By Douglas Messier

Managing Editor

Virgin Galactic’s former vice president of propulsion, Thomas Markusic, has accused Richard Branson’s space company of lying about the safety and performance of its SpaceShipTwo suborbital tourism vehicle.

“Dr. Markusic was forced to separate from VG [Virgin Galactic] because the company was defrauding the public about the ability of the vehicles to reach space and was utilizing rocket engine technologies that have a high probability of causing catastrophic failure and loss of life,” according to the document.

“VG directed Dr. Markusic to lie to customers about the performance and safety of the company’s hybrid rocket technology,” the document continues. “VG asserts that Dr. Markusic secretly plotted to start his own rocket company and exploited his position at VG; whereas, in reality, Dr. Markusic’s conscience forced him to to leave.”

Virgin Galactic has dismissed the claims by Markusic, who left in January 2014 to head up a rival company, Firefly Space Systems, that is directly competing with Virgin in developing small satellite launch vehicles.

“This comment was shocking to Virgin Galactic considering that Markusic did not raise such concerns during his employment with Virgin Galactic,” the company responded. “Markusic’s ‘crisis-of-confidence’ claims also ring hollow when considered in the context of Markusic’s breach of contract counterclaim, which alleges that he expected to enter into a consulting arrangement with Virgin Galactic upon the end of his formal employment.”

Markusic’s explosive allegations are part of a year-old arbitration process Virgin Galactic launched against its former propulsion chief in December 2014. Virgin claims that Markusic secretly conspired with two SpaceShipTwo ticketholders to found Firefly while he was still employed at Branson’s company in violation of his employment agreement.

Virgin Galactic further alleges that Markusic illegally appropriated proprietary information, documents, engineering notebooks, and a business plan for use at his new company. Virgin also claims he improperly approached its employees and investors while seeking to hide his actions.

“Markusic has destroyed storage devices, disposed of computers, and reformatted hard drives to cover the tracks of his misappropriation of Virgin Galactic information,” the company alleges.

Markusic has denied the charges, saying that the rocket technology that Firefly is developing is not based on work he did at Virgin Galactic.

In legal papers, he calls Virgin’s actions “nothing more than a veiled attempt to impose a non-compete agreement against Dr. Markusic when one does not exist and in a state which prohibits such agreements….Contrary to VG’s bogus and slanderous assertions, however, Dr. Markusic has not violated any agreement or duty to VG, and VG has not suffered harm as a result of Dr. Markusic’s conduct.”

“Through this claim and the cost and the time associated in defending the claim, VG seeks to suppress future competition by tortuously interfering with Dr. Markusic’s present employment at Firefly, and seeks to stifle Firefly’s efforts to raise capital and recruit employees,” the papers state.

Virgin Galactic has asked the arbitrator, Louise A. LaMothe, to enter an award that would essentially put Firefly out of business and sideline Markusic for at least a year. Specifically, Virgin has asked for an award

“declaring that Virgin Galactic owns the technology and business plan Respondent [Markusic] is using in his new business; ordering Respondent to return to Virgin Galactic its Confidential Information; enjoining Respondent from further utilizing Virgin Galactic’s Confidential Information, including the technology and business plan Respondent developed while he was a Virgin Galactic employee, and from further soliciting Virgin Galactic’s employees; ordering Respondent to pay Virgin Galactic damages according to proof; and ordering other appropriate relief such as disgorging Respondent’s ill gotten gains and requiring Respondent to stand down from further development of his spaceship business for a period of at least one year to prevent Respondent from profiting from disloyal, illegal and contract breaching activities.”

Between May 2011 and January 2014, Markusic led the development of Virgin Galactic’s Newton family of liquid rocket motors for use in the LauncherOne booster. The NewtonThree engine also was considered as a possible replacement for the hybrid engines used in SpaceShipTwo, sources say.

A key date in the dispute is March 28, 2013. Virgin Galactic CEO George Whitesides had arranged a tour of the company’s facilities in Mojave, Calif., for SpaceShipTwo ticket holders P.J. King, Michael Blum and Edwin Sahakian. Markusic discussed the company’s liquid propulsion work with the three visitors.

Virgin alleges Markusic later met with King and Blum and commenced plans to form Firefly.

