Jay Clayton, U.S. Attorney for the Southern District of New York | Department of Justice
Federal prosecutors have unsealed indictments charging two men in connection with a large-scale investment fraud scheme involving water vending machines, which allegedly resulted in more than $200 million in losses to investors and bondholders. The case was announced by Jay Clayton, United States Attorney for the Southern District of New York; Teal Luthy Miller, Acting United States Attorney for the Western District of Washington; Daniel Brubaker, Inspector in Charge of the New York Division of the U.S. Postal Inspection Service (USPIS); and W. Mike Herrington, Special Agent in Charge of the Seattle Field Office of the FBI.
Ryan Wear, former owner and operator of Water Station Management LLC (“Water Station”), is charged with securities and wire fraud after allegedly raising over $200 million from investors through false promises about water vending machines that often did not exist. Jordan Chirico, a former fund portfolio manager and investment adviser, faces charges including investment adviser fraud for directing more than $100 million into Water Station bonds while hiding his personal financial interests and knowledge of ongoing fraud.
“Ryan Wear raised hundreds of millions of dollars through false promises of a water vending machine business that became nothing more than a scam that victimized retail investors, including military veterans,” U.S. Attorney Jay Clayton said. “Jordan Chirico made matters worse by putting his own financial interests before his professional duties, investing clients’ money in Water Station—helping himself and hurting his investors—even after he knew it was a scam. One fraud does not excuse another. With the assistance of our dedicated law enforcement partners and our colleagues throughout the Department of Justice, this Office will continue to aggressively pursue financial frauds on Wall Street and Main Street.”
“From the relatively small city of Everett, Washington, to the major financial markets in New York, this fraud scheme had a broad reach,” said Acting U.S. Attorney Teal Luthy Miller. “We appreciate our partnership with the Southern District of New York on this investigation.”
“The greed and deception of this Ponzi scheme has resulted in the same way they have throughout history, with unwitting investors seeing their hard-earned money grossly misused, and the scammers arrested and held accountable for their crimes,” said USPIS Inspector in Charge Daniel Brubaker. “Postal Inspectors, along with our law enforcement partners, will continue to aggressively investigate and disrupt criminals from defrauding the American public.”
“The scale of this fraud, which resulted in at least $200 million in losses, is simply staggering,” said FBI Special Agent in Charge W. Mike Herrington. “And the deception and obfuscation these two men allegedly engaged in to siphon funds from retail investors, even U.S. military veterans, is absolutely unconscionable. FBI Seattle is committed to working with our law enforcement partners throughout Washington state and the nation to hold accountable those who abuse investors’ trust and defraud them of their hard-earned savings.”
According to court documents unsealed today before U.S. District Judge Jennifer L. Rochon, Wear operated Water Station as an investment scheme by misleading investors about how many water vending machines existed or were profitable. He raised capital by promising returns from individual investments or through bonds supposedly backed by actual machines but delivered far fewer units than claimed or sold interests multiple times on non-existent equipment.
The operation continued until August 2024 when Water Station entered bankruptcy after failing to raise enough new funds to pay existing obligations—a pattern typical for Ponzi schemes.
Chirico managed assets at 3|5|2 Capital ABS Master Fund LP (the “352 Fund”), part of Jefferies Financial Group’s Leucadia Asset Management division. Prosecutors allege Chirico breached fiduciary duties by steering nearly $100 million into Water Station bonds while concealing both his substantial personal stake—worth over $7 million—and ongoing payments he received from Water Station totaling more than $11 million between April 2022 and February 2024.
Even after learning that thousands of supposed collateralizing machines did not exist—and despite being told directly by Wear that tens of millions had been misappropriated—Chirico continued directing fund investments into Water Station without disclosing mounting risks or conflicts to clients.
Wear faces up to 20 years each on securities fraud and wire fraud counts; Chirico faces up to five years for investment adviser fraud plus up to 20 years for securities fraud if convicted.
Mr. Clayton commended investigative efforts by USPIS, FBI, IRS-Criminal Investigation Division, Small Business Administration OIG, FDIC OIG as well as support from other federal agencies during this multi-jurisdictional probe.
Assistant U.S. Attorneys Adam S. Hobson and Justin V. Rodriguez (Southern District) together with Dane Westermeyer (Western District) are prosecuting under oversight from SDNY’s Securities & Commodities Fraud Task Force.
All charges remain allegations unless proven at trial; defendants are presumed innocent until then.
