Former Executives of Aerospace Startup Indicted on Fraud and Tax Evasion Charges
Five former executives of Theia Group, Inc., an aerospace startup headquartered in Washington, D.C., have been indicted on charges of fraud, conspiracy to commit fraud, and tax evasion, according to federal prosecutors. The indictment alleges a scheme that defrauded investors and lenders of approximately $250 million, along with personal tax evasion amounting to nearly $3.9 million.
The individuals named in the indictment are Erlend Olson, John Gallagher, Stephen Buscher, Joseph Fargnoli, and Jamil Swati. Arrests were made over the past two days in multiple states, including New Mexico, Tennessee, Pennsylvania, New York, and Connecticut.
The charges were announced by U.S. Attorney Edward R. Martin, Jr., along with officials from the Justice Department’s Tax Division, the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General, and the Internal Revenue Service Criminal Investigation (IRS-CI) Washington, D.C. Office.
Theia Group, Inc. was established in 2015 with plans to launch a network of 112 satellites by 2022 at an estimated cost of $10 billion to $15 billion. The company aimed to secure funding from various international sources, promising perpetual data and analytics services for an upfront investment of $2 billion. However, federal prosecutors allege that from its inception through its court-ordered receivership in 2021, the company failed to secure these funds, instead obtaining approximately $250 million through fraudulent means.
The indictment outlines allegations that the executives misrepresented the company’s financial position by fabricating revenue from nonexistent government contracts and producing falsified financial statements, including a fraudulent $6 billion escrow account statement. Additionally, they allegedly made misleading claims about the company’s technical capabilities to secure investments and loans.
In addition to the fraud allegations, Olson, the company’s founder, is accused of evading federal income taxes between 2018 and 2020. Prosecutors claim Olson concealed millions in compensation by directing funds through a nominee entity, Meridian Vector Corporation, to pay for personal expenses. These included private jet memberships, luxury vehicle purchases, and high-end real estate acquisitions. The indictment further alleges that Olson took steps to avoid IRS reporting of his income from Theia, extending back to unpaid taxes from 2009 to 2011.
Each of the five defendants faces a charge of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison. Olson, Gallagher, Buscher, Fargnoli, and Swati also face multiple counts of wire and mail fraud, which could result in additional 20-year sentences per count if convicted. Olson faces further penalties of up to five years in prison for each count of tax evasion.
If found guilty, the defendants could also face supervised release, financial restitution, monetary penalties, and asset forfeiture. A federal district court judge will determine sentencing in accordance with the U.S. Sentencing Guidelines and statutory considerations.
The case is being investigated by the FDIC Office of Inspector General and IRS Criminal Investigation. The prosecution is being led by Assistant U.S. Attorneys Rebecca G. Ross and Joshua Gold, along with Senior Litigation Counsel Nanette Davis and Trial Attorney Alexis Hughes of the Tax Division.
Federal officials emphasize that an indictment is an allegation and that the defendants are presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.