“At the same time Respondent told Virgin Galactic senior management that he was interested in possibly starting his own company, he hid the fact that he had already started the company and was already soliciting Virgin Galactic employees and investors using Virgin Galactic’s resources and technology while he was still working at Virgin Galactic,” the arbitration demand states.

Markusic says he was upfront with Virgin Galactic management about his plans to leave as they evolved throughout 2013. In the summer, he met with Whitesides and President Steve Isakowitz to propose that he start a rocket parts company and become a supplier to Virgin Galactic, according to legal papers.

Markusic says he informed Whitesides in November that he was leaving the company. Whitesides asked him to stay employed for a few more weeks and not to publicize his departure for six months because Virgin was attempting to sell the rocket team to Google, Markusic said in legal papers.

Virgin Galactic claims their propulsion chief left because he became frustrated with the company’s rejection of some of his rocket engine proposals. Markusic points to safety concerns and a lack of confidence in the company as key reasons for his departure.

“On or before April 21, 2013, the Respondent became increasingly concerned about Virgin Galactic’s viability and increasingly concerned about the safety of Space Ship II,” according to an arbitration document. “The Respondent also become increasingly concerned by representations being made by Virgin Galactic about Space Ship II’s safety and performance.”

At that time, Virgin was making expansive safety claims about SpaceShipTwo on its website.

“Safety is Virgin Galactic’s North Star,” the company stated. “Our excitement in 2002 on discovering Burt Rutan’s plans for SpaceShipOne focused on a number of design features which we believed in their own right could make the vehicles many thousands of times safer than any manned space craft of the past. Overlay that with Virgin’s experience in transportation operations and there potentially existed a unique opportunity to transform levels of safety from day one; a prerequisite for any responsible operator and in particular for Virgin Galactic. “

Virgin also advertised the “simplicity and safety” of SpaceShipTwo’s hybrid motor, claiming that the nitrous oxide and rubber used in it were “both benign, stable as well as containing none of the toxins found in solid rocket motors.”

The April 21, 2013 date Markusic cites was eight days prior to SpaceShipTwo’s first powered flight test. On an April 29 flight, the ship’s hybrid engine fired for 16 seconds. Subsequent tests in September and January included engine firings of 20 seconds apiece. On the third flight, SpaceShipTwo reached a maximum altitude of 71,000 – far below the internationally recognized boundary of space of 328,084 feet (100 km or 62.1 miles) known as the Karman line.

Sources have told Parabolic Arc that during that period Virgin Galactic and Scaled Composites, which built SpaceShipTwo, were struggling to get the hybrid engine to work. If the engine had been fired to full duration of about a minute, it would have caused dangerous vibrations and oscillations in the spacecraft.

SpaceShipTwo’s performance was also adversely affected by extra weight it gained during its construction. In 2014, Virgin Galactic officials admitted that the spacecraft could not reach 100 km (62.1 mile). SpaceShipTwo would instead fly to the 50 mile (80 km) boundary of space the U.S. Air Force used for awarding astronaut wings to X-15 pilots in the 1960’s.

Although Virgin Galactic had publicly advertised that SpaceShipTwo would fly above the Karman line, the company’s agreement with ticket holders only stipulates a flight to at least 50 miles (80 km).

Virgin Galactic’s arbitration against Markusic proceeded in private for a year before becoming public last month. Firefly’s King filed a public lawsuit in Los Angeles seeking to reduce the scope of a ruling signed by arbitrator LaMothe ordering Markusic, King, Blum and Firefly to turn over company documents, computers and other materials to Virgin Galactic for review.

The lawsuit states that King should be excluded from turning over documents because he was not a party to the employment agreement Markusic signed with Virgin Galactic. It also accuses Virgin Galactic of launching “an astonishingly broad fishing expedition to discover the proprietary and trade secret information of what it perceives to be a new competitor, Firefly.”

A hearing on King’s suit against Virgin Galactic is scheduled for Friday in Los Angeles.

On Dec. 28, Virgin Galactic filed a legal action in Clark County, Nev,, to compel Blum to comply with the arbitrator’s ruling to turn over documents to Virgin Galactic. A hearing on that suit is scheduled for Jan. 29 in Las Vegas.