SEC sues Semisub tour boat, alleging investor fraud

The Securities and Exchange Commission has filed a suit against the Hawaii Semisub tour boat and its founders, who they allege misappropriated at least $1.5 million from investors to pay for personal expenses, including $8,500 per month to rent a Kahala home and over $200,000 on psychics and recreational drugs.

The complaint, filed Aug. 3 in U.S. District Court, seeks an injunction to stop Semisub and its founders Curtiss Edward Jackson, 69, Semisub’s CEO, and company president Jamey Denise Jackson, 58, from violating federal securities laws. The SEC also seeks orders directing the defendants to return wrongfully gained profits with interest and to pay civil penalties.

According to the SEC filing, the Jacksons raised approximately $4.7 million from January 2017 to February 2022 from at least 129 investors who bought common stock, preferred shares and promissory notes, “purportedly for the purpose of construction and operation of a partially submersible vessel that would be used for commercial sightseeing tours in Hawaii.”

The SEC complaint reads, “To perpetuate the fraud and solicit additional funds to support their extravagant spending, defendants repeatedly lied to investors about the status of construction of the vessel and potential business relationships with reputable entities and organizations. To conceal the fraud, defendants provided misleading financial information to investors.”

The Honolulu Star-Advertiser was unable to reach Jamey Denise Jackson, but interviewed Curtiss Jackson on Monday. Curtiss Jackson told the Star-Advertiser that the couple has been separated for some time and that his estranged wife now lives in Florida.

“None of this baloney as far as misleading investors or anything to do with any funds that were misallocated — that’s not on me. I fully intend to cooperate,” he said. “I’m tired of being made to be a bad person when I’m not. I mean, I lived a life of luxury — (that’s crap). I worked my (bottom) off every day. I mean, my only entertainment was NASCAR on Saturdays sitting on the freaking couch trying to rejuvenate.”

Given their marital status and control over Semisub’s operations and bank accounts, the SEC said in its complaint that the couple “effectively acted as partners in the misappropriation of investor funds.”

The SEC alleges that the Jacksons also failed to disclose to the Internal Revenue Service any of the amounts they used for personal expenses as income on their tax returns. The suit breaks down these personal expenses to include:

>> $8,500 per month in rent for their residence in Hawaii.

>> $2,300 per month to pay a mortgage on their home in California.

>> $1,400 per month for car leases, including a Mercedes for Curtiss Jackson.

>> $27,000 per year on food and groceries.

>>$23,000 in personal retail expenses, including clothing, haircuts and visits to nail salons.

>> More than $167,000 in personal credit card bills.

>> More than $200,000 in cash for activities such as psychics and recreational drugs.

In addition to these expenditures, the SEC said that Semisub paid Jamey Denise Jackson an annual salary of approximately $150,000 from at least September 2017 through March 2020.

Curtiss Jackson said he did not manage Semisub’s financials himself because he suffers from the learning disorder dyslexia and at one point was undergoing chemotherapy for non-­Hodgkin’s lymphoma, an illness from which he is now in remission.

He said he hired a third-party accounting firm, which he declined to name, to “make sure there were no problems.”

Jackson said he does not consult with psychics or engage in recreational drug use, outside of cannabis, which he said he uses at night to combat sleep disorders from serving in Vietnam. He said he paid for the cannabis with his personal money, and noted that he never took a paycheck from Semisub.

“If the Feds felt they had a strong enough case, then they wouldn’t be charging me with a civil case; they would be just locking (me) up,” Jackson said, adding that he declined an earlier offer to pay $3 million and go to prison for 20 years.

“If you aren’t guilty, you don’t take the plea or run away,” he said.

This latest civil action is not the first time that Semisub has run afoul of financial regulators. In 2019 the California secretary of state suspended Semisub’s California registration, which had dated back to 2003.

The California Department of Corporations issued a desist and refrain order in 2009 faulting Jackson for not telling investors about an earlier 2008 cease and desist order issued by the Pennsylvania Securities Commission.

According to Pennsylvania Securities Commission records, Semisub’s investor relations materials dated February 2008 stated it had raised approximately $5.8 million of an $8 million offering. The materials also stated that a 12% rate of return for the stock was expected the first year the company was operational.

It was 2009 when Semisub, a Nevada corporation, established Honolulu as it principal place of business. Almost a decade later, frustrated investors, some of whom had invested tens of thousands in Semisub, were still telling the Star-­Advertiser that they had not seen any returns.

Jackson told the Star-­Advertiser that only about four or five Semisub investors out of 200 are disgruntled.

“It’s a high-risk investment, OK. If you couldn’t afford to lose the money, don’t put it in,” he said. “As far as what they bought, they bought my vision. They bought my vision long before Semisub even began to be built.”

It was not until July 2019 that the 72-foot semisubmersible jet-powered catamaran, now moored in Honolulu, received U.S. Coast Guard approval, paving the way for commercial tours to start in November 2019.

According to the SEC complaint, the U.S. Coast Guard shut down Semisub just months after its start as a result of problems with its engine, and Semisub ceased operations entirely in March 2020 at the beginning of the COVID-19 pandemic.

According to the SEC complaint, Jackson emailed investors on or about Feb. 1 stating that Semisub planned to reopen in the next few months.

On Monday the company’s website and booking engine were still up, and Jackson told the Star-Advertiser that he was targeting next week to restart. He said that the U.S. Coast Guard completed its “last sign-off” on Monday of the vessel, which completed its haul-out about three weeks ago.

Jackson claimed that he has enough capital to relaunch the boat, and said he has about eight employees ready to get back to work.

“I’m going to operate this boat and make money and go out and put some deals together and build some more. It’s a great boat. I put my heart and soul into this thing for a long time,” he said.