A next-generation financial advisor named Michael Shillin pled guilty to criminal charges in a fraud case in which he sold fake SpaceX shares to his clients. He claimed to invest clients’ funds in IPO or pre-IPO shares in well-known, privately owned companies like SpaceX.
Prosecutors brought charges of wire fraud and bank fraud. His sentencing is set for July 21.
The Securities and Exchange Commission (SEC) also opened an investigation into Michael Shillin’s activities. It alleged that Shillin misrepresented investments and fabricated documents over the course of a year.
One of his clients retired early in 2020 because he believed he made $450,000 on an investment in SpaceX. He later found out that Shillin faked both the money and the SpaceX shares.
Shillin also misled clients into rolling over life insurance policies into new policies that offered fewer benefits.
As part of the settlement with the SEC, Shillin will pay a fine that will be determined by a court at a later date. Shillin neither admitted nor denied the SEC’s allegations. The SEC barred him from working in the securities industry.
Shillin’s career included positions at Edward Jones, Raymond James Financial, and Alliance Global Partners. In 2020, he founded his own financial advisement firm named Shillin Wealth Management, which is now defunct.
SpaceX CEO Elon Musk previously denied plans to conduct an IPO for SpaceX, though he did float the idea of spinning off Starlink as a publicly traded company at some point in the future. Starlink’s satellite Internet service currently has 400,000 active subscribers online.
SpaceX has several launch contracts with NASA and private clients, including ferrying astronauts and cargo to the International Space Station as part of NASA’s Commercial Crew program and resupply missions. Axiom Space recently completed the first fully private mission to the International Space Station on a SpaceX Crew Dragon.
SpaceX occasionally conducts regulation fundraisers in which accredited investors can buy shares. During its most recent fundraise, SpaceX raised $1.5 billion at a valuation of $125 billion, a $25 billion increase over its previous $100 billion valuation. It says it will use the money to continue work on Starship / Super Heavy development, which has been repeatedly delayed due to regulatory red tape at the FAA.