Curtiss Jackson, owner and CEO of Semisub Inc., says he expects his partially submersible vessel to start commercial tours in Hawaii’s waters next month.

Some of his investors say they’ll believe it when they see it. About 14 years after the company registered in California, the boat still isn’t up and running. None of its 400 investors have seen any returns despite promises that operations were imminent and the unusual vessel design would soon be sold to hungry buyers worldwide.

Jackson and his wife, Denise, who is the company’s president, received an Aug. 23 letter signed by more than 20 concerned investors, demanding that the couple set a definitive date for Semisub One’s launch and provide an accounting of the steps required to make that happen. Several members of the group told the Honolulu Star-Advertiser that only a portion of the group signed the letter because some feared retribution.

“Millions of dollars and endless years have been invested in Semisub, yet we still await our first customer,” the letter read. “More disconcerting is that Semisub continues to solicit us for more money, even after repeatedly reassuring some of us that no more cash was needed to complete the vessel. We feel a strong moral responsibility to ourselves, as well as new investors, to better understand where the money is going before willfully (or silently) allowing this to continue.”

About eight years ago Jackson registered Semisub as a Nevada corporation, and a year later moved the vessel from California to Hawaii, where the company is registered as a foreign corporation. In December 2011 Jackson told the Star-Advertiser that the vessel would operate out of Kewalo Basin by January 2012.

Investors were told in November that all was ready. Jackson told another news organization earlier this year that the vessel would sail by summer. Last month a September launch was teased. General Manager Lee Collins, who joined the company Aug. 15, sent a recent email to investors setting Oct. 16 as the first paying cruise target.

Staffing begins

Vessel funding falls under Rule 506 of Securities Exchange Commission Regulation D, which exempts companies from Securities Act registration under certain conditions. As a result, Semisub isn’t required to file performance reports like public companies do.

Jackson declined to say how much money has been raised, but described the company as a “$25 million venture” during a December 2011 interview with the Star-Advertiser. He told the newspaper Wednesday that the enterprise is fully funded by investors, save for his $3 million contribution.

Jackson said concerns are coming from fewer than 2 percent of investors and don’t reflect the vast majority, who understand the challenge of getting a unique vessel approved. He described the Coast Guard as “overly cautious” about Semisub, which is a “futuristic vessel that no one has ever built before.”

Jackson said he expects heavy demand for the 149-passenger vessel’s sunset dinner cruises, reef cruises and shark cruises. He’s gauging interest based on his experience with the Maui E-ticket, a similar submersible vessel that he built in 1990. Jackson said that boat, which he sold in the mid-1990s, was popular until it was destroyed by a storm while moored.

Investors will make even more on the Semisub prototype, which could be used in other tourism destinations and in marine biology and homeland security applications, he said.

“They are all aware of what they are into,” Jackson said of his investors. “They are big boys and women. The more serious investors, those with $1 million plus, understand the scope and vision. … They put money into the company every month.”

Millions of investment dollars have gone into Semisub, but some investors have said the company has far to go before it can offer paying cruises. Collins’ update said the company was still making boat repairs and had yet to pass a major Coast Guard inspection. Collins said the company recently hired FareHarbor.com for the company’s reservation system and is developing a marketing plan that includes a new website.

The company has hired a comptroller, an internet sales manager, a chief engineer and an engineering assistant, and Collins said he hopes to have 35 employees on board by mid-October.

Waiting on repairs

Collins said the company also would vet proposals for food service, although it had previously announced a partnership with chef Chai Chaowasaree. On Wednesday, Chaowasaree said he was blindsided by Collins’ statement that he would seek other proposals, since he had already made purchases for the business, which planned to launch initially under his liquor license. Chaowasaree said he met with Semisub on Thursday and expects the issue will be resolved.

“My lawyer is working on an agreement for them to sign,” Chaowasaree said. “I’m most concerned that they get their license. We’ve been talking to them for about five years. We are ready to go when they get their U.S. Coast Guard approval.”

Lt. Cmdr. Mike Lendvay, Coast Guard Honolulu inspections division chief, said Tuesday that Semisub “has a number of outstanding items.”

“We haven’t issued a (Certificate of Inspection), and I don’t have them scheduled for the near future,” Lendvay said. “I don’t know how soon that they can repair stuff — the timetable is a better question for the owner.”

Jackson and Collins blame permit uncertainty for the last-minute frenzy. But frustrated investors allege that recent share solicitations are indicative of an underfunded operation with an exaggerated outlook. Several investors in the concerned group said Joe Davis, a Semisub equity associate, purportedly sent them emails Nov. 7 and on Sept. 2, seeking gap funding for the venture’s final push.

“Semisubs will run at a very high profit margin and based on an 85 percent profit margin, we can generate about $2.2 million dollars in net profit per month for each boat. Most of this profit will be going back to the equity holders,” the Nov. 7 email said. “Semisub has a number of interested parties that want to joint venture and/or buy boats. One of the first vessels sold would be to an organization called NOAA, The National Oceanic and Atmospheric Administration U.S. Department of Commerce.”

NOAA has forwarded the letter to its Office of General Counsel’s enforcement section, according to the agency’s Honolulu-based spokeswoman, Jolene Lau. “No one from NOAA is working with this Semisub,” Lau said.

Davis did not return a call from the Star-Advertiser.

Jackson said Davis was not behind the email. “He didn’t write it,” he said, adding that disgruntled former employees have been causing trouble.

But Collins said he would look into the matter further. “If there is a misunderstanding with the investors, we’ll address that,” he said.

Semisub has trouble in 2 states

The company has been on the hot seat for communications before. The Pennsylvania Securities Commission issued an order against Semisub Inc., Jackson and his private-equity associate, Joshua M. Heller, in 2008 to cease and desist from offering and selling shares in their state. The order said Heller had told at least one unqualified Pennsylvania investor that Semisub was looking for investors “interested in making huge capital gains in the not so distant future.”

California Department of Corporations issued a 2009 desist and refrain order, faulting Jackson and Semisub for not telling California investors about the Pennsylvania order. The department said it had not issued a permit or other form of qualification authorizing any person to offer or sell shares of Semisub stock in California.

Jackson said the Pennsylvania issue is moot. He said the company is in good standing in California and that the order had nothing to do with his decision to register the business as a Nevada domestic corporation just four days later.

But Virginia Lucy, Pennsylvania Department of Banking and Securities spokeswoman, said the 2008 enforcement action is still on the books. Mark Leyes, California Department of Business Oversight spokesman, said California’s order hasn’t been rescinded, either. Department records also show that Semisub was suspended or forfeited by California’s Franchise Tax Board for failure to meet tax requirements.

Company leadership also encountered legal woes here. The Jacksons had several 2013 domestic fights documented in Oahu’s Family Court. The couple sought restraining orders against each other for physical abuse.

Jackson said the couple’s personal issues aren’t relevant to their business operations. But according to the couple’s own court filings, the alleged abuse occurred in a home that was rented by Semisub and used as an office for three people. The city’s assessed value of the 3,359-square-foot residence near the Kahala Hotel & Resort is more than $2.7 million.

“We hit a rough patch,” Jackson said in a Thursday phone interview. “It never hurt the company.”

Jackson said the company also has survived his own health issues, including major back surgery and a recent battle with cancer.

“I’m committed for me and all of my partners. We didn’t expect it to take this long. It’s God’s doing,” he said. “The whole key is to get the first one out so I can get out of here. I’ll go back to the mainland and get more of these vessels built and into the water.”