A second Long Island man has pleaded guilty to defrauding investors who thought they were buying into a “time share” fleet of yachts, the United States attorney in Connecticut said Monday.
Brian Ferraioli, 41, of Sayville, waived his right to an indictment and pleaded guilty to conspiracy to commit mail and wire fraud, a charge that carries up to 20 years in prison, prosecutors said.
Between August 2016 and February 2017, Ferraioli and Thomas Heaphy Jr., of East Moriches, persuaded at least 12 investors to pay at least $1,289,500 for shares of Waters Club before the initial public offering, officials said. The members were to jointly own yachts they could use for vacations, prosecutors said.
The money was to fund the company’s operations and develop the business, but instead, the two men took about half the money for their own use. This left the 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.
Ferraioli got $297,546 in the scam, prosecutors said, and Heaphy, 43, who pleaded guilty to the same charge on Thursday, took $307,658.
Their attorneys could not be reached for comment Monday evening.
Both men started selling their Waters Club securities after learning they were under FBI and IRS investigation in the summer of 2016 for an unrelated “pump-and-dump” stock scam that lasted from 2011 to 2016, authorities said. Both men last year pleaded guilty in that separate case to one count of conspiracy to commit mail and wire fraud and one count of tax evasion.