Customers accuse Broward flying machine maker of fraud; Attorney General investigating

By: Ann Henson Feltgen, Browardbulldog.org 

A marketing photo for JetLev’s Acquaflyer

A Dania Beach firm that sells James Bond-style jetpacks is being sued for fraud by a California watersports company that alleges it lost more than $1 million because equipment it paid for was never delivered and contracts it was counting on were not honored.

Dean O’Malley, president of Newport Beach-based Jetpack America, filed the eight-count complaint against JetLev, a designer and manufacturer of water recreational systems. O’Malley’s firm distributed JetLev products.

O’Malley is not alone in his complaints. The Florida Attorney General’s office is investigating four complaints brought by unhappy customers against JetLev and Matt Rosenblatt, an Aventura resident described in the lawsuit as the company’s chief executive officer.

In addition, BrowardBulldog.org has identified nine other customers – individuals and companies – who accuse JetLev of bilking them. Those customers are from Arizona, California, New York, Texas, Washington, Australia, Canada and the Bahamas.

The lawsuit, filed Dec. 5 in U.S. District Court in Santa Ana, Ca., alleges fraud, breach of contract, misrepresentation, intentional interference with prospective economic advantage, conversion and negligence.

The defendants are JetLev, several affiliated companies, Rosenblatt and Seth Gerszberg, a New York-based financier who took control of JetLev in 2013.

While JetLev’s website is still up and the company remains listed as active in Florida’s corporate records, JetLev’s phone numbers no longer work.

JetLev Chief Executive Matt Rosenblatt, interviewed by CNBC in August 2013.

In an interview, Rosenblatt denied any wrongdoing, noting he never even got a paycheck from JetLev.

“I have never taken a penny out of JetLev,” said Rosenblatt, adding that he is no longer with the company, but believed it would soon file for bankruptcy. Customers, however, said he remains involved.

Neither Gerszberg or his New York City attorney, Gregg Donnenfeld, responded to numerous requests for comment by phone and email.

JetLev customers, including Jetpack America, say problems began last year after they made down payments on products but never received the equipment or a refund. Victims and former company insiders interviewed for this story say total losses by all customers range from $600,000 to more than $3 million.

THE COMPANY’S BEGINNINGS

Raymond Li, a Canadian inventor, founded JetLev. In 2011, the company introduced its first product – a water-propelled jetpack that allows thrill-seekers to soar up to 30 feet above the water. The devices use a floating pump that forces water up a hose to an apparatus worn by the user. The apparatus expels the water at high velocity, generating lift, according to the lawsuit.

The initial price tag was $100,000, a drawback to all but the wealthy, according to watersports publications and an Associated Press story.

Li went on to develop and patent two lower priced jetpacks – the Aquaflyer and Aquaboard – that retailed for about $10,000 each. The price drop led to an increase in demand.

But by late 2011, Li faced financial problems and Gerszberg became an investor, the lawsuit says.

Gerszberg became co-owner with Li and incorporated JetLev, LLC in Delaware in December 2011, according to corporate records. JetLev replaced Li’s company, JetLev Technologies Inc. In exchange, Gerszberg provided financial backing for the company.

In July 2013, Li assigned his patents to one of Gerszberg’s companies, according to the U.S. Patent and Trademark Office. Within a year, Li left the company and returned to Canada. Around the same time, Gerszberg brought in his friend Rosenblatt to run the company.

Li could not be reached for comment. However, former JetLev employees said Li was forced out and the company owed him money.

Rosenblatt blames Li for JetLev’s financial troubles.

“The former owner left the company in disarray. I came in and cut costs and provided new products,” Rosenblatt said.

JetLev’s corporate papers mention Gerszberg’s affiliation with well-known fashion designer Marc Ecko.

Gerszberg co-owns several companies affiliated with Ecko, a designer of urban hip-hop clothing popular in the 1990s, according to the lawsuit. One of those companies, a chain of retail stores across the United States that exclusively sell Marc Ecko clothing, recently filed for bankruptcy. The chain was later sold to another Gerszberg company, according to the lawsuit

Rosenblatt said Gerszberg pumped close to $5 million total into JetLev, adding that he invested money, too.

In August 2013, Rosenblatt fired many of the 20-some people who worked at JetLev, said Keith Paul, a former employee. Paul said Rosenblatt cut costs to the bone and told employees who threatened to sue for back pay that JetLev might file for bankruptcy.

The lawsuit alleges that Rosenblatt and Gerszberg created another Florida company, Aquaflier LLC, as part of a corporate shuffle intended to dodge Jetlev’s legitimate debts and shield its existing assets “so that Aquaflier could hit the ground running once it had a viable commercial product.’’

VICTIMS TELL SIMILAR STORIES

In interviews, JetLev’s customers identified Rosenblatt as the man who cheated them.

Jeff Gerlitz, a watersports enthusiast from Seattle, said he got caught up with Rosenblatt a year ago when he said he learned that JetLev was going to introduce two new and affordable jetpack products.

“I really wanted one,” said Gerlitz. “Matt said he’d cut me a deal for $8,000 if I’d wire him a $5,000 down payment.”  Gerlitz said he sent the payment in December 2013, but not his item.

In May in flew to Florida, rented a car and went to the address listed for JetLev where he met a few workers. He said he later received an email from Rosenblatt threatening him with arrest if he ever returned to the office.

Persons who complained to the Florida Attorney General’s Office, like those spoke with BrowardBulldog.org, told similar stories: that Rosenblatt wanted money up front, then didn’t deliver. Later, they said, he cut off all communication with them.

As of two months ago, Rosenblatt was still asking clients for money, according to Frazier Grandison, a Fort Lauderdale resident and ex-JetLev employee who said he originally had shares in JetLev and helped the company get on its feet with its initial product. He said he is considering a class action lawsuit against Rosenblatt as he too lost money.

“Rosenblatt is still taking money; a guy from the Bahamas sent in $50,000 a year ago and Matt told him a month ago that if he’d send in another $7,000 he would get the machines in a couple of weeks,” Grandison said in an interview last month.

O’Malley, the president of Jetpack America, said his company was the largest seller and supplier of JetLev products. A year ago, “Matt came in and promised different equipment and models,” O’Malley said, adding that he sent in the required deposits.

“He said he would deliver the products to us in November 2013. But then it was December, March, April and May. I had a number of clients waiting.”

O’Malley said that when he confronted Rosenblatt the JetLev CEO told him he planned to file for bankruptcy and walk away from the company.

But according to O’Malley’s lawsuit, the company has not filed for bankruptcy. A search of the U.S. Bankruptcy Court Website shows no record of a bankruptcy filing for JetLev.

“In fact, JetLev continues to offer jetpack equipment for sale, taking deposits on equipment that has yet to be delivered,’’ the lawsuit states. “Plaintiffs did not discover that JetLev had not gone bankrupt until just recently.”

The Florida Attorney General’s Office has urged victims to file a complaint by phone or online. They can call 1-866-9NO-SCAM or 1-850-414-3990.  To file a complaint online, go to www.myflorida.legal.com