đľď¸ The Great Pretender
Ryan Wear, the mastermind behind this elaborate scheme, managed to raise a whopping $165 million by selling investment contracts for water machines that either didn't exist or were already sold to other investors. Imagine buying a machine you think will generate revenue, only to find out itâs a ghost!
Bold move: Wear and his companies even raised an additional $110 million from institutional investors with notes secured by these non-existent machines. Talk about taking 'fake it till you make it' to a whole new level.
đź Fiduciary Fail
Portfolio manager Jordan Chirico wasnât just asleep at the wheel; he actively drove his fund client into Wearâs scheme while hiding his own investments in the business. Conflict of interest much? Despite glaring red flags, Chirico kept increasing the fund's investments, prioritizing his personal gains over client interests.
âInvestment advisers like Mr. Chirico must act in their clientsâ best interests and disclose all material conflicts of interest,â said Corey Schuster from the SEC. Clearly, Chirico missed this memo.
đŁ The Fallout
The SEC's complaints are packed with allegations of fraud, seeking civil penalties, disgorgement of ill-gotten gains, and even barring Wear from holding officer and director positions. Meanwhile, the U.S. Attorneyâs Office has slapped criminal charges against both Wear and Chirico.
But the real kicker? Over $60 million of investor funds were misappropriated to make Ponzi-like payments and fund Wearâs other ventures. Thatâs one expensive house of cards.
