Water Vending Machine Ponzi Scheme Charges $275 Million | Key Case
Water Vending machine Ponzi Scheme Charges for Station Management, LLC is a water-vending investment company accused of overselling machines and using new investor money to pay earlier investors. Regulators call it a Ponzi-style scheme; the company denies wrongdoing. Cases, bankruptcy, and restitution efforts remain ongoing as of 2025.
Case Title
Water Station Management, LLC: Asset-Backed Franchising or Ponzi Scheme?
Water Station Management, LLC—a Washington-based franchising company that sold water-filtration vending machines became the focal point of a large alleged investment fraud.
Prosecutors and regulators say founder Ryan Wear marketed water-vending “franchises” to retail and institutional investors, promising steady, passive returns.
Authorities contend the operation sold thousands of purported machines that either did not exist, were double-sold, or were located where investors were told they would not be, and that funds from later investors were used to pay earlier ones a classic Ponzi pattern.
Timeline (2016–2025)
| Year | Event |
|---|---|
| 2016–2019 | Water vending franchise sales expand nationwide |
| 2020–2022 | Institutional capital notes issued |
| 2023 | Complaints surface; regulators investigate |
| 2024 | Bankruptcy filed; trustee appointed |
| 2024–2025 | Civil & criminal charges filed; asset freeze orders |
| Late 2025 | Cases pending; restitution & recovery efforts ongoing |
Business Model Allegations
According to enforcement filings and regulator reports, investors were told that an $8,500 purchase would secure a water-filtration vending machine and ongoing franchise revenue.
The company reportedly marketed guaranteed or high returns and offered financing to certain groups, including veterans.
Investigators allege that far fewer machines were actually deployed than sold, many machines were sold to multiple investors, and the units that were deployed generated far less revenue than represented.
To cover shortfalls, authorities allege operators used new investor money to make payments to earlier investors and diverted millions for other ventures and personal expenses.
Structure and Scale
Investigators describe two linked phases of fundraising: an initial retail franchise offering (roughly 2016–2023) that targeted individual investors, and a later institutional fundraising phase (circa 2022–2024) that included corporate bond sales purportedly secured by machine assets.
Enforcement agencies report that the combined offerings raised well into the hundreds of millions of dollars and involved hundreds of investors.
State regulators have alleged that only a minority of the machines sold were actually in service.
Regulatory and Criminal Actions
Multiple federal and state enforcement actions have been filed:
Authorities allege:
- Thousands of vending machines were promised but never deployed
- Units were double-sold to multiple investors
- Returns were paid using new investor funds
- Investor money was diverted for unrelated use & personal benefit
- A portion of investors, including veterans, used loans to finance participation
Total raised allegedly reached hundreds of millions across hundreds of investors.
Issues Presented
- Did the company operate as a Ponzi scheme by using new investor funds to pay prior investors?
- Were the securities offered unregistered and sold through misleading representations?
- Did the defendants commit wire and securities fraud through misstatements regarding assets and machine deployment?
- What remedies and restitution are available to investors through bankruptcy and enforcement actions?
Procedural History
- Civil Enforcement: Filed by federal securities regulators seeking injunctions, disgorgement, penalties, and officer bars
- Criminal Charges: Federal indictments filed; defendants pleaded not guilty
- State Action: State financial regulator filed charges for unregistered securities sales and fraud
- Bankruptcy Filing (2024): Case converted to liquidation; trustee appointed
- Active Proceedings (2025): Civil, criminal, and recovery actions continue
Victims, Losses and Official Statement
Authorities report that hundreds of investors both retail individuals and institutions suffered losses.
Estimates of total investor losses run into the hundreds of millions of dollars. Many investors reportedly financed purchases through loans; a notable share were military veterans.
Officials from enforcement agencies publicly condemned the alleged misconduct as extensive and particularly harmful to vulnerable investors.
Bankruptcy, Creditors and Recovery Efforts
The operating companies entered bankruptcy in 2024. Bankruptcy proceedings led to appointment of a creditors’ committee and, later, a court-confirmed liquidation plan that consolidated assets and appointed a trustee to pursue recoveries for creditors and investors.
Bankruptcy filings and court orders are being used to marshal assets for distribution, and civil enforcement actions continue in parallel.
Current Status (late 2025)
As of late 2025, criminal and civil cases remain active.
Defendants have been charged and have entered pleas of not guilty; trials and related litigation are pending.
Regulators and trustees are pursuing financial remedies, restitution and asset recovery. Authorities continue to investigate related conduct and parties where appropriate.
