by Brian Orlotti
A Japanese investor, popularly known as Horiemon (ホリエモン?) due to his resemblance to Doraemon, the chubby robot cat in a popular Japanese cartoon, is suing Isle of Man-registered space transportation firm Excalibur Almaz (EA) for allegedly misleading him into investing $49Mln USD ($55.2Mln CDN) in a commercial space venture.
According to the November 19th, 2014 IOM Today article "Manx-registered space exploration firm to fight civil suit in US," Japanese businessman Takafumi Horie has filed a civil suit in Harris County district court, Texas, against EA founders Art Dula and J Buckner Hightower. Horie’s suit accuses Dula and Hightower of fraud, breach of contract and breach of fiduciary duty.
Horie claims he realized that his investment was a “sham” when he learned that Dula had sold a Russian spacecraft at auction that allegedly was "only suitable for display in a museum, and not as a potential flight vehicle as had been falsely represented to the plaintiff from the beginning."
But as outlined in the May 18th, 2014 Financial Times article "Takafumi Horie – return of Japan’s enfant terrible," the well known Japanese investor also comes with some history. According to the article, he once spent 21 months in prison for violating Japanese securities laws.
As for Excalibur Almaz, it was founded in 2005 on the Isle of Man, a self-governing British Crown dependency located in the Irish Sea between Ireland and the UK. According to the company's website, EA had planned to provide a variety of space related services, including:
The Almaz program used three main hardware components:
Originally used as a tailgun on Tu-22 bombers, the R-23 had a theoretical firing rate of up to 2600 rounds per minute and its projectiles flew at a speed of 850 m/s relative to the station. The cannon was envisioned as both a point defence weapon against incoming enemy spacecraft and as an antisatellite weapon. Since the cannon was on a fixed mount, the entire station needed to be turned to aim it. The R-23 carried 32 rounds and was test fired three times at the end of the 1974 Salyut-3 mission, when the station was operating uncrewed, so as to avoid issues with excessive vibration and noise.
Of course, the Almaz program left behind a rich legacy, which continues to the present-day.
The DOS series of space station modules (based on the Almaz OPS) served as the core of the Salyut 1, 6, and 7 space stations, the Mir space station and the Zvezda service module of the International Space Station (ISS). Hardware derived from the Almaz FGB would also become the basis for the Kvant-1 module of the Mir space station and the Zarya Functional Cargo Block, in use on the ISS.
In 2011, EA purchased two partially completed Almaz-205 and Almaz-206 (i.e. Almaz-OPS) modules and four VA spacecraft hulls from Russia's NPO Mashinostroyeniya (the former Soviet OKB-52 design bureau). The company claimed that the Soviet-era electronics had been gutted and replaced with modern avionics from an unnamed supplier. EA claimed that using refurbished hardware rather than developing new technology would save some $2Bln USD ($2.25Bln CDN) in development costs.
Signs of trouble first appeared in September of 2012, when EA was refused a second round of funding in NASA's Commercial Crew Development program. Then, the company was hit with a lawsuit from investor Donna Beck who claimed that the company had swindled her and her late husband into investing $300,000 USD ($338,000 CDN) in an asteroid mining scheme.
EA settled out of court with Beck for an undisclosed amount.
In May 2014, in what has been seen as the company's dying gasp, one of EA's VA spacecraft was sold at an auction in Belgium for €1.26Mln EUR ($1.77Mln CDN). In July 2014, EA founder Art Dula told the Isle of Man Examiner that the company had abandoned its space tourism plans. Its likely that the financial pressure of this latest lawsuit will trigger further liquidation of the company's assets.
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| Takafumi Horie. Photo c/o Wikipedia. |
According to the November 19th, 2014 IOM Today article "Manx-registered space exploration firm to fight civil suit in US," Japanese businessman Takafumi Horie has filed a civil suit in Harris County district court, Texas, against EA founders Art Dula and J Buckner Hightower. Horie’s suit accuses Dula and Hightower of fraud, breach of contract and breach of fiduciary duty.
Horie claims he realized that his investment was a “sham” when he learned that Dula had sold a Russian spacecraft at auction that allegedly was "only suitable for display in a museum, and not as a potential flight vehicle as had been falsely represented to the plaintiff from the beginning."
But as outlined in the May 18th, 2014 Financial Times article "Takafumi Horie – return of Japan’s enfant terrible," the well known Japanese investor also comes with some history. According to the article, he once spent 21 months in prison for violating Japanese securities laws.
