not even close to unairworthy.
“In fact, the prototypes were not intended to be lifted into the air,” the documents say. “Rather, they were supposed to be the starting point for the company to create its own commercial-grade vehicle that was safe and airworthy — two things that Eve and Unity definitely weren’t.”
Sir Richard Branson knowingly sent faulty passenger rockets into space, claims Virgin Galactic shareholders in a lawsuit.
The lawsuit also alleges that the spacecraft “was not designed for commercial purposes … after each flight, it developed cracks and did not receive proper scheduled maintenance.”
Strikingly, Branson’s famous launch into space last July, Virgin Galactic, is said to have suffered mid-flight damage and “cracks have been found in key locations on the vehicles.”
He also accuses the company of a cover-up when VSS Unity was severely damaged during a test flight in February 2019.
And it claims that “the entire team almost died due to a mechanical problem caused by human error, but this was not reported at the time.” A mid-flight disaster in October 2014 destroyed the company’s first spacecraft, the VSS Enterprise, killing its co-pilot and seriously injuring the pilot.
The lawsuit also alleges that the spacecraft “was not designed for commercial purposes … after each flight, it developed cracks and did not receive proper scheduled maintenance.”
Branson’s company went public in October 2019, but court documents allege, “Virgin Galactic was less valuable than it seemed because its flights weren’t as safe as publicly made out.”
The lawsuit alleges that the billionaire sold 16 million shares for around £346 million while the shares were “artificially inflated” between April 12 and August 12 last year.
Since the start of 2020, he has sold more than $1 billion worth of Virgin Galactic shares – about £760 million.
Branson founded Virgin Galactic in 2004, hoping to launch commercial space tourism by 2009. Test flights are ongoing, and the launch of commercial space flights for paying customers has been delayed until at least the end of the year.
The company is also investigating materials in spacecraft joints that have been tested and found to have “reduced strength,” the lawsuit says.
Nearly 600 potential passengers paid a deposit for flights on Branson’s spacecraft, at a cost of £340,000 per seat for a flight of up to three hours, including a few minutes of weightlessness in zero gravity.
Branson founded Virgin Galactic in 2004, hoping to launch commercial space tourism by 2009. Test flights are ongoing, and the launch of commercial space flights for paying customers has been delayed until at least the end of the year. Pictured: Virgin Galactic’s VSS Unity passenger rocket plane.
The investor lawsuit was filed on behalf of Virgin Galactic shareholders by Thomas Spiteri in the US District Court for the Eastern District of New York. It seeks damages from the directors and management of Branson and Virgin Galactic for alleged breach of fiduciary duty, unjust enrichment, gross mismanagement, abuse of control, embezzlement of corporate assets, and violations of the Exchange Act.
Court documents allege that the company will “lose and spend many millions of dollars” to fix structural and design issues, fix the FAA’s “unsafe flying misconduct” ruling, and challenge the securities class action.
Virgin Galactic declined to comment. He has not presented a defense yet.