Florida Businessman Gets Jail For Sunken Yacht Club

NEW HAVEN, CT — A South Florida businessman has been sentenced to 18 months in jail for defrauding investors in what was billed as a worldwide yacht-sharing club. Fifty-two-year-old Andrew Deme was also ordered by U.S. District Judge Jeffrey A. Meyer in New Haven, Connecticut to pay nearly $1.3 million in restitution.

The sentence was announced Friday by U.S. Attorney John H. Durham in Connecticut. One Connecticut investor in Deme's Waters Club Worldwide, Inc. invested $475,000 in the business, according to federal prosecutors.

"Deme was the president and sole director of Waters Club Worldwide, Inc.," according to federal prosecutors, who said that the business changed its name to Waters Club Holdings in 2016 following a merger with Petrus Resources Corporation.

"DEME became president, chief executive officer and chief financial officer of Waters Club," prosecutors said. "According to a Waters Club document used to solicit investors and business partners, Waters Club sought to 'introduce a revolutionary sharing economy model to yachting'” by 'form[ing] a membership-based club with a fleet of yachts strategically located in the world’s leading cruising regions that members can share and use interchangeably for their yachting vacations.'”

In the end, at least 12 investors paid out a total of $1,289,500 into the company only to become yachting victims.

Half of the money went to promoters like Thomas Heaphy, Jr. and Brian Ferraioli in the form of sales commissions, according to prosecutors.

Federal prosecutors said that prospective investors in Waters Club were assured that the money would be used to develop the business and not for recruiting investors.

"In truth, DEME knew that approximately half of all the money paid by investors for shares of Waters Club was paid to Heaphy and Ferraioli as sales commissions," prosecutors said. "Due in part to these payments, Waters Club lacked the capital to develop its membership-based club, did not pursue an IPO and the shares purchased by investors were unsalable."

Heaphy’s made $307,658 while Ferraioli’s made $297,546., according to prosecutors. DEME was arrested on December 5, 2017 and pleaded guilty to one count of conspiracy to commit mail and wire fraud on March 15. He was ordered to report to prison on July 12.

Heaphy, of East Moriches, New York, and Ferraioli, of Sayville, New York, previously pleaded guilty in the scheme and were each sentenced to 72 months in prison. Their sentences also covered an unrelated investment fraud scheme.

The case was investigated by the FBI and IRS – Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorney Avi M. Perry.

Photo courtesy U.S. District Court for the District of Connecticut