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Long IslandCrime

LI men sentenced to 6 years for stock, time share scams

Two Long Island men who defrauded investors in two scams were sentenced to six years in prison and ordered to help pay almost $7 million in restitution Monday, the U.S. attorney’s office in Connecticut said.

Thomas Heaphy Jr., 43, of East Moriches, and Brian Ferraioli, 41, of Sayville, were also ordered to serve 3 years of supervised release on two counts of conspiracy to commit mail and wire fraudone for a pump-and-dump scheme between 2011 and 2016 and one for taking money that was supposed to fund a “time share” fleet of yachts. They also pleaded guilty to tax evasion.

In the stock scam, the two men inflated the value of securities through lies and misleading information, according to a news release from U.S. Attorney John H. Durham. The companies that issued the stock were shell companies that had “virtually no legitimate business activities,” the release stated.

The pair kept about 25 percent of the money that they got from investors, with Ferraioli taking about $1.25 million and Heaphy about $719,000, officials said.

After Ferraioli and Heaphy learned they were under federal investigation, they started in August 2016, to persuade a dozen or more investors to pay at least $1,289,500 for shares of Waters Club, a yacht time share, in advance of an expected initial public offering, officials said. The members were to jointly own yachts they could use for vacations, prosecutors said.

The money was intended to fund the company’s operations and develop the business, but instead, the two men took about half the money for their own use, prosecutors said. This left Waters Club without the capital to develop its membership-based club and investors with unsellable shares of a company that never went public, prosecutors said.

Heaphy’s gain from the scheme was $307,658. Ferraioli’s total gain was $297,546, officials said.

Ferraioli’s attorney, John Kaley, said his client acknowledges what he did was wrong. He said Ferraioli steered investors in the stock sale to the Waters Club in hopes of helping them make up their losses, but he and Heaphy made the mistake of not telling investors about their commissions, the attorney said.

Ferraioli “stood up like a man and accepted responsibility for his actions and will spend the rest of his life trying to make amends,” said Kaley, whose offices are in Manhattan and Garden City.

Heaphy’s attorneys did not immediately return calls and emails.

Several others have also been sentenced in the schemes, which were investigated by the FBI, IRS and the U.S. Postal Service, with help from the Connecticut Department of Banking and the Hartford and Stamford police departments.

Restitution of about $5 million in the stock scheme must be paid by Heaphy, Ferraioli and other defendants in the case, while the two Long Islanders and the owner of the Waters Club were ordered to pay back $1.2 million, the U.S. attorney’s office said.

The two Long Islanders were released on bonds and ordered to report to prison July 9.

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