Ex-CEO Of Waters Club Holdings Gets Prison for Investor Con
The former head of Waters Club Holdings, a supposed membership-based yacht-sharing company, has been sentenced to 18 months in prison for lying to investors. The former president and CEO, Andrew Deme, 52, of Fort Lauderdale, Florida, repeatedly lied to investors about the use of investor funds and an alleged public offering.
Waters Club Holdings Aimed to Dupe Investors
According to prosecutors, Waters Club Holding was advertised as the “Uber of yachting” – the company would apply the sharing economy model to yachting by allowing members to share and use yachts in various locations around the world.
To attract investors, Deme hired two promoters, Thomas Heaphy Jr. and Brian Ferraioli, who recruited at least 12 investors that collectively paid nearly $1.3 million for Waters Club shares.
Investors were told that their money would be used for business development, operations, and the expansion of the yacht fleet, and that the promoters were paid with Waters Club stock.
However, more than half of the money invested was used to pay sales commissions to Heaphy and Ferraioli. To conceal the payments, Deme, along with Heaphy and Ferraioli, said the money paid was consulting fees for “acquisition due diligence.”
Deme also told investors there would be an initial public offering, even implying that the company would be applying for a stock symbol and telling investors that the company had a robust balance sheet – a far cry from the truth. At the time, Waters Club Holdings had just $16,242 in assets and nearly $1.3 million in liabilities.
Waters Club Holdings Conspirators Sentenced to Prison
Deme pled guilty in early 2018 to one count of conspiracy to commit mail and wire fraud and waived his appellate rights if he received anything less than a 41-month prison term.
His co-conspirators, Heaphy and Ferraioli, pled guilty as well, and were both sentenced to six years in prison.
Have You Lost Money Investing with Waters Club Holdings?
If you lost money investing with Waters Club Holdings or think you may be a victim of an investment fraud scheme, contact an experienced investment fraud attorney today.
Speak with an Investment Fraud Attorney Today
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. represent individual investors who have lost money as a result of an investment fraud scheme.