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| EA founder Art Dula in front of re-purposed ex-Soviet Almaz hardware in 2012. Dula also acts as the literary executor for science fiction author Robert A. Heinlein and maintains a legal practice focused around aerospace, business and intellectual property law. Photo c/o Pocket Lint. |
As for Excalibur Almaz, it was founded in 2005 on the Isle of Man, a self-governing British Crown dependency located in the Irish Sea between Ireland and the UK. According to the company's website, EA had planned to provide a variety of space related services, including:
- Unmanned micro-gravity scientific research missions
- Human transportation including crew and tourism
- Cargo delivery and return
- Chartered space exploration
EA's strategy focused on the use of re-purposed Soviet-era space hardware. This vintage hardware was originally part of the "Almaz" (Diamond) program, a top-secret Soviet military space station project which ran from the early 1960's to the late 1970's. Three crewed military reconnaissance stations were launched between 1973 and 1976.
To conceal the program's military purpose, the three launched Almaz stations were designated as civilian space stations: Salyut 2, 3 and 5. Salyut 2 failed shortly after reaching orbit, but Salyut 3 and Salyut 5 both conducted successful crewed tests.
In 1978, following the Salyut 5 mission, the Soviet Ministry of Defence concluded that the time spent on station upkeep outweighed the stations' benefits compared to automated reconnaissance satellites and the program was ended.
To conceal the program's military purpose, the three launched Almaz stations were designated as civilian space stations: Salyut 2, 3 and 5. Salyut 2 failed shortly after reaching orbit, but Salyut 3 and Salyut 5 both conducted successful crewed tests.
In 1978, following the Salyut 5 mission, the Soviet Ministry of Defence concluded that the time spent on station upkeep outweighed the stations' benefits compared to automated reconnaissance satellites and the program was ended.
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| A full scale model of the Salyut 7 space station (with a Soyuz spacecraft docked at the front port and a Progress spacecraft at the rear) which is on display as part of the Exhibition of Soviet National Economic Achievement in Moscow. Photo c/o Wikipedia. |
The Almaz program used three main hardware components:
- the Orbital Piloted Station (OPS) module, forming the space station itself
- the Functional Cargo Block (FGB), a resupply craft for the stations
- the VA spacecraft (known in the West as the Merkur), a launch and return vehicle for the crews, reusable for up to 10 flights.
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| The Amlaz-205 module in 2011. At the time of its purchase by EA in 2011, the module was missing payload and subsystems, at least according to a May 21st, 2011 Russian Space web post on the topic. Photo c/o Russian Space Web. |
Of course, the Almaz program left behind a rich legacy, which continues to the present-day.
The DOS series of space station modules (based on the Almaz OPS) served as the core of the Salyut 1, 6, and 7 space stations, the Mir space station and the Zvezda service module of the International Space Station (ISS). Hardware derived from the Almaz FGB would also become the basis for the Kvant-1 module of the Mir space station and the Zarya Functional Cargo Block, in use on the ISS.
In 2011, EA purchased two partially completed Almaz-205 and Almaz-206 (i.e. Almaz-OPS) modules and four VA spacecraft hulls from Russia's NPO Mashinostroyeniya (the former Soviet OKB-52 design bureau). The company claimed that the Soviet-era electronics had been gutted and replaced with modern avionics from an unnamed supplier. EA claimed that using refurbished hardware rather than developing new technology would save some $2Bln USD ($2.25Bln CDN) in development costs.
Signs of trouble first appeared in September of 2012, when EA was refused a second round of funding in NASA's Commercial Crew Development program. Then, the company was hit with a lawsuit from investor Donna Beck who claimed that the company had swindled her and her late husband into investing $300,000 USD ($338,000 CDN) in an asteroid mining scheme.
EA settled out of court with Beck for an undisclosed amount.
In May 2014, in what has been seen as the company's dying gasp, one of EA's VA spacecraft was sold at an auction in Belgium for €1.26Mln EUR ($1.77Mln CDN). In July 2014, EA founder Art Dula told the Isle of Man Examiner that the company had abandoned its space tourism plans. Its likely that the financial pressure of this latest lawsuit will trigger further liquidation of the company's assets.
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| Brian Orlotti. |
Although the Excalibur Almaz story reads like a Kurt Vonnegut novel, it can be instructive as a case study for both NewSpace companies and investors.
Due diligence, from both investors and companies remains the key to the industry's future.
Due diligence, from both investors and companies remains the key to the industry's future.
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Brian Orlotti is a Toronto-based IT professional and a regular contributor to the Commercial Space blog.
Brian Orlotti is a Toronto-based IT professional and a regular contributor to the Commercial Space blog.
That is unfortunate. The Almaz capsule could have been used for small size launchers such as Antares sized.
ReplyDeleteBob Clark