SEC v. JORDAN CHIRICO, No. 1:25-cv-06715, Southern District of New York (Aug. 15, 2025) — Complaint

Lee A. Greenwood
David Zetlin-Jones
Heather L. Shaffer
Ming Ming Yang
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
(212) 336-0978 (Zetlin-Jones)
[email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,

                                             Plaintiff,

                        -against-

JORDAN CHIRICO,

                                             Defendant.

COMPLAINT

25 Civ. 6715 (       )

JURY TRIAL DEMANDED

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
Defendant Jordan Chirico (“Chirico”), alleges as follows:
SUMMARY
1. From at least April 2022 through June 2024, Defendant Chirico, a portfolio manager
employed by registered investment adviser Leucadia Asset Management LLC (“Leucadia”), violated
his fiduciary duty to his private investment fund client, the 3|5|2 Capital ABS Master Fund, LP
(“352 Fund” or “Fund”) in at least two ways.  First, Chirico violated his duty of loyalty to the 352
Fund by directing that the Fund enter into conflicted investments in notes issued by Water Station
Management LLC (“Water Station” or the “Company”), which were purportedly collateralized by
water vending machines owned by the Company (“Water Station Notes” or “Notes”).  Chirico

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invested the 352 Fund’s assets in the Notes without disclosing to Leucadia or the 352 Fund that he
had a significant personal investment in Water Station, that he orchestrated the buyout of his own
investment with Notes offering proceeds, and that he continued to extend, and receive payment on,
millions of dollars of personal loans to Water Station’s founder, owner, and managing partner, Ryan
Wear (“Wear”).  Second, by at least August 2023, Chirico had notice of red flags indicating that at
least a portion of the purported collateral for the Notes may have been fabricated.  In the face of
these red flags, Chirico failed to act in the 352 Fund’s best interests by causing the Fund to
substantially increase its investments in Water Station Notes, while continuing to conceal his
personal financial entanglements with Water Station and Wear from Leucadia and the Fund.
2. Water Station was in the business of selling and servicing water vending machines
(“water machines”).  From 2018 to 2021, Chirico personally invested more than $7 million in water
machines purportedly sold and serviced by Water Station or its affiliates.  In connection with these
investments, Chirico received nearly $3 million in distributions from Water Station.  Chirico also
received approximately $1.5 million in “referral fees” from Water Station for recommending
friends, family members, and business associates who invested in the Company during the same
period.
3. Beginning in late 2021, Chirico worked with Water Station’s owner, Wear, to
coordinate Water Station’s issuance and sale of the Water Station Notes.  Upon the closing of the
first Notes issuance in April 2022, Chirico directed his advisory client, the 352 Fund, to invest nearly
$9 million in the Notes.  Between April 2022 and February 2024, Chirico grew the 352 Fund’s
position in the Notes to more than $90 million.  At no point during that period did Chirico, as
investment adviser to the 352 Fund, disclose to either Leucadia or the Fund that he was personally
invested in the very same business in which he had invested his client.

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4. Nor did Chirico disclose numerous other personal financial dealings with Wear and
Wear’s companies including (a) Chirico’s sale, in November 2022, of his water machine investments
to a Wear-controlled entity, which the Wear entity paid for using proceeds of the Notes offering; (b)
Chirico’s entry into a promissory note transaction with Wear, also in November 2022, under which
Wear was obligated to repay Chirico $1.9 million over the following 18 months; and (c) Chirico’s
extension of $1.45 million more in personal loans to Wear over the course of 2023.
5. By at least the fall of 2023, the Water Station Notes’ “Collateral Manager”—a
financial firm tasked with independently monitoring the performance of the assets backing the
Notes—notified Chirico that Water Station’s representations to it regarding the number and
existence of the water machines purportedly securing the Notes appeared inaccurate.  Chirico also
became aware of significant cash shortfalls that left Water Station behind on the money it owed to
other investors and posed a growing risk that Water Station would be unable to meet its repayment
obligations under the Notes.
6. Despite this knowledge, Chirico increased the 352 Fund’s investments in Water
Station Notes from $12.9 million in August 2023 (when he learned of the Collateral Manager’s
concerns) to more than $90 million by February 2024, while continuing to conceal his personal
financial relationships with Water Station and Wear from Leucadia and the Fund.  During this
period, Chirico pressured Wear to use available cash to make payments to Chirico and the friends,
family, and business associates Chirico had referred to Water Station as investors, thereby depriving
Water Station of cash it needed to meet its obligations to the 352 Fund.
7. In August 2024, Water Station entered receivership and was forced into involuntary
Chapter 11 bankruptcy proceedings in the wake of revelations that Wear had engaged in a fraudulent
Ponzi-like scheme in connection with his operation of Water Station and the sale of Water Station
Notes.  Water Station’s collapse decimated the value of the 352 Fund’s Notes investments.

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VIOLATIONS
8. By virtue of the foregoing conduct and as alleged further herein, Chirico has violated
Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C.
§§ 80b-6(1), (2)].
9. Unless Chirico is restrained and enjoined, he will engage in the acts, practices,
transactions, and courses of business set forth in this Complaint or in acts, practices, transactions,
and courses of business of similar type and object.
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
10. The Commission brings this action pursuant to the authority conferred upon it by
Advisers Act Section 209(d) and 209(e) [15 U.S.C. § 80b-9(d) and 80b-9(e)].
11. The Commission seeks a final judgment: (a) permanently enjoining Chirico from
violating the federal securities laws this Complaint alleges he has violated; (b) ordering Chirico to
disgorge all ill-gotten gains he received as a result of the violations alleged here and to pay
prejudgment interest thereon; (c) ordering Chirico to pay a civil money penalty pursuant to Advisers
Act Section 209(e) [15 U.S.C. § 80b-9(e)]; (d) permanently restraining and enjoining Chirico from,
directly or indirectly, acting as or being associated with any investment adviser, broker, or dealer; and
(e) ordering any other and further relief the Court may deem just and proper.
JURISDICTION AND VENUE
12. This Court has jurisdiction over this action pursuant to Advisers Act Section 214 [15
U.S.C. § 80b-14].
13. Chirico, directly and indirectly, has made use of the means or instrumentalities of
interstate commerce or of the mails in connection with the transactions, acts, practices, and courses
of business alleged herein.

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14. Venue lies in this District under Advisers Act Section 214 [15 U.S.C. § 80b-14].
Certain of  the acts, practices, transactions, and courses of  business alleged in this Complaint
occurred within this District.  Among other things, Leucadia’s principal place of  business is in New
York, New York, and the 352 Fund effected its transactions in Water Station Notes, including the
execution of  the indentures and note purchase agreements, there.
DEFENDANT
15. Chirico, age 41, is a resident of Carmel, Indiana.  From May 28, 2020, through June
5, 2024, Chirico was employed by Leucadia as the portfolio manager of the 352 Fund.  Before
joining Leucadia, Chirico was registered with the Financial Industry Regulatory Authority in
connection with his employment by four broker-dealer firms between 2006 and 2020 and, before
that, played soccer professionally.
OTHER RELEVANT INDIVIDUALS AND ENTITIES
16. Leucadia is a Delaware limited liability company with its principal place of business
in New York, New York, and is a wholly owned subsidiary of the Jefferies Financial Group Inc.
(“Jefferies”).  Leucadia has been registered with the Commission as an investment adviser since
January 2003.  Leucadia provides investment advisory and portfolio management services to private
investment funds and separately managed accounts.  Leucadia managed the 352 Fund and employed
Chirico as the portfolio manager for the 352 Fund.
17. The 352 Fund is a private fund established by Leucadia in 2021 that invested in
asset-backed securities, loans, and other financial instruments.  As of December 31, 2023, Leucadia’s
3|5|2 Capital Division (“352 Capital Division”), of which the 352 Fund was a part, had
approximately $641 million in assets under management.  Leucadia began to wind down the 352
Capital Division and the 352 Fund in July 2024 after revelations of Water Station’s alleged fraud and
the collapse of the 352 Fund’s investments in Water Station Notes.

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18. Wear, age 49, is a resident of Marysville, Washington.  Wear is the founder and
owner and, until August 2024, was the managing partner of Water Station and Creative
Technologies, LLC (“Creative”).  Wear owns and controls dozens of other limited liability
companies, some of which are related to Wear’s water and other vending machine businesses.
19. Water Station is a Washington limited liability company formed by Wear in 2016.
Water Station was formerly controlled and remains wholly-owned by Wear.  Water Station placed,
installed, operated, and serviced water machines, which were generally manufactured or sourced by
Creative.  In August 2024, Water Station was put into receivership through a private litigation in
Washington state court, captioned First Fed Bank v. Creative Technologies, LLC, Case No. 24-2-10753-3
SEA (Wa. Super. Ct.) (filed May 14, 2024) (the “Receivership Action”).  Later that month, a creditor
of Water Station filed an involuntary Chapter 11 bankruptcy petition against it, captioned Water
Station Management LLC, No. 24-bk-1864 (Bankr. E.D. Wa.) (filed Aug. 27, 2024) (transferred from
Bankr. S.D. Tex.).  Water Station is now managed by an independent chief restructuring officer.
20. Creative is a Washington limited liability company formed by Wear in 2013.
Creative was formerly controlled and remains majority-owned by Wear.  Creative manufactured,
sourced, and sold water machines that Water Station placed and serviced around the country.  In
May 2024, Creative was put into receivership through the Receivership Action.  In August 2024, a
creditor of Creative filed an involuntary Chapter 11 bankruptcy petition against it, captioned Creative
Technologies, LLC, No. 24-bk-1866 (Bankr. E.D. Wa.) (filed Aug. 27, 2024) (transferred from Bankr.
S. D. Tex.).  Creative is now managed by an independent chief restructuring officer.

