SEC Charges Against Ryan Wear and Associates
The Securities and Exchange Commission (SEC) has charged Ryan Wear, along with his companies Water Station Management LLC and Creative Technologies, Inc., for operating Ponzi-like schemes that defrauded over 250 investors and raised more than $275 million between September 2016 and February 2024.
Details of the Schemes
The schemes involved selling non-existent water machines as investment contracts. The SEC’s complaints also include charges against portfolio manager Jordan Chirico for breaching fiduciary duties by investing clients in Water Station notes without disclosing conflicts of interest.
“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, Chief of the Division of Enforcement’s Asset Management Unit.
The SEC’s complaint alleges that from September 2016 through September 2023, the defendants raised over $165 million from retail investors, including veterans, by offering investment contracts for water machines that supposedly generated revenues. However, thousands of these machines either did not exist or had already been sold to other investors.
In a related scheme, the defendants raised more than $110 million from institutional investors between April 2022 and February 2024 through the issuance of Water Station notes purportedly secured by water machines. Most of these machines were either non-existent or not owned by Water Station.
Misappropriation of Funds
The defendants allegedly misappropriated over $60 million of investor funds to make Ponzi-like payments to other investors and to fund Wear’s other business ventures, including Refreshing USA, LLC and Ideal Property Investments LLC, which are named in the complaint as relief defendants.
Chirico’s Violations
The SEC’s separate complaint against Chirico alleges he violated his fiduciary duty to his private fund client by directing the fund client to purchase Water Station notes without disclosing his significant personal investment in the business. The complaint also states that Chirico failed to act in the fund client’s best interests by causing it to substantially increase its investments in the notes despite red flags regarding the legitimacy of the purported water machine collateral.
Legal Actions and Investigations
The SEC’s complaints, filed in the U.S. District Court for the Southern District of New York, charge the defendants with violating antifraud provisions of federal securities laws. They seek injunctive relief, civil penalties, disgorgement of ill-gotten gains, and an officer and director bar against Wear.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against Wear and Chirico. The SEC’s investigation involved coordination with multiple federal agencies, including the FBI, IRS Criminal Investigation, and others.
