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5d ago

DOJ and SEC Charge Ex-Water Station Founder and Fund Manager in $275 Million Ponzi Scheme

Federal authorities unsealed criminal indictments, civil fraud charges Thursday accusing the defendants of marketing nonexistent water machines to investors, concealing conflicts

The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly/File Photo
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Overview

  • Ryan Wear, former owner of Water Station Management, was indicted on securities and wire fraud charges in Manhattan federal court for allegedly raising over $200 million by selling machines that largely did not exist.
  • The SEC filed parallel civil antifraud actions against Wear and his companies, accusing them of misrepresenting machine inventories and selling the same units to multiple investors.
  • Jordan Chirico, a former Jefferies portfolio manager, faces securities and investment adviser fraud charges for directing more than $107 million of his 3/5/2 Capital ABS Master Fund into Water Station bonds while hiding a personal $7 million stake.
  • Court filings allege the scheme used new investor money to pay earlier backers, inflicting losses estimated between $200 million and $275 million on retail investors including military veterans.
  • Water Station entered Chapter 11 bankruptcy in August 2024 and the prospects for victim recovery hinge on the outcome of bankruptcy proceedings and related civil enforcement actions.