brokerwatch

“The largest franchise fraud case in the history of the United States” – Water Station Investor

According to the indictment the government recently filed against Ryan Wear, he knew the company was not the profitable enterprise he was representing it to be.  In doing so, he raised over $200 million from the victims of this alleged Ponzi scheme. He is also charged with misappropriating fund assets for personal use.

Investors were initially told by Wear that each investment of $8,500 would fund the manufacture of a water vending machine.  Wear later sold bonds that he falsely claimed were collateralized by Water Station’s vending machines.  He also allegedly made outlandish representations about Water Station’s financial position and growth prospects.  According to the government, there were far more Water Station vending machines sold than had ever been manufactured. Wear sold the same vending machines to multiple investors and claimed vending machines existed that had never been built.  The gig was up in August 2024 when Water Stations filed for bankruptcy.  The government estimates that investors lost more than $200 million. 

The SEC has also brought charges against Jordan Chirico for engaging in a scheme to defraud the 352 Fund while investing in Water Station.  Chirico was the portfolio manager of the 352 Fund and caused almost $100 million to be invested in the Water Station through a series of conflicted transactions that violated the fiduciary duties of loyalty and care that he owed to the 352 Fund investors.  Unbeknownst to investors, Chirico had a significant personal investment in Water Station.  He also failed to disclose that he was receiving over $90,000 a month from Water Station and had collected $1.6 million in referral fees for bringing in other investors.  

According to the indictment in United States of America v. Jordan Chirico, Chirico continued to solicit millions of dollars in investments into Water Station despite learning firsthand in January 2024 that thousands of bond collateralized machines did not exist.  He also heard Water Station called “the largest franchise fraud case in the history of the United States” by one Water Station investor.  Instead of sounding the alarm, Chirico directed the 352 Fund to buy another $20.8 million of additional Water Station-issued bonds.   

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If you’ve invested in Water Station or the 352 Fund, Contact Us today by filling out a Contact Form or by calling 585-310-5140 to schedule a FREE Case Evaluation.