The executive of a yacht sharing club has admitted to operating an investment fraud scheme.

Andrew Deme, of Fort Lauderdale, Florida, was president, CEO and CFO of Waters Club Holdings Inc., a membership-based club with a fleet of yachts.

In pleading guilty, Deme admitted that promoters he hired misrepresented Waters Club to investors, including the fact that money would be used to develop the business and fund its operations. He also falsely claimed that promoters were not being paid commissions for recruiting investors. 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. Due in part to the payments to promoters, which totaled approximately $605,000, Waters Club lacked the capital to develop its membership-based club, did not pursue an IPO, and the shares purchased by investors were unsalable.

One of the victims of this investment scheme was a Connecticut resident who invested $475,000 in Waters Club.

Deme pleaded guilty to one count of conspiracy to commit mail and wire fraud, an offense that carries a maximum term of 20 years in prison. Sentencing is scheduled for June 7, 2018.

Deme has been released on a $100,000 bond since his arrest in December 2017.

Two Waters Club promoters, Thomas Heaphy Jr. and Brian Ferraioli, both of New York, previously pleaded guilty to the same charge. Heaphy and Ferraioli recruited at least 12 investors to pay a total of at least $1.29 million for shares of Waters Club stock. Heaphy’s total gain from the scheme was $307,658, and Ferraioli’s total gain was $297,546.