OLYMPIA – The Washington State Department of Financial Institutions (DFI) filed a Statement of Charges against Everett, WA-based Water Station Management, its founder Ryan Wear, affiliated entities, and several of its salespersons for multiple violations of the Securities Act between 2016 and 2022.
DFI alleges that Water Station and its representatives offered and sold water vending machines that were serviced and managed by the company for a fee. Nationwide, at least 171 investors spent more than $129 million on this investment. At least 10 Washington residents invested approximately $11.2 million.
DFI alleges that to help sell its investment, Water Station misled its investors. It funneled at least 70 individuals toward small business loans while neglecting to inform them that using these loans to purchase Water Station investments would violate federal guidelines.
Additionally, DFI asserts that Water Station also executed a much more egregious scheme to defraud investors by misleading them about the number and location of the water vending machines. The company sold investors thousands of machines that either did not exist or did not exist in the places the company represented them to be. Of the nearly 15,000 machines investors purchased, only about 6,000 existed. More than half the machines that did exist were in a warehouse, not earning revenue.
“Washington’s securities laws exist to protect investors,” DFI Division of Securities William Beatty said. “Taking action against entities that make unlawful offerings and those that mislead investors is an important part of DFI’s mission of investor protection.”
Water Station raised hundreds of millions of dollars from investors and banks before ultimately being forced into involuntary bankruptcy proceedings late last year. Investors have been left to shoulder the burden for Water Station’s fraud and financial mismanagement.
The Statement of Charges announces DFI’s intent to order Water Station and its founder, Ryan Wear, to cease and desist from violations of the Securities Act, to pay a fine, and to pay costs related to the investigation. The action puts several Water Station salespersons on notice that DFI intends to order them to do the same.
DFI is the first state regulator to take public action against Water Station for violating state securities laws.