SEC Charges Fund Manager in $275M Ponzi Scheme Involving Water Vending Machines

SEC Uncovers $275M Ponzi Scheme Involving Fund Manager and Water Vending Machine Scam

The U.S. Securities and Exchange Commission (SEC) has charged both the alleged operator of two Ponzi-style schemes and a fund manager who invested client assets into the fraudulent setup.

Ryan Wear, along with his firms — Water Station Management LLC and Creative Technologies, Inc. — allegedly orchestrated investment schemes that raised more than US$275 million between September 2016 and 2023, claiming the capital would be used to operate revenue-generating water vending machines.

However, according to the SEC, many of these machines either didn’t exist or had already been sold to others. Investigators claim Wear misappropriated tens of millions of dollars from the investment proceeds to make payments to earlier investors and to finance unrelated business ventures. By August 2024, Water Station filed for bankruptcy following the exposure of the alleged scheme.

The SEC’s complaint reveals that over US$165 million was collected from retail investors and another US$100 million from institutional investors between April 2022 and February 2024. The money was raised through the sale of notes supposedly backed by the vending machines.

In a related enforcement action, the SEC also charged Jordan Chirico, a fund manager at Leucadia Asset Management LLC, for allegedly breaching his fiduciary duty. Chirico is accused of investing in Water Station on behalf of 3|5|2 Capital ABS Master Fund LP even after realizing it may be a Ponzi scheme — all while hiding his personal financial interest in the company.

The SEC claims Chirico had personally invested more than US$7 million into Water Station and related entities between 2018 and 2021, receiving nearly US$3 million in distributions and an additional US$1.5 million in referral fees for directing other investors to the scheme.

By late 2021, Chirico began helping Water Station issue and sell the questionable notes and invested his fund in them without disclosing his own financial ties — not to his firm, nor to the fund’s investors. Even after becoming aware of discrepancies in the machine inventory and Water Station’s cash flow issues by late 2023, he increased the fund’s exposure from US$12.9 million in August 2023 to over US$90 million by February 2024, all while continuing to withhold disclosure of his personal interests.

Both Wear and Chirico now face criminal charges. Wear is charged with securities fraud and wire fraud, while Chirico is charged with investment adviser fraud and securities fraud. All charges remain allegations, and both individuals are presumed innocent unless proven guilty in court.

Ai Financial Insight

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