WILMINGTON (LN) — Delaware Chancellor Kathaleen St. J. McCormick on April 24, 2026 granted summary judgment against the sibling founders of a defunct AI physical-therapy startup on a fraudulent inducement claim, ruling that investor Kevin Kulak proved the pair lied about their product's capabilities to extract $250,000 in loans — while letting a derivative breach-of-fiduciary-duty claim survive for trial.
Kulak sued Itshak "Itzik" On and Keren-Or On, co-founders of Movado PT Technologies Inc., in January 2023, alleging they pitched him a mobile phone application that could perform real-time two- and three-dimensional musculoskeletal analysis using artificial intelligence — technology that, by Keren-Or's own admission at deposition, did not exist when they sent him the pitch deck.
The June 2020 investor presentation Itzik reviewed and sent to Kulak described Movado as offering autonomous care via mobile-phone that measures and analyzes key physical attributes of users and delivers personalized action plans, and claimed it was the only 2D and 3D real-time, mobile solution for musculoskeletal conditions. Keren-Or, who prepared the deck, told the court the autonomous therapeutic platform was only a vision and that the technology that we worked wasn't a product and that they couldn't do it in a mobile phone.
Itzik's response was less forthcoming. When asked at deposition whether the technology worked when he sent the presentation, he invoked the Fifth Amendment 18 times — including in response to questions as basic as What was Movado's business and did you receive a salary from Movado. McCormick found that conduct, combined with his role as president and board chairman, established at minimum a reckless disregard for the truth. His excuse that he was not a technical person did not, the chancellor wrote, excuse his reckless disregard of Movado's actual technological capabilities when soliciting millions of dollars from investors.
Kulak entered two convertible loan agreements — $100,000 in September 2020 and $150,000 in November 2020 — in reliance on the presentation. Although the conversion triggers occurred, Defendants never converted the loans and never repaid him.
On the derivative fiduciary duty claim, McCormick declined to grant summary judgment, finding the record too thin on the self-dealing allegations. Kulak uncovered roughly $740,000 in reimbursements paid to Movado's Israeli subsidiary and thousands of what appear to be personal transactions — Uber, Amazon, and similar charges — run through the company. But the chancellor found the financial records in evidence reflected only aggregate amounts, leaving too many factual disputes for summary adjudication.
The opinion also catalogued what McCormick called a sustained campaign of discovery abuse: deletion of email accounts for all Movado employees except Keren-Or; cellphones described as either lost or broken; failure to preserve WhatsApp communications; unsupervised self-collection of documents; and Itzik's admission at deposition that he was deliberately withholding evidence until the parties needed to go to court to prove costs. When asked when he would provide the documents, Itzik testified that it depends on your court.
McCormick held the adverse inference motion in abeyance, saying it remained difficult to fashion a remedy tailored to the harm without a fuller record. She closed with a pointed warning: since Kulak filed the action in 2023, Defendants have filed two motions for sanctions, a motion to compel, a motion to limit deposition, a motion for recusal, two motions for reargument, two motions for certification of interlocutory appeal, and a motion to intervene — all denied. McCormick wrote that she did not wish to impose sanctions and would prefer that Defendants proceed in a more focused and disciplined manner, but that she would not hesitate to act under Rule 11 if Defendants' troubling litigation conduct continues.
Itzik and Keren-Or On, who are representing themselves, list a Tel Aviv address on the docket.