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FACTS
I. CHIRICO PERSONALLY INVESTS IN WATER STATION.
A. Water Station’s Investment Opportunity
21. Beginning in at least 2016, Wear raised money for Water Station and Creative from
outside investors through the issuance of investment contracts tied to water machines.
22. Under these investment contracts, investors paid Creative a fixed price to purchase
particular water machines, which Water Station agreed to install and service at retail locations such
as gas stations, grocery stores, and fitness centers.
23. The investment contracts generally consisted of (a) a purchase order, pursuant to
which investors would pay Creative a fixed price (typically $8,500 per machine though sometimes as
much as $10,000) to become the “sole owner and title holder” of specified water machines; (b) a
service agreement, pursuant to which Water Station agreed to place and install the investor’s water
machines at locations within its network of retailers, to collect cash and other payments from the
machines, and to manage all day-to-day decisions concerning the machines in return for a monthly
servicing fee based on the machine’s profits; and (c) for certain investors, a franchise agreement,
pursuant to which WST Franchise Systems LLC (“WST”), a Water Station affiliate, licensed its
business model and trademark to investors in return for an additional fee.
24. Pursuant to its service agreements, Water Station promised investors steady returns
through monthly distributions.
B. Chirico Purchases Water Station Securities.
25. By early 2018, Chirico had been in the financial services industry for over a decade,
having worked in well-paid positions across multiple financial firms, including registered broker

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dealers and investment advisers.  Chirico’s focus was on trading and managing portfolios of asset-
backed instruments.
26. In or around early 2018, Chirico began researching Water Station as a potential
personal investment opportunity.  As part of his due diligence, Chirico had multiple telephone
conversations with Wear to get a better understanding of Water Station and its business model.
27. In February 2018, Chirico formed C3 Capital, Inc. (“C3”), an Indiana corporation he
owned jointly with his spouse, for the purpose of purchasing and holding his Water Station
investments.
28. In June 2018, Chirico, on behalf of C3, executed a purchase order with Creative to
acquire 350 water machines for $2.875 million.  The purchase order stated that C3 had paid an initial
deposit of $100,000, entitling it to ownership of 11 water machines, and that it would pay the
remaining amount upon the funding of a bank loan, after which it would own all 350 machines.
29. Chirico, on behalf of C3, simultaneously entered into a service agreement with Water
Station, pursuant to which Water Station agreed to install and service C3’s water machines and to
pay C3 monthly distributions of 50% of the net profits generated by C3’s machines.
30. Chirico negotiated the purchase order and service agreement with Wear, who signed
the documents on behalf of Creative and Water Station, respectively.
31. Chirico began receiving monthly distributions from his Water Station investment in
August 2018.
32. Chirico was approved for a bank loan in September 2018, which enabled him to
purchase the additional 339 water machines contemplated in the purchase order described in
paragraph 28 above.
33. Upon the funding of the loan, Chirico remitted the balance of his $2.875 million
initial Water Station investment.

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34. Also in September 2018, Chirico, on behalf of C3, executed a franchise agreement
with WST, pursuant to which WST licensed its trademark and business model to Chirico in
exchange for a franchise fee.
35. In March 2019, after his water machines failed to generate the level of returns
Chirico had expected, Chirico approached Wear to renegotiate the terms of his service agreement.
36. Under an amended service agreement, rather than base C3’s investment returns on
C3’s variable share of its water machines’ monthly net profits, Water Station (through Wear) agreed
to pay C3 fixed monthly distributions based on an annual rate of return of 15% of the amount of
C3’s Water Station investment.
37. Between late 2018 and early 2019, Wear engaged Chirico to assist in identifying and
procuring potential financing opportunities to grow Water Station’s water machine business.  In
exchange, Wear promised Chirico a referral fee based upon the value of any financing ultimately
secured.
38. In early 2019, Chirico and representatives from an international financial institution
conducted a site visit at Water Station’s offices and warehouses in Washington.  The financial
institution put together a term sheet for a transaction that would have advanced approximately $50
million to fund Water Station’s expansion, but Wear ultimately rejected the deal.
39. In March 2020, Chirico, acting on behalf of C3 and relying on funding from another
bank loan, executed a purchase order to acquire an additional 300 water machines for $2.55 million,
again with a service agreement providing for an annual return of 15% of C3’s investment to be paid
monthly.
40. In July 2021, Chirico, on behalf of C3, executed an additional purchase order and
service agreement with Creative and Water Station, purchasing an additional 29 water machines for
$246,500.

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41. In August 2021, Chirico, on behalf of C3, executed an additional purchase order and
service agreement with Creative and Water Station to purchase an additional 175 water machines for
$1.4875 million.
42. As was the case with his prior investments, Water Station promised a fixed 15%
annualized rate of return on each of these new investments to be paid monthly.
43. These additional purchases brought Chirico’s total investment in Water Station to
approximately $7.3 million and 854 water machines, making him one of the Company’s largest
individual investors.
44. In addition to his direct investments in Water Station machines, Chirico also received
compensation from Wear and Water Station through referral fees for recommending friends, family
members, and business associates to make their own investments in Water Station.
45. Wear promised Chirico and Individual A, a mutual friend of Chirico’s and Wear’s
who had extensive business dealings and investments with Wear and Water Station, a 12% finder’s
fee for any investment they brought into Water Station.  Chirico and Individual A agreed to split any
such referral fees they earned equally between themselves.
46. From approximately 2018 through 2021, Chirico and Individual A referred at least
twenty friends, family members, and business associates to invest in Water Station, at least eight of
whom were referrals made by Chirico personally.
47. Between 2018 and 2022, Water Station and/or Creative paid Chirico a total of
approximately $1.5 million for these referrals.
II. CHIRICO JOINS LEUCADIA.
A. Leucadia Recruits Chirico to Launch the 352 Capital Division.
48. In May 2020, Leucadia recruited Chirico as part of Leucadia’s effort to move into a
new investment strategy focused on asset-backed securities.

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49. Following Chirico’s hiring, Leucadia established the 352 Capital Division to offer
advisory and portfolio management services to clients through separately managed accounts and
private funds, with an emphasis on investments in consumer-oriented asset-backed securities.
50. In or around September 2020, Leucadia appointed Chirico to be the portfolio
manager and managing director of the 352 Capital Division, which Chirico named after a soccer
formation.
51. Under Chirico’s employment agreement, Leucadia delegated to Chirico the authority
to “make appropriate investment decisions (subject to any agreed-to risk limits or guidelines)” on
behalf of the 352 Capital Division.
52. In this capacity, Chirico provided investment advice to, among other clients, the 352
Fund, a private fund whose stated investment objectives were to “generate attractive risk-adjusted
returns primarily in the cash securitized market” by “structur[ing] a portfolio of asset-backed
securities, loans and other financial instruments . . .  to enhance long-term return goals.”
53. Chirico was the senior-most member of a small team managing the 352 Fund’s
investment portfolio and, at all relevant times, had the authority to make unilateral investment
decisions on the Fund’s behalf.
54. Chirico was the only investment professional identified in 352 Fund’s private
placement memorandum as providing investment advice to the Fund.
55. The private placement memorandum also disclosed the 352 Fund’s “Dependence
Upon the Portfolio Manager [Chirico]” as a risk factor, noting that the Fund was especially
dependent on Chirico’s “skill, judgment and expertise.”
56. Chirico received a base annual salary and cash bonuses for his work providing
investment advice to Leucadia clients, including the 352 Fund.

