U.S. Couple Charged With Fraud in $28M Boatbuilding Scheme

semisub one
Image courtesy Semisub

Published Oct 28, 2022 10:27 PM by The Maritime Executive

A married couple in the U.S could be staring at a long time in jail after allegedly defrauding investors out of $28 million by diverting money from an unsuccessful boatbuilding and cruise tour business. 

The Justice Department has indicted Curtiss Jackson and Jamey Jackson, the owners of Hawaii-based shipbuilding firm Semisub Inc., on charges of securities fraud, conspiracy, mail fraud and wire fraud.

The couple allegedly engaged in a scheme to defraud buyers of their company's securities by misleading them about the company’s finances and operations. The Jacksons sold private investors shares in Semisub with plans to develop and build a fleet of semi-submersible vessels for tourism, raising over $28 million from more than 400 individuals.

However, they allegedly diverted a substantial share of these funds for personal use, taking hundreds of thousands of dollars to pay for luxury residences, a Mercedes-Benz automobile, vacations, psychics, marijuana, personal credit cards and cash withdrawals, among other things.

“For over 10 years, the defendants allegedly falsely told investors that a purported prototype vessel, dubbed 'Semisub One' was 'weeks' or 'months' away from beginning operations. They also allegedly falsely claimed that Semisub had entered into agreements or developed relationships with marquee government agencies and a well-known private equity firm to build and sell a fleet of additional vessels for $32 million each,” said the Justice Department in a statement.

The department claims that despite being barred from selling securities by authorities in the states of Pennsylvania and California, the defendants nonetheless continued to sell securities to investors across the U.S, including in those two states.

On its website, Semisub describes itself as a specialized luxury cruise boat company with a proprietary vessel design. The boat was intended to allow passengers to look out underwater through special viewing windows while enjoying creature comforts inside, including high-end cuisine.

The Jacksons raised money to fund the construction of the first prototype, dubbed "Semisub One." The company says that construction began in Long Beach, California in 2008 and continued in Hawaii over the next 10 years, and that its team worked closely with the U.S. Coast Guard's inspectors. In reality, the Coast Guard says that the physical prototype boat differed materially from the naval architect's plans in 38 successive inspections, and when it finally won its COI in 2019, it only operated for a few months before engine trouble took it offline again. 

The Jacksons made initial court appearances on October 25 in two different jurisdictions, Curtiss Jackson in Hawii and Jamey Jackson in Connecticut. 

Semisub's website still offers bookings for cruises on the Semisub One and employment opportunities for deckhands. Online reviews, last posted in 2021, suggest uneven customer satisfaction.