New Haven, Connecticut – John H. Durham, United States Attorney for the District of Connecticut, Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, and Joel P. Garland, Special Agent in Charge of IRS Criminal Investigation in New England, today announced that on November 30, a federal grand jury in New Haven returned a five-count indictment charging Andrew Deme, 51, of Fort Lauderdale, Florida, with conspiracy and fraud offenses related to an investment fraud scheme.
DEME was arrested yesterday in Florida and is released on a $100,000 bond pending his arraignment in Connecticut.
As alleged in the indictment, DEME was the President and sole Director of Waters Club Worldwide, Inc. (“WCW”). In November 2016, WCW completed a merger with Petrus Resources Corporation and the merged company subsequently changed its name to Waters Club Holdings, Inc. (“Waters Club”). DEME became President, Chief Executive Office and Chief Financial Officer of Waters Club. 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.”
The indictment alleges that DEME and others solicited prospective investors in Connecticut and across the U.S. by representing that investors’ would be used to develop the business, and fund the operations, of WCW and Waters Club; that DEME’s co-conspirators were not receiving compensation for recruiting investors, or were exclusively compensated with stock in lieu of commissions or other payments, and that WCW and Waters Club were in sound financial condition. In addition, in December 2016, DEME filed a Notice of Exempt Offering of Securities (“Form D”) with the U.S. Securities and Exchange Commission in which DEME represented that no sales commissions or finders’ fees were being paid to any person in connection with the sale of Waters Club stock.
The indictment alleges that, in fact, WCW and Waters Club were not in sound financial condition, and a substantial portion of investors’ money was not used to develop the business of WCW and Waters Club. Approximately half of all money paid by investors for shares of WCW and Waters Club was misappropriated for the personal use of DEME and his co-conspirators, and DEME’s co-conspirators were compensated with sales commissions, and not stock, for recruiting investors.
The indictment charges DEME with one count of conspiracy to commit mail and wire fraud, two counts of wire fraud, and two counts of mail fraud. Each charge carries a maximum term of imprisonment of 20 years.
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