A man from East Moriches, New York pleaded guilty before a judge in New Haven to a conspiracy charge stemming from an investment fraud scheme.

Thomas Heaphy, 43, along with an associate, admitted to operating a scheme that involved the promotion and sale of securities of Waters Club Worldwide Inc. and Waters Club Holdings Inc. (collectively, Waters Club), which provided yacht charter services to customers. From approximately August 2016 to February 2017, Heaphy and another promoter solicited prospective investors to purchase shares of Waters Club stock purportedly in advance of an initial public offering. According to Heaphy and his co-conspirators, Waters Club intended to form a membership-based “time share” club with a fleet of yachts that members jointly owned and could use for yachting vacations.

In pleading guilty, Heaphy admitted that he and his co-conspirators deceived prospective investors by assuring them their money would be used to develop the business and fund its operations. He also made misrepresentations by telling investors that he and his co-conspirators were being compensated with stock for recruiting investors. In truth, Heaphy received approximately half of all the money invested. Waters Club did not pursue an IPO, and the shares purchased by investors were unsalable.

Heaphy and the other promoter recruited at least 12 investors to pay a total of nearly $1.3 million for shares of Waters Club stock. One of the victims of the Waters Club scheme was a Connecticut resident who paid $475,000 to Waters Club. Heaphy’s total gain from this scheme was $307,658.

Heaphy began to sell Waters Club securities after he learned that he was under federal investigation for the stock pump and dump scheme in the summer of 2016.

At least six Waters Club victim-investors have also been identified as victims of the earlier stock pump and dump scheme.

was it today or was it yesterday? [CM1]