Andrew Deme, former CEO of the Waters Club Worldwide, has pleaded guilty for conspiring to commit fraud against investors. Deme admitted that he and two co-conspirators misled investors in a scheme involving a yacht-sharing venture that never materialised.

Government prosecutors said that one of the investors was a Connecticut resident who lost US$475,000. In total, at least a dozen people paid US$1.29m into the business for shares of Waters Club stock that could not be resold.

“In truth, Deme knew that approximately half of all the money paid by investors for shares of Waters Club was paid to the promoters as sales commissions,” said the statement by US Attorney John H. Durham. “Due in part to the payments to promoters, which totaled approximately US$605,204, Waters Club lacked the capital to develop its membership-based club, did not pursue an IPO (Initial Public Offering), and the shares purchased by investors were unsalable.”

Thomas Heaphy Jr and Brian Ferraioli have also pleaded guilty in the case. They will all be sentenced in coming months.

The Waters Club remains in business in Fort Lauderdale under new management, according to a story in the Sun-Sentinel.