Founder of water vending machine company, portfolio manager, charged in $275M Ponzi scheme

Two men — Ryan Wear, of Everett, Washington, and Jordan Chirico, of Carmel, Indiana — have been indicted in New York on federal criminal charges related to two Ponzi-like schemes involving water vending machines, according to the Department of Justice (DOJ). The schemes, which ran between September 2016 and February 2024, allegedly defrauded more than $275 million from 250 investors, according to the Securities and Exchange Commission (SEC), which also brought civil charges involving the violation of antifraud provisions of federal securities laws in connection with the scheme. 

Wear, the Water Station Management LLC founder and owner, is charged with securities and wire fraud for allegedly raising millions from investors in scheme that, in many cases, involved machines that did not exist.  “Wear’s alleged scheme spanned more than seven years and ensnared hundreds of investors, including veterans who were solicited with higher guaranteed returns and exclusive financing options,” said Corey Schuster, SEC chief of the Division of Enforcement’s Asset Management Unit. The company was forced into bankruptcy in August 2024.

Chirico, who managed the hedge fund 3|5|2 Capital ABS Master Fund LP, which was a part of Jefferies Financial Group's Leucadia Asset Management, is charged in a separate indictment with investment adviser and securities fraud for concealing personal financial ties to Water Station Management. As the portfolio manager of the fund, he owed the investors fiduciary duties of loyalty and care. In breach of those duties, according to the indictment, Chirico caused the fund to invest nearly $100 million into what he came to learn was a Ponzi scheme which was masquerading as a legitimate company. Additionally, Chirico had secret and undisclosed financial stakes in the fraud for which he was using investors' money, holding a joint venture partnership worth over $7 million.

Prosecutors allege Wear operated Water Station as a Ponzi-like scheme, promising investors — many of them military veterans — that $8,500 purchases of water vending machines would generate passive income. In reality, far fewer machines were built than claimed, some were sold to multiple investors, and many did not exist at all, according to the DOJ. As revenue from the machines fell short, Wear allegedly used new investor money to pay earlier investors and diverted millions to expand his traditional vending business and cover personal expenses, before the company collapsed into bankruptcy.

Authorities say Chirico received more than $11 million in payments from Wear and Water Station between 2022 and 2024, even after learning in early 2024 that thousands of machines supposedly collateralizing the bonds did not exist, and that tens of millions in proceeds had been misappropriated.

"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," Clayton said, per the DOJ release.

Law enforcement officials called the scale and deception of the scheme “staggering,” noting that investors were defrauded of their life savings. “The greed and deception of this Ponzi scheme has resulted in the same way they have throughout history,” said Daniel Brubaker, U.S. Postal Inspection Service inspector in charge. FBI Seattle Special Agent in Charge W. Mike Herrington described the conduct as “absolutely unconscionable” and pledged continued efforts to hold financial fraudsters accountable.

Wear, 49, is charged with one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison if convicted. Chirico, 41, is charged with one count of investment adviser fraud, which carries a maximum sentence of five years, and one count of securities fraud, which carries a maximum sentence of 20 years in prison if convicted. The SEC’s complaints charge the defendants with violating antifraud provisions of the federal securities laws and seeks injunctive relief and civil penalties against the defendants, disgorgement of ill-gotten gains against the defendants and relief defendants, and an officer and director bar against Wear.

The case is being prosecuted by the Southern District of New York’s Securities and Commodities Fraud Task Force in cooperation with the Western District of Washington, the SEC, and multiple federal investigative agencies.