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57. Over the course of his employment at Leucadia, from May 2020 until his termination
in June 2024, Chirico was paid more than $5.3 million in salary and bonus payments.
58. As a portfolio manager at Leucadia, Chirico had unilateral discretion to make
investment decisions on behalf of certain Leucadia advisory clients (such as the 352 Fund) and
engaged in the business of advising Leucadia clients on the advisability of investing in securities, for
which he received compensation.
59. Accordingly, Chirico was at all relevant times an investment adviser under the
Advisers Act Section 202(a)(11) [15 U.S.C. § 80b-2(a)(11)].
B. Chirico’s Duties as an Investment Adviser
60. As an investment adviser, Chirico owed his investment advisory clients (including
the 352 Fund) a fiduciary duty to act in their best interests, which includes of a duty of loyalty and a
duty of care.
61. Chirico’s duty of loyalty required that he act with the utmost good faith, and make
full and fair disclosure of all material facts and employ reasonable care to avoid misleading clients.
The duty to disclose all material facts includes the duty to disclose all conflicts of interest that might
incentivize the adviser to render investment advice that is not disinterested.  To satisfy the duty of
loyalty, an investment adviser who does not eliminate a conflict of interest with his or her advisory
client must make an adequate disclosure of such conflicts of interest to the client and obtain the
client’s informed consent to the conflict.
62. The duty of care includes the duty to provide advice that is in the best interest of the
client, based on the client’s objectives, and to provide advice and monitoring over the course of the
advisory relationship.
63. Jefferies adopted and implemented policies, procedures, and practices to assure it
and its employees adhered to their fiduciary obligations generally, and to identify, monitor, and

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mitigate employee conflicts of interest specifically.  These policies, procedures, and practices were
applicable to Leucadia employees, including Chirico.
64. For example, Jefferies’ Employee Outside Activities and Affiliations Policy (“OBA
Policy”) required employees, including Leucadia employees, to complete and submit an Outside
Affiliation Request Form to Jefferies’ compliance department (“Compliance Department”) for
approval prior to engaging in a business activity with an outside organization or entity (an “Outside
Business Activity”).
65. Per the OBA Policy, in determining whether to approve an employee’s participation
in an Outside Business Activity, the Compliance Department would consider, among other things,
whether the activity conflicted with, or appeared to conflict with, either the firm’s or its clients’
interests or posed a reputational risk.
66. Under the OBA Policy, employees were required to certify annually to the
Compliance Department that they had received approval of all Outside Business Activities.
Employees were also required to report immediately to the Compliance Department any material
changes to their Outside Business Activities and/or if they identified any new actual or potential
conflicts arising from any previously-approved Outside Business Activities.
67. Jefferies’ Personal Trading and Private Securities Transactions/Investments Policy
(“Personal Trading Policy”) required employees, including Leucadia employees, to complete and
submit an online trade request through a Jefferies web-based system for approval before executing
any personal trade or private securities transactions in their personal trading accounts, including
before adding to or withdrawing from any previously-approved investment.  The Personal Trading
Policy defined “private securities” to include “non-publicly traded financial instruments and
securities and investments in private businesses, corporations and partnerships, including passive
investments in investment partnerships and funds.”  The Personal Trading Policy also warned that

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“[e]mployees must be extremely careful to avoid conflicts of interest as well as the appearance of a
conflict of interest,” noting that a conflict “exists when an employee’s personal interests, financial or
otherwise, are inconsistent with the interests of the [Jefferies] or its customers.”
68. Jefferies’ Investment Advisers Code of Ethics (“Code of Ethics”) was applicable to a
subset of Jefferies’ and Leucadia’s employees, including those “who provide investment advice on
behalf of the Adviser and are subject to the supervision and control of the Adviser.”  The Code of
Ethics provided that all persons covered by the policy “are fiduciaries to [their] advisory clients”
and, as such, “owe their clients (i) a duty of care to serve the best interests of clients and (ii) a duty
of loyalty which requires an advisor not subordinate its clients’ interests to its own interests, and to
eliminate or expose through full and fair disclosure conflicts of interest.”
69. The Code of Ethics further required employees “involved in making securities
recommendations to advisory clients” (as Chirico was) to submit at least annually to the Compliance
Department a list of all “reportable securities,” defined to include any “participation in any profit-
sharing agreement” and any “investment contract” held by any covered employee.
70. Leucadia’s marketing brochure, filed with the Commission in its Form ADV,
highlighted the applicability of the Code of Ethics to Leucadia’s employees, informing potential
investors that the Code of Ethics implements the principle that “the professional activities and
personal investment activities of our personnel must ... avoid any actual, potential or the appearance
of a conflict between the interest of our clients and those of our firm or our personnel.”
71. As an employee of Leucadia, and by virtue of his duties as portfolio manager and
managing director of the 352 Capital Division, Chirico was subject to each of the above-described
codes and policies and their various reporting requirements.

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72. Chirico was required to certify annually that he reviewed and understood the above-
described codes and policies, had adhered to their requirements, and had made all disclosures
required under them.
73. Chirico completed and submitted these annual compliance certifications each year
from 2020 through 2023.
III. CHIRICO’S UNDISCLOSED CONFLICTS OF INTEREST
A. Chirico’s Concealment of His Water Station Investments
74. When Chirico joined Leucadia in May 2020, he had already personally invested
approximately $5.2 million in Water Station securities through C3.
75. In August 2020, upon joining Leucadia, Chirico submitted a “New Hire
Questionnaire” to the Compliance Department.
76. In his New Hire Questionnaire, Chirico attested that he had read, and was in
compliance with, Jefferies’ compliance policies and procedures, including the Codes of Ethics, OBA
Policy, and Personal Trading Policy.
77. Despite his more than $5 million Water Station investment, Chirico falsely
represented in his New Hire Questionnaire that he did not have any private securities transactions
and/or Outside Business Activities or affiliations to disclose.
78. In December 2020, Chirico submitted an Outside Affiliation Request Form in which
he disclosed his ownership of C3 as an Outside Business Activity.
79. In this request, Chirico described C3’s business as an “[i]nvestment in Water related
vending Machines within retail establishments,” and stated that his role with the company entailed a
“passive investment in the vending equipment that distributes water in grocery and other retail
settings [to] be owned by my wife and I.”

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80. Chirico stated in this disclosure that C3 was neither “investment-related” nor “in his
coverage sector industry,” and he certified that, to the best of his knowledge, he was unaware of any
conflicts or potential conflicts of interest between C3’s interests and Leucadia’s or its clients.
81. Nowhere in this December 2020 request did Chirico identify Water Station by name,
or otherwise specify that the vending machine products he had invested in through C3 were
affiliated with Water Station and/or Creative.
82. By contrast, when Chirico submitted requests to pre-clear other private investments
over the course of 2021 and 2022, he identified by name the companies in which he was investing.
83. While employed at Leucadia, Chirico made an additional investment of more than $2
million in Water Station securities in July and August 2021.
84. Chirico did not disclose these additional investments as private securities transactions
or reportable holdings to the Compliance Department or to his supervisors at Leucadia.  Nor did
Chirico update his Outside Business Activity disclosure to reflect this additional investment activity.
B. Chirico Directs the 352 Fund to Invest in Water Station Notes.
85. In the fall of 2021, Chirico began working with Water Station and Wear on a debt
issuance to allow Water Station to raise more capital for the manufacture and acquisition of
additional water machines.
86. Chirico introduced Wear to contacts within his network of business associates to
assist Water Station in structuring the deal, including outside securities counsel and principals at a
registered broker-dealer who might serve as placement agent for any securities offering.
87. Over the course of the next several months, Water Station worked to structure an
offering of Water Station Notes, ultimately by retaining the broker-dealer Chirico recommended to
market and place the Notes with institutional investors.

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88. On April 29, 2022, Water Station issued the Notes, which consisted of Class A
Notes in the aggregate principal amount of $56.25 million and Class B Notes in the aggregate
principal amount of $15 million, under an indenture (“Indenture”).
89. Under the Indenture, these Water Station Notes were to be secured by 2,794 water
machines that Water Station pledged upon the Notes’ issuance, as well as new or existing water
machines (less than five years old) to be purchased from prior Water Station investors with Notes
proceeds (“Eligible Assets”).  Subject to limited and specified one-time exceptions applicable to the
initial funding, Water Station was prohibited from withdrawing Notes proceeds for any purpose
other than to acquire Eligible Assets.  The revenues generated by water machines securing the Notes
were to be used to make interest and principal payments to the noteholders.
90. The Indenture appointed an affiliate of the placement agent (the broker-dealer
Chirico introduced to Wear) as the Notes’ Collateral Manager.  Among other things, the Collateral
Manager was responsible for reviewing (a) documentation prepared by Water Station (including sales
agreements and invoices) to confirm that Notes proceeds were being used solely for their authorized
use of purchasing Eligible Assets; and (b) periodic financial and performance reporting relating to
the Eligible Assets securing the Notes (also prepared by Water Station) to assure that the Notes
were sufficiently collateralized.
91. Institutional Investor A, a financial services company focused on community
banking, purchased the entirety of the Class A Notes for $55.7 million.
92. Chirico directed the 352 Fund and a Jefferies affiliate to purchase the entirety of the
Class B Notes, committing approximately $8.9 million of the Fund’s assets and an additional
approximately $6.1 million from the Jefferies affiliate to fund the investment.

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93. At the time he caused the 352 Fund to make this initial investment in Water Station
Notes, Chirico knew he and his spouse (through C3) had personally invested more than $7 million
in water machines serviced by Water Station.
94. Chirico had also received by this point more than $2 million in distributions from his
Water Station investments (and stood to receive additional distributions) as well as more than $1.5
million in referral fees for bringing to Water Station the investments of his friends, family, and
business associates.
95. Chirico therefore knew that he was committing his client’s assets to an issuer in
whose financial viability he had a personal financial interest.
96. Chirico knew, recklessly disregarded, or should have known that his personal
financial interest in Water Station presented a conflict of interest with that of his advisory client
fund, and that his recommendation that the 352 Fund invest in Water Station alongside him was not
disinterested.
97. Chirico also knew, recklessly disregarded, or should have known that he failed to
provide full and fair disclosure of this conflict and to obtain his client’s informed consent before
investing his client’s assets in Water Station.
98. Chirico never disclosed his personal financial interest in Water Station to the 352
Fund, to his supervisors at Leucadia, or to the Compliance Department before directing the Fund to
invest in Water Station Notes.
99. Nor did Chirico update his 2020 Outside Affiliation Request Form to clarify or
specify that the investment in water machines that he held through C3 was in the same issuer into
which he directed the 352 Fund to invest.
100. To the contrary, Chirico falsely affirmed to the Compliance Department in annual
compliance certifications each calendar year from 2021 through 2023 that he had no additional

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information to report concerning his Outside Business Activities, while also certifying that he
understood his “ongoing requirement to advise Compliance promptly, if any Outside Activities that
I have either already disclosed or disclose in the future, change materially, or if I identify any new
potential conflicts.”
C. Chirico’s Ongoing Undisclosed Conflicts of Interest
101. Over the summer and fall of 2022, after the closing of the initial Water Station Notes
offering, Chirico and Wear discussed having Water Station repurchase C3’s water machines.
102. While these negotiations were ongoing, Leucadia’s chief operating officer (“Leucadia
COO”) inquired further about the nature of C3, Chirico’s disclosed Outside Business Activity.
103. In an email to the Leucadia COO on October 11, 2022, responding to this inquiry,
Chirico again declined to identify Water Station by name.  Chirico stated only that he played a
strictly “passive role” in C3’s operations, which involved an external investment in “vending” assets
that were “unrelated to debt/equity markets.”
104. Chirco’s October 11, 2022 email to the Leucadia COO was misleading because (a)
far from playing a merely “passive” role in C3, Chirico at the time was actively negotiating a buyout
of his investment with Wear and Water Station; and (b) by stating that his investment was “unrelated
to debt/equity markets,” Chirico concealed that the investment was in a company whose debt the
352 Fund held.
105. Chirico and Wear ultimately effectuated the buyout of Chirico’s water machines
through a series of transactions culminating in a share purchase agreement dated November 15,
2022, between C3 and Creative.  Pursuant to this agreement, Creative purchased all of C3’s shares
for approximately $7.3 million, about the same amount that Chirico and his spouse had invested
(through C3) in Water Station between 2018 and 2021.

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106. Chirico understood that the proceeds from the Water Station Notes offering
provided the funding for Creative’s repurchase of his machines.  In an August 2022 payment
schedule prepared in contemplation of the buyback of his water machines, Chirico recommended
that the payment be funded through “available cash in the bond deal” (i.e., Notes proceeds).
107. Chirico did not disclose Creative’s purchase of C3’s water machines to the 352 Fund,
to his supervisors, or to the Compliance Department.
108. Additionally, in connection with the C3 buyout, Chirico secured Wear’s agreement to
issue a promissory note to C3 in which Wear personally agreed to pay C3 $1.9 million via equal
installments on the first of every quarter starting January 1, 2023, with any remaining balance due on
April 1, 2024 (“Promissory Note”).
109. The Promissory Note was in addition to the $7.3 million Chirico received from
Creative for the repurchase of C3’s water machines.
110. In email correspondence and draft payment schedules in August and September
2022, Chirico described the additional amount reflected in the Promissory Note as compensation
owed to him for “Outstanding Referral[s]” or a “referral balance.”
111. Wear paid down the Promissory Note in three installments of $316,666 each in
January, April, and July 2023, and an additional payment of $800,000 in February 2024.  These
payments were made to Chirico from Water Station’s, Creative’s, and another Wear entity’s bank
accounts.
112. Chirico did not disclose to the 352 Fund, to his supervisors at Leucadia, or to the
Compliance Department that he was owed $1.9 million from the founder and managing partner of
the entity into which he had caused the 352 Fund to invest.
113. In January 2023, while the Promissory Note was still outstanding, Water Station
issued $25 million of additional Class A and B Notes under an Indenture supplement.

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114. Chirico directed the 352 Fund to purchase $3.3 million in additional Class B Notes
under the supplemental Indenture, upsizing his client’s investment in (and exposure to) Water
Station.  Again, at this time, Chirico did not disclose to the 352 Fund, to his supervisors at Leucadia,
or to the Compliance Department his continuing personal financial dealings with Water Station’s
owner.
115. On March 7, 2023, the Leucadia COO asked Chirico over email to explain the nature
of his disclosed Outside Business Activity, C3.  Chirico replied that C3 had been closed and
currently conducted “zero” Outside Business Activity.
116. This was misleading because Chirico did not inform the Leucadia COO that the
reason C3 had closed was because Water Station had repurchased Chirico’s water machines with
Notes proceeds.  Nor did Chirico disclose that Water Station’s owner owed him additional money
on the Promissory Note, or that Chirico had received payments from Water Station under the
Promissory Note.
117. In the same March 7, 2023 email, the Leucadia COO asked whether C3’s former
business activity had anything to do with coin counting kiosks manufactured by a company
(“Company A”) in which the 352 Fund held an investment.
118. At around the time of this inquiry to Chirico, the Leucadia COO had declined to
approve a pre-clearance request from another member of Chirico’s team to invest in Company A
because it would have presented a conflict between that employee’s interests and the 352 Fund’s
interests given the Fund’s investment in Company A.  The Leucadia COO reported this request to
Chirico, told Chirico that it was improper, and reminded Chirico that neither he nor his team could
personally invest in companies that were also part of the portfolio.  This incident was the basis of
the Leucadia COO’s March 7, 2023, inquiry seeking to confirm whether Chirico’s former Outside
Business Activity likewise had anything to do with Company A.

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119. Chirico replied, in reference to C3’s business activity:  “No, it was bottled water!”
120. This response was misleading because Chirico concealed that this “bottled water”
investment was actually an investment in water machines manufactured by Water Station, another
company (like Company A) in which Chirico had invested the 352 Fund’s assets.
121. The Leucadia COO instructed Chirico to “let compliance know that the business has
ceased operations.”  Shortly thereafter, Chirico submitted an update to the Compliance Department
stating that “the outside business activity within my portal has been closed as of Q4 2022.  The
business is no longer in operation and may be removed from the file.”
122. In May 2023, Individual A told Chirico that he intended to loan Water Station $1.4
million to assist Wear in meeting obligations to earlier Water Station investors.
123. Chirico provided a $700,000 loan to Individual A as part of this larger loan to Water
Station.
124. Chirico received $800,000 (his principal plus an additional $100,000) back from
Individual A one month later, in June 2023, in satisfaction of the May 2023 loan, which Chirico
understood reflected his share of the loan repayment from Water Station.
125. Chirico also made an additional $750,000 in loans to Wear entities in the fall of 2023,
on which he was paid back, by December 2023, a total of $815,000 (his principal plus $65,000 in
interest).
126.
In total, Chirico loaned $1.45 million to Wear and/or Wear’s entities in 2023.
127. Chirico never disclosed these loans to the 352 Fund, to his supervisors at Leucadia,
or to the Compliance Department.

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IV. CHIRICO INCREASES THE 352 FUND’S EXPOSURE TO WATER STATION
NOTES DESPITE RED FLAGS.
A. Chirico Discovers that Water Station Falsified Collateral for the Notes.
128. In the summer of 2023, the Collateral Manager began to question the accuracy of the
data reported by Water Station concerning the Notes’ collateral.
129. In or around August 2023, the Collateral Manager commissioned a third-party firm
to perform spot checks of the water machines that were purportedly collateralizing the Notes.
130. This firm determined that 163 of the 164 locations it visited had no Water Station
water machines on site, a finding the Collateral Manager conveyed to Chirico and Wear by email on
August 11, 2023.
131. The Collateral Manager further determined that it could not locate or account for
water machines associated with approximately 3,500 (out of the approximately 10,500) serial
numbers for the machines purportedly securing the Notes.
132. On August 16, 2023, the Collateral Manager informed Wear via email that Water
Station had 90 days (a “Cure Period”) per the terms of the Indenture to provide information
verifying the existence and location of “3000+ machines” ostensibly securing the Notes that were
“actually missing.”  Chirico was copied on this email.
133. On or around September 12, 2023, the Collateral Manager informed Chirico that
Wear was not allowing it access to the vending management system Water Station used to track each
of its water machines in real time, frustrating the Collateral Manager’s efforts to locate the missing
machines.
134. The Collateral Manager also communicated to Chirico on multiple occasions during
the Cure Period that Wear and Water Station were becoming increasingly delinquent in their
financial reporting and their payment obligations under the Indenture.

24
135. At the time, Chirico was also communicating with Wear about significant cash
shortfalls Wear was experiencing and about how those cash flow issues were impairing Wear’s ability
to satisfy distribution payments owed to other Water Station investors.
136. Aware of Wear’s liquidity constraints, Chirico pressed Wear in emails and phone calls
to prioritize payments to him and his spouse under the personal loans still outstanding to them, as
well as to a select group of Water Station investors that Chirico and/or Individual A had referred.
137. For example, on October 17, 2023, after learning that Wear had come into receipt of
approximately $400,000 in loan proceeds to another of Wear’s entities, Chirico wrote to Wear: “I
would appreciate a payment to my wife and I of $100K” and directed Wear to pay an additional
$270,000 to twelve of Chirico’s investor referrals (including his brother).
138. The same day, Wear paid Chirico and his spouse $100,000, as instructed.
139. The Cure Period expired on November 29, 2023, without Wear providing any
additional information about the missing water stations or curing the deficiencies of which he had
been notified by the Collateral Manager.
140. As of early December 2023, the Collateral Manager still had not located the water
machines it had identified as missing over the prior summer and continued to seek information from
Wear.  Chirico was copied on emails during this period between the Collateral Manager and Wear
relating to these efforts and was thus aware that these issues remained unresolved.
141. Under the Indenture, Water Station’s failure to validate the existence and operability
of the missing water machines identified by the Collateral Manager within the Cure Period should
have required Water Station to refund the purchase price for those machines to the noteholders.
However, Chirico did not take any steps to enforce this Indenture provision on behalf of the 352
Fund after the Cure Period expired.

25
B. Chirico Increases the 352 Fund’s Exposure to Water Station Notes in the Face
of These Red Flags.
142. Despite his knowledge of Wear’s inability to explain the status—or even demonstrate
the existence—of the water machines serving as collateral for the Water Station Notes, Chirico
repeatedly caused the 352 Fund to increase its investments in the Notes.
143. Institutional Investor A, which had purchased over $70 million of Class A Notes
between April 2022 and January 2023, was not informed by the Collateral Manager about any
potential issues with the Water Station Notes’ collateral until December 2023, after the Cure Period
had expired.
144. Upon learning of the Collateral Manager’s concerns about the Notes’ collateral,
Institutional Investor A agreed to sell the entirety of its position in the Class A Notes at a discount
to par of 82 cents on the dollar.
145. On December 15, 2023, Chirico directed the 352 Fund to purchase a significant
portion of Institutional Investor A’s Class A Notes at a discounted price for approximately $41.8
million, increasing the 352 Fund’s holdings of Water Station Notes from $12.9 million to $54.7
million.
146. Chirico directed that a Jefferies affiliate and a separately managed account he advised
purchase of the remainder of Institutional Investor A’s Class A Notes holdings at their offered
discounted price.
147. That same month, Chirico also authorized the 352 Fund to enter into another
supplemental Indenture (the third), whereby the Fund agreed to loosen the restrictions on certain
uses of funds by Water Station and gave Water Station the ability to substitute new collateral for
collateral that was “non-performing” (i.e., collateral that Wear could not demonstrate actually
existed).

26
148. On January 29, 2024, Chirico and Individual A participated in a phone call with
Wear, which Chirico recorded.
149. During the call, Chirico asked Wear if a substantial portion of the collateral for the
Water Station Notes were actually other types of vending machines, such as snack vending
machines, rather than water machines.  Individual A raised the possibility that a large portion of the
water machines did not exist at all.
150. Wear did not deny the allegations that that he had misrepresented the Notes
collateral and provided no explanation as to the existence or whereabouts of the missing water
machines.  Wear acknowledged that he did not know where the relevant water machines were and
suggested instead that Wear would look for alternative funding sources to repay Water Station’s
investors.
151. On the call, Individual A accused Wear of running “the largest franchise fraud in the
history of the United States.”
152. Around the time of the call, Chirico also became aware of over a dozen pending or
threatened lawsuits against Water Station and Wear by earlier investors in Water Station.  These
lawsuits contained allegations that Water Station and Wear had failed to pay them required
distributions and, in some cases, alleged that Wear was running a Ponzi scheme.
153. Despite the foregoing, on February 1, 2024, Chirico directed the 352 Fund to
purchase approximately $20.8 million in Water Station Notes (approximately $15.9 million of Class
A Notes, and approximately $4.9 million of Class B Notes) from the Jefferies affiliate holding them.
154. On February 2, 2024, Chirico caused the 352 Fund to enter into another
supplemental Indenture (the fourth), under which the Fund acknowledged that “certain Issuer
and/or Servicer covenant breaches, defaults, Events of Default have either occurred, or may occur .
. . .” and agreed to waive those events of default by Water Station “now and in the future.”

27
155. Also pursuant to the February 2, 2024, supplemental Indenture, Chirico directed the
352 Fund to purchase an additional $12.7 million in Class A Notes from Water Station at a discount
to par, and an additional $4 million in Class B Notes from Water Station at par, increasing the 352
Fund’s total investment in Water Station’s Notes to $92.2 million.
156. On February 5, 2024, Chirico personally received a lump sum repayment of $800,000
from Wear to pay down the Promissory Note.
157. Wear used the proceeds from the 352 Fund’s purchase of Water Station Notes on
February 2, 2024 to fund this payment.
158. On February 14, 2024, Chirico authorized the fifth supplemental Indenture, which
permitted Water Station to withdraw Notes proceeds without approval from the Collateral Manager
or the 352 Fund.
159. On February 16, 2024, Chirico authorized the release of all water machines and
related agreements, revenues, and proceeds, from the lien of the Indenture, which left the Water
Station Notes held by the 352 Fund entirely unsecured.
V. LEUCADIA ISSUES DEFAULT NOTICES AND TERMINATES CHIRICO.
160. In the spring of 2024, Chirico informed Leucadia that a Water Station investor
intended to file a complaint in federal court naming, among others, Chirico and Leucadia as
defendants.
161. After conducting an internal investigation, Leucadia terminated Chirico effective
June 5, 2024.
162. In May and June 2024, at the 352 Fund’s direction, the trustee for the Water Station
Notes issued notices of default to Water Station under the Indenture.
163. The 352 Fund’s valuation committee marked down the value of the Fund’s holdings
of Water Station Notes by 50% by June 2024.

28
164. The 352 Fund has not collected any interest on its outstanding Water Station Notes
since June 2024, nor has it recovered any of its principal investment.
165. Leucadia is in the process of winding down the 352 Fund.
FIRST CLAIM FOR RELIEF
Violations of Advisers Act Sections 206(1) and (2)

166. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1 through 165.
167. At all relevant times, Chirico was an investment adviser under Advisers Act Section
202(a)(11) [15 U.S.C. § 80b-2(a)(11)].
168. Chirico, by use of  the mails or any means or instrumentality of  interstate commerce,
directly or indirectly has: (i) knowingly or recklessly employed one or more devices, schemes, or
artifices to defraud any client or prospective client, and/or (ii) knowingly, recklessly, or negligently
engaged in one or more transactions, practices, and courses of  business which operated or would
operate as a fraud or deceit upon any client or prospective client.
169. By reason of  the foregoing, Chirico, directly or indirectly, singly or in concert, has
violated and, unless enjoined, will again violate Advisers Act Sections 206(1) and (2) [15 U.S.C.
§§ 80b-6(1) and 80b-6(2)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Chirico and his agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
Advisers Act Sections 206(1) and 206(2) [15 U.S.C. §§ 80b-6(1) and 80b6-(2)].

29
II.
Ordering Chirico to disgorge all ill-gotten gains he received directly or indirectly, with pre-
judgment interest thereon, as a result of the alleged violations.
III.
Ordering Chirico to pay a civil monetary penalty pursuant to Advisers Act Section 209(e) [15
U.S.C. § 80b-9(e)];
IV.
Permanently enjoining Chirico from directly or indirectly acting as, or being associated with,
any investment adviser, broker, or dealer.  For purposes of this paragraph, (i) a person is associated
with an investment adviser if such person is a partner, officer, or director of such investment adviser
(or performs similar functions), or directly or indirectly controls or is controlled by such investment
adviser, including any employee of such investment advisor; and (ii) a person is associated with a
broker or dealer if such person is a partner, officer, director, or branch manager of such broker or
dealer (or occupies a similar status or performs similar functions), directly or indirectly controls, is
controlled by, or is under common control with such broker or dealer, or is an employee of such
broker or dealer; and
V.
Granting any other and further relief this Court may deem just and proper.

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JURY DEMAND
 The Commission demands a trial by jury.

Dated:  New York, New York
August 14, 2025
_/s/ David Zetlin-Jones _____________________
Lee A. Greenwood
David Zetlin-Jones
Heather L. Shaffer
Ming Ming Yang
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
(212) 336-0978 (Zetlin-Jones)
[email protected]

Lee A. Greenwood 
David Zetlin-Jones 
Heather L. Shaffer 
Ming Ming Yang 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
(212) 336-0978 (Zetlin-Jones) 
[email protected] 
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
                                             Plaintiff, 
 
                        -against- 
 
JORDAN CHIRICO,    
  
                                             Defendant.  
 
 

 
 
COMPLAINT 

   
25 Civ. 6715 (       ) 

 
   

JURY TRIAL DEMANDED 
  

           
          

 
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

Defendant Jordan Chirico (“Chirico”), alleges as follows: 

SUMMARY 

1. From at least April 2022 through June 2024, Defendant Chirico, a portfolio manager 

employed by registered investment adviser Leucadia Asset Management LLC (“Leucadia”), violated 

his fiduciary duty to his private investment fund client, the 3|5|2 Capital ABS Master Fund, LP 

(“352 Fund” or “Fund”) in at least two ways.  First, Chirico violated his duty of loyalty to the 352 

Fund by directing that the Fund enter into conflicted investments in notes issued by Water Station 

Management LLC (“Water Station” or the “Company”), which were purportedly collateralized by 

water vending machines owned by the Company (“Water Station Notes” or “Notes”).  Chirico 

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invested the 352 Fund’s assets in the Notes without disclosing to Leucadia or the 352 Fund that he 

had a significant personal investment in Water Station, that he orchestrated the buyout of his own 

investment with Notes offering proceeds, and that he continued to extend, and receive payment on, 

millions of dollars of personal loans to Water Station’s founder, owner, and managing partner, Ryan 

Wear (“Wear”).  Second, by at least August 2023, Chirico had notice of red flags indicating that at 

least a portion of the purported collateral for the Notes may have been fabricated.  In the face of 

these red flags, Chirico failed to act in the 352 Fund’s best interests by causing the Fund to 

substantially increase its investments in Water Station Notes, while continuing to conceal his 

personal financial entanglements with Water Station and Wear from Leucadia and the Fund.   

2. Water Station was in the business of selling and servicing water vending machines 

(“water machines”).  From 2018 to 2021, Chirico personally invested more than $7 million in water 

machines purportedly sold and serviced by Water Station or its affiliates.  In connection with these 

investments, Chirico received nearly $3 million in distributions from Water Station.  Chirico also 

received approximately $1.5 million in “referral fees” from Water Station for recommending  

friends, family members, and business associates who invested in the Company during the same 

period.   

3. Beginning in late 2021, Chirico worked with Water Station’s owner, Wear, to 

coordinate Water Station’s issuance and sale of the Water Station Notes.  Upon the closing of the 

first Notes issuance in April 2022, Chirico directed his advisory client, the 352 Fund, to invest nearly 

$9 million in the Notes.  Between April 2022 and February 2024, Chirico grew the 352 Fund’s 

position in the Notes to more than $90 million.  At no point during that period did Chirico, as 

investment adviser to the 352 Fund, disclose to either Leucadia or the Fund that he was personally 

invested in the very same business in which he had invested his client.   

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4. Nor did Chirico disclose numerous other personal financial dealings with Wear and 

Wear’s companies including (a) Chirico’s sale, in November 2022, of his water machine investments 

to a Wear-controlled entity, which the Wear entity paid for using proceeds of the Notes offering; (b) 

Chirico’s entry into a promissory note transaction with Wear, also in November 2022, under which 

Wear was obligated to repay Chirico $1.9 million over the following 18 months; and (c) Chirico’s 

extension of $1.45 million more in personal loans to Wear over the course of 2023.   

5. By at least the fall of 2023, the Water Station Notes’ “Collateral Manager”—a 

financial firm tasked with independently monitoring the performance of the assets backing the 

Notes—notified Chirico that Water Station’s representations to it regarding the number and 

existence of the water machines purportedly securing the Notes appeared inaccurate.  Chirico also 

became aware of significant cash shortfalls that left Water Station behind on the money it owed to 

other investors and posed a growing risk that Water Station would be unable to meet its repayment 

obligations under the Notes. 

6. Despite this knowledge, Chirico increased the 352 Fund’s investments in Water 

Station Notes from $12.9 million in August 2023 (when he learned of the Collateral Manager’s 

concerns) to more than $90 million by February 2024, while continuing to conceal his personal 

financial relationships with Water Station and Wear from Leucadia and the Fund.  During this 

period, Chirico pressured Wear to use available cash to make payments to Chirico and the friends, 

family, and business associates Chirico had referred to Water Station as investors, thereby depriving 

Water Station of cash it needed to meet its obligations to the 352 Fund.    

7. In August 2024, Water Station entered receivership and was forced into involuntary 

Chapter 11 bankruptcy proceedings in the wake of revelations that Wear had engaged in a fraudulent 

Ponzi-like scheme in connection with his operation of Water Station and the sale of Water Station 

Notes.  Water Station’s collapse decimated the value of the 352 Fund’s Notes investments. 

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VIOLATIONS 

8. By virtue of the foregoing conduct and as alleged further herein, Chirico has violated 

Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. 

§§ 80b-6(1), (2)]. 

9. Unless Chirico is restrained and enjoined, he will engage in the acts, practices, 

transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, 

and courses of business of similar type and object.   

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

10. The Commission brings this action pursuant to the authority conferred upon it by 

Advisers Act Section 209(d) and 209(e) [15 U.S.C. § 80b-9(d) and 80b-9(e)].  

11. The Commission seeks a final judgment: (a) permanently enjoining Chirico from 

violating the federal securities laws this Complaint alleges he has violated; (b) ordering Chirico to 

disgorge all ill-gotten gains he received as a result of the violations alleged here and to pay 

prejudgment interest thereon; (c) ordering Chirico to pay a civil money penalty pursuant to Advisers 

Act Section 209(e) [15 U.S.C. § 80b-9(e)]; (d) permanently restraining and enjoining Chirico from, 

directly or indirectly, acting as or being associated with any investment adviser, broker, or dealer; and 

(e) ordering any other and further relief the Court may deem just and proper.  

JURISDICTION AND VENUE 

12. This Court has jurisdiction over this action pursuant to Advisers Act Section 214 [15 

U.S.C. § 80b-14].  

13. Chirico, directly and indirectly, has made use of the means or instrumentalities of 

interstate commerce or of the mails in connection with the transactions, acts, practices, and courses 

of business alleged herein. 

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14. Venue lies in this District under Advisers Act Section 214 [15 U.S.C. § 80b-14].  

Certain of  the acts, practices, transactions, and courses of  business alleged in this Complaint 

occurred within this District.  Among other things, Leucadia’s principal place of  business is in New 

York, New York, and the 352 Fund effected its transactions in Water Station Notes, including the 

execution of  the indentures and note purchase agreements, there.  

DEFENDANT 

15. Chirico, age 41, is a resident of Carmel, Indiana.  From May 28, 2020, through June 

5, 2024, Chirico was employed by Leucadia as the portfolio manager of the 352 Fund.  Before 

joining Leucadia, Chirico was registered with the Financial Industry Regulatory Authority in 

connection with his employment by four broker-dealer firms between 2006 and 2020 and, before 

that, played soccer professionally.   

OTHER RELEVANT INDIVIDUALS AND ENTITIES 

16. Leucadia is a Delaware limited liability company with its principal place of business 

in New York, New York, and is a wholly owned subsidiary of the Jefferies Financial Group Inc. 

(“Jefferies”).  Leucadia has been registered with the Commission as an investment adviser since 

January 2003.  Leucadia provides investment advisory and portfolio management services to private 

investment funds and separately managed accounts.  Leucadia managed the 352 Fund and employed 

Chirico as the portfolio manager for the 352 Fund. 

17. The 352 Fund is a private fund established by Leucadia in 2021 that invested in 

asset-backed securities, loans, and other financial instruments.  As of December 31, 2023, Leucadia’s 

3|5|2 Capital Division (“352 Capital Division”), of which the 352 Fund was a part, had 

approximately $641 million in assets under management.  Leucadia began to wind down the 352 

Capital Division and the 352 Fund in July 2024 after revelations of Water Station’s alleged fraud and 

the collapse of the 352 Fund’s investments in Water Station Notes. 

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18. Wear, age 49, is a resident of Marysville, Washington.  Wear is the founder and 

owner and, until August 2024, was the managing partner of Water Station and Creative 

Technologies, LLC (“Creative”).  Wear owns and controls dozens of other limited liability 

companies, some of which are related to Wear’s water and other vending machine businesses. 

19. Water Station is a Washington limited liability company formed by Wear in 2016.  

Water Station was formerly controlled and remains wholly-owned by Wear.  Water Station placed, 

installed, operated, and serviced water machines, which were generally manufactured or sourced by 

Creative.  In August 2024, Water Station was put into receivership through a private litigation in 

Washington state court, captioned First Fed Bank v. Creative Technologies, LLC, Case No. 24-2-10753-3 

SEA (Wa. Super. Ct.) (filed May 14, 2024) (the “Receivership Action”).  Later that month, a creditor 

of Water Station filed an involuntary Chapter 11 bankruptcy petition against it, captioned Water 

Station Management LLC, No. 24-bk-1864 (Bankr. E.D. Wa.) (filed Aug. 27, 2024) (transferred from 

Bankr. S.D. Tex.).  Water Station is now managed by an independent chief restructuring officer. 

20. Creative is a Washington limited liability company formed by Wear in 2013.  

Creative was formerly controlled and remains majority-owned by Wear.  Creative manufactured, 

sourced, and sold water machines that Water Station placed and serviced around the country.  In 

May 2024, Creative was put into receivership through the Receivership Action.  In August 2024, a 

creditor of Creative filed an involuntary Chapter 11 bankruptcy petition against it, captioned Creative 

Technologies, LLC, No. 24-bk-1866 (Bankr. E.D. Wa.) (filed Aug. 27, 2024) (transferred from Bankr. 

S. D. Tex.).  Creative is now managed by an independent chief restructuring officer.  

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FACTS 

I. CHIRICO PERSONALLY INVESTS IN WATER STATION.  

A. Water Station’s Investment Opportunity 

21. Beginning in at least 2016, Wear raised money for Water Station and Creative from 

outside investors through the issuance of investment contracts tied to water machines. 

22. Under these investment contracts, investors paid Creative a fixed price to purchase 

particular water machines, which Water Station agreed to install and service at retail locations such 

as gas stations, grocery stores, and fitness centers. 

23. The investment contracts generally consisted of (a) a purchase order, pursuant to 

which investors would pay Creative a fixed price (typically $8,500 per machine though sometimes as 

much as $10,000) to become the “sole owner and title holder” of specified water machines; (b) a 

service agreement, pursuant to which Water Station agreed to place and install the investor’s water 

machines at locations within its network of retailers, to collect cash and other payments from the 

machines, and to manage all day-to-day decisions concerning the machines in return for a monthly 

servicing fee based on the machine’s profits; and (c) for certain investors, a franchise agreement, 

pursuant to which WST Franchise Systems LLC (“WST”), a Water Station affiliate, licensed its 

business model and trademark to investors in return for an additional fee. 

24. Pursuant to its service agreements, Water Station promised investors steady returns 

through monthly distributions. 

B. Chirico Purchases Water Station Securities. 

25. By early 2018, Chirico had been in the financial services industry for over a decade, 

having worked in well-paid positions across multiple financial firms, including registered broker 

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dealers and investment advisers.  Chirico’s focus was on trading and managing portfolios of asset-

backed instruments.   

26. In or around early 2018, Chirico began researching Water Station as a potential 

personal investment opportunity.  As part of his due diligence, Chirico had multiple telephone 

conversations with Wear to get a better understanding of Water Station and its business model. 

27. In February 2018, Chirico formed C3 Capital, Inc. (“C3”), an Indiana corporation he 

owned jointly with his spouse, for the purpose of purchasing and holding his Water Station 

investments. 

28. In June 2018, Chirico, on behalf of C3, executed a purchase order with Creative to 

acquire 350 water machines for $2.875 million.  The purchase order stated that C3 had paid an initial 

deposit of $100,000, entitling it to ownership of 11 water machines, and that it would pay the 

remaining amount upon the funding of a bank loan, after which it would own all 350 machines.   

29. Chirico, on behalf of C3, simultaneously entered into a service agreement with Water 

Station, pursuant to which Water Station agreed to install and service C3’s water machines and to 

pay C3 monthly distributions of 50% of the net profits generated by C3’s machines.   

30. Chirico negotiated the purchase order and service agreement with Wear, who signed 

the documents on behalf of Creative and Water Station, respectively.   

31. Chirico began receiving monthly distributions from his Water Station investment in 

August 2018. 

32. Chirico was approved for a bank loan in September 2018, which enabled him to 

purchase the additional 339 water machines contemplated in the purchase order described in 

paragraph 28 above.   

33. Upon the funding of the loan, Chirico remitted the balance of his $2.875 million 

initial Water Station investment. 

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34. Also in September 2018, Chirico, on behalf of C3, executed a franchise agreement 

with WST, pursuant to which WST licensed its trademark and business model to Chirico in 

exchange for a franchise fee.   

35. In March 2019, after his water machines failed to generate the level of returns 

Chirico had expected, Chirico approached Wear to renegotiate the terms of his service agreement. 

36. Under an amended service agreement, rather than base C3’s investment returns on 

C3’s variable share of its water machines’ monthly net profits, Water Station (through Wear) agreed 

to pay C3 fixed monthly distributions based on an annual rate of return of 15% of the amount of 

C3’s Water Station investment. 

37. Between late 2018 and early 2019, Wear engaged Chirico to assist in identifying and 

procuring potential financing opportunities to grow Water Station’s water machine business.  In 

exchange, Wear promised Chirico a referral fee based upon the value of any financing ultimately 

secured.   

38. In early 2019, Chirico and representatives from an international financial institution 

conducted a site visit at Water Station’s offices and warehouses in Washington.  The financial 

institution put together a term sheet for a transaction that would have advanced approximately $50 

million to fund Water Station’s expansion, but Wear ultimately rejected the deal.   

39. In March 2020, Chirico, acting on behalf of C3 and relying on funding from another 

bank loan, executed a purchase order to acquire an additional 300 water machines for $2.55 million, 

again with a service agreement providing for an annual return of 15% of C3’s investment to be paid 

monthly.   

40. In July 2021, Chirico, on behalf of C3, executed an additional purchase order and 

service agreement with Creative and Water Station, purchasing an additional 29 water machines for 

$246,500.   

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41. In August 2021, Chirico, on behalf of C3, executed an additional purchase order and 

service agreement with Creative and Water Station to purchase an additional 175 water machines for 

$1.4875 million.   

42. As was the case with his prior investments, Water Station promised a fixed 15% 

annualized rate of return on each of these new investments to be paid monthly.   

43. These additional purchases brought Chirico’s total investment in Water Station to 

approximately $7.3 million and 854 water machines, making him one of the Company’s largest 

individual investors.   

44. In addition to his direct investments in Water Station machines, Chirico also received 

compensation from Wear and Water Station through referral fees for recommending friends, family 

members, and business associates to make their own investments in Water Station.   

45. Wear promised Chirico and Individual A, a mutual friend of Chirico’s and Wear’s 

who had extensive business dealings and investments with Wear and Water Station, a 12% finder’s 

fee for any investment they brought into Water Station.  Chirico and Individual A agreed to split any 

such referral fees they earned equally between themselves.   

46. From approximately 2018 through 2021, Chirico and Individual A referred at least 

twenty friends, family members, and business associates to invest in Water Station, at least eight of 

whom were referrals made by Chirico personally.   

47. Between 2018 and 2022, Water Station and/or Creative paid Chirico a total of 

approximately $1.5 million for these referrals. 

II. CHIRICO JOINS LEUCADIA. 

A. Leucadia Recruits Chirico to Launch the 352 Capital Division. 

48. In May 2020, Leucadia recruited Chirico as part of Leucadia’s effort to move into a 

new investment strategy focused on asset-backed securities.   

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49. Following Chirico’s hiring, Leucadia established the 352 Capital Division to offer 

advisory and portfolio management services to clients through separately managed accounts and 

private funds, with an emphasis on investments in consumer-oriented asset-backed securities.   

50. In or around September 2020, Leucadia appointed Chirico to be the portfolio 

manager and managing director of the 352 Capital Division, which Chirico named after a soccer 

formation.   

51. Under Chirico’s employment agreement, Leucadia delegated to Chirico the authority 

to “make appropriate investment decisions (subject to any agreed-to risk limits or guidelines)” on 

behalf of the 352 Capital Division. 

52. In this capacity, Chirico provided investment advice to, among other clients, the 352 

Fund, a private fund whose stated investment objectives were to “generate attractive risk-adjusted 

returns primarily in the cash securitized market” by “structur[ing] a portfolio of asset-backed 

securities, loans and other financial instruments . . .  to enhance long-term return goals.”   

53. Chirico was the senior-most member of a small team managing the 352 Fund’s 

investment portfolio and, at all relevant times, had the authority to make unilateral investment 

decisions on the Fund’s behalf.    

54. Chirico was the only investment professional identified in 352 Fund’s private 

placement memorandum as providing investment advice to the Fund.   

55. The private placement memorandum also disclosed the 352 Fund’s “Dependence 

Upon the Portfolio Manager [Chirico]” as a risk factor, noting that the Fund was especially 

dependent on Chirico’s “skill, judgment and expertise.”   

56. Chirico received a base annual salary and cash bonuses for his work providing 

investment advice to Leucadia clients, including the 352 Fund.   

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57. Over the course of his employment at Leucadia, from May 2020 until his termination 

in June 2024, Chirico was paid more than $5.3 million in salary and bonus payments.   

58. As a portfolio manager at Leucadia, Chirico had unilateral discretion to make 

investment decisions on behalf of certain Leucadia advisory clients (such as the 352 Fund) and 

engaged in the business of advising Leucadia clients on the advisability of investing in securities, for 

which he received compensation.  

59. Accordingly, Chirico was at all relevant times an investment adviser under the 

Advisers Act Section 202(a)(11) [15 U.S.C. § 80b-2(a)(11)].   

B. Chirico’s Duties as an Investment Adviser 

60. As an investment adviser, Chirico owed his investment advisory clients (including 

the 352 Fund) a fiduciary duty to act in their best interests, which includes of a duty of loyalty and a 

duty of care.   

61. Chirico’s duty of loyalty required that he act with the utmost good faith, and make 

full and fair disclosure of all material facts and employ reasonable care to avoid misleading clients.  

The duty to disclose all material facts includes the duty to disclose all conflicts of interest that might 

incentivize the adviser to render investment advice that is not disinterested.  To satisfy the duty of 

loyalty, an investment adviser who does not eliminate a conflict of interest with his or her advisory 

client must make an adequate disclosure of such conflicts of interest to the client and obtain the 

client’s informed consent to the conflict.   

62. The duty of care includes the duty to provide advice that is in the best interest of the 

client, based on the client’s objectives, and to provide advice and monitoring over the course of the 

advisory relationship. 

63. Jefferies adopted and implemented policies, procedures, and practices to assure it 

and its employees adhered to their fiduciary obligations generally, and to identify, monitor, and 

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mitigate employee conflicts of interest specifically.  These policies, procedures, and practices were 

applicable to Leucadia employees, including Chirico. 

64. For example, Jefferies’ Employee Outside Activities and Affiliations Policy (“OBA 

Policy”) required employees, including Leucadia employees, to complete and submit an Outside 

Affiliation Request Form to Jefferies’ compliance department (“Compliance Department”) for 

approval prior to engaging in a business activity with an outside organization or entity (an “Outside 

Business Activity”).   

65. Per the OBA Policy, in determining whether to approve an employee’s participation 

in an Outside Business Activity, the Compliance Department would consider, among other things, 

whether the activity conflicted with, or appeared to conflict with, either the firm’s or its clients’ 

interests or posed a reputational risk.  

66. Under the OBA Policy, employees were required to certify annually to the 

Compliance Department that they had received approval of all Outside Business Activities.  

Employees were also required to report immediately to the Compliance Department any material 

changes to their Outside Business Activities and/or if they identified any new actual or potential 

conflicts arising from any previously-approved Outside Business Activities.   

67. Jefferies’ Personal Trading and Private Securities Transactions/Investments Policy 

(“Personal Trading Policy”) required employees, including Leucadia employees, to complete and 

submit an online trade request through a Jefferies web-based system for approval before executing 

any personal trade or private securities transactions in their personal trading accounts, including 

before adding to or withdrawing from any previously-approved investment.  The Personal Trading 

Policy defined “private securities” to include “non-publicly traded financial instruments and 

securities and investments in private businesses, corporations and partnerships, including passive 

investments in investment partnerships and funds.”  The Personal Trading Policy also warned that 

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“[e]mployees must be extremely careful to avoid conflicts of interest as well as the appearance of a 

conflict of interest,” noting that a conflict “exists when an employee’s personal interests, financial or 

otherwise, are inconsistent with the interests of the [Jefferies] or its customers.”   

68. Jefferies’ Investment Advisers Code of Ethics (“Code of Ethics”) was applicable to a 

subset of Jefferies’ and Leucadia’s employees, including those “who provide investment advice on 

behalf of the Adviser and are subject to the supervision and control of the Adviser.”  The Code of 

Ethics provided that all persons covered by the policy “are fiduciaries to [their] advisory clients” 

and, as such, “owe their clients (i) a duty of care to serve the best interests of clients and (ii) a duty 

of loyalty which requires an advisor not subordinate its clients’ interests to its own interests, and to 

eliminate or expose through full and fair disclosure conflicts of interest.”   

69. The Code of Ethics further required employees “involved in making securities 

recommendations to advisory clients” (as Chirico was) to submit at least annually to the Compliance 

Department a list of all “reportable securities,” defined to include any “participation in any profit-

sharing agreement” and any “investment contract” held by any covered employee. 

70. Leucadia’s marketing brochure, filed with the Commission in its Form ADV, 

highlighted the applicability of the Code of Ethics to Leucadia’s employees, informing potential 

investors that the Code of Ethics implements the principle that “the professional activities and 

personal investment activities of our personnel must … avoid any actual, potential or the appearance 

of a conflict between the interest of our clients and those of our firm or our personnel.”   

71. As an employee of Leucadia, and by virtue of his duties as portfolio manager and 

managing director of the 352 Capital Division, Chirico was subject to each of the above-described 

codes and policies and their various reporting requirements. 

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72. Chirico was required to certify annually that he reviewed and understood the above-

described codes and policies, had adhered to their requirements, and had made all disclosures 

required under them.   

73. Chirico completed and submitted these annual compliance certifications each year 

from 2020 through 2023.    

III. CHIRICO’S UNDISCLOSED CONFLICTS OF INTEREST  

A. Chirico’s Concealment of His Water Station Investments 

74. When Chirico joined Leucadia in May 2020, he had already personally invested 

approximately $5.2 million in Water Station securities through C3.   

75. In August 2020, upon joining Leucadia, Chirico submitted a “New Hire 

Questionnaire” to the Compliance Department.   

76. In his New Hire Questionnaire, Chirico attested that he had read, and was in 

compliance with, Jefferies’ compliance policies and procedures, including the Codes of Ethics, OBA 

Policy, and Personal Trading Policy.    

77. Despite his more than $5 million Water Station investment, Chirico falsely 

represented in his New Hire Questionnaire that he did not have any private securities transactions 

and/or Outside Business Activities or affiliations to disclose.   

78. In December 2020, Chirico submitted an Outside Affiliation Request Form in which 

he disclosed his ownership of C3 as an Outside Business Activity.   

79. In this request, Chirico described C3’s business as an “[i]nvestment in Water related 

vending Machines within retail establishments,” and stated that his role with the company entailed a 

“passive investment in the vending equipment that distributes water in grocery and other retail 

settings [to] be owned by my wife and I.”   

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80. Chirico stated in this disclosure that C3 was neither “investment-related” nor “in his 

coverage sector industry,” and he certified that, to the best of his knowledge, he was unaware of any 

conflicts or potential conflicts of interest between C3’s interests and Leucadia’s or its clients.   

81. Nowhere in this December 2020 request did Chirico identify Water Station by name, 

or otherwise specify that the vending machine products he had invested in through C3 were 

affiliated with Water Station and/or Creative.   

82. By contrast, when Chirico submitted requests to pre-clear other private investments 

over the course of 2021 and 2022, he identified by name the companies in which he was investing.   

83. While employed at Leucadia, Chirico made an additional investment of more than $2 

million in Water Station securities in July and August 2021.    

84. Chirico did not disclose these additional investments as private securities transactions 

or reportable holdings to the Compliance Department or to his supervisors at Leucadia.  Nor did 

Chirico update his Outside Business Activity disclosure to reflect this additional investment activity.   

B. Chirico Directs the 352 Fund to Invest in Water Station Notes. 

85. In the fall of 2021, Chirico began working with Water Station and Wear on a debt 

issuance to allow Water Station to raise more capital for the manufacture and acquisition of 

additional water machines.  

86. Chirico introduced Wear to contacts within his network of business associates to 

assist Water Station in structuring the deal, including outside securities counsel and principals at a 

registered broker-dealer who might serve as placement agent for any securities offering.   

87. Over the course of the next several months, Water Station worked to structure an 

offering of Water Station Notes, ultimately by retaining the broker-dealer Chirico recommended to 

market and place the Notes with institutional investors.   

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88. On April 29, 2022, Water Station issued the Notes, which consisted of Class A 

Notes in the aggregate principal amount of $56.25 million and Class B Notes in the aggregate 

principal amount of $15 million, under an indenture (“Indenture”). 

89. Under the Indenture, these Water Station Notes were to be secured by 2,794 water 

machines that Water Station pledged upon the Notes’ issuance, as well as new or existing water 

machines (less than five years old) to be purchased from prior Water Station investors with Notes 

proceeds (“Eligible Assets”).  Subject to limited and specified one-time exceptions applicable to the 

initial funding, Water Station was prohibited from withdrawing Notes proceeds for any purpose 

other than to acquire Eligible Assets.  The revenues generated by water machines securing the Notes 

were to be used to make interest and principal payments to the noteholders.    

90. The Indenture appointed an affiliate of the placement agent (the broker-dealer 

Chirico introduced to Wear) as the Notes’ Collateral Manager.  Among other things, the Collateral 

Manager was responsible for reviewing (a) documentation prepared by Water Station (including sales 

agreements and invoices) to confirm that Notes proceeds were being used solely for their authorized 

use of purchasing Eligible Assets; and (b) periodic financial and performance reporting relating to 

the Eligible Assets securing the Notes (also prepared by Water Station) to assure that the Notes 

were sufficiently collateralized.    

91. Institutional Investor A, a financial services company focused on community 

banking, purchased the entirety of the Class A Notes for $55.7 million. 

92. Chirico directed the 352 Fund and a Jefferies affiliate to purchase the entirety of the 

Class B Notes, committing approximately $8.9 million of the Fund’s assets and an additional 

approximately $6.1 million from the Jefferies affiliate to fund the investment.  

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93. At the time he caused the 352 Fund to make this initial investment in Water Station 

Notes, Chirico knew he and his spouse (through C3) had personally invested more than $7 million 

in water machines serviced by Water Station.   

94. Chirico had also received by this point more than $2 million in distributions from his 

Water Station investments (and stood to receive additional distributions) as well as more than $1.5 

million in referral fees for bringing to Water Station the investments of his friends, family, and 

business associates.   

95. Chirico therefore knew that he was committing his client’s assets to an issuer in 

whose financial viability he had a personal financial interest.   

96. Chirico knew, recklessly disregarded, or should have known that his personal 

financial interest in Water Station presented a conflict of interest with that of his advisory client 

fund, and that his recommendation that the 352 Fund invest in Water Station alongside him was not 

disinterested. 

97. Chirico also knew, recklessly disregarded, or should have known that he failed to 

provide full and fair disclosure of this conflict and to obtain his client’s informed consent before 

investing his client’s assets in Water Station. 

98. Chirico never disclosed his personal financial interest in Water Station to the 352 

Fund, to his supervisors at Leucadia, or to the Compliance Department before directing the Fund to 

invest in Water Station Notes.   

99. Nor did Chirico update his 2020 Outside Affiliation Request Form to clarify or 

specify that the investment in water machines that he held through C3 was in the same issuer into 

which he directed the 352 Fund to invest.   

100. To the contrary, Chirico falsely affirmed to the Compliance Department in annual 

compliance certifications each calendar year from 2021 through 2023 that he had no additional 

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information to report concerning his Outside Business Activities, while also certifying that he 

understood his “ongoing requirement to advise Compliance promptly, if any Outside Activities that 

I have either already disclosed or disclose in the future, change materially, or if I identify any new 

potential conflicts.”   

C. Chirico’s Ongoing Undisclosed Conflicts of Interest 

101. Over the summer and fall of 2022, after the closing of the initial Water Station Notes 

offering, Chirico and Wear discussed having Water Station repurchase C3’s water machines.   

102. While these negotiations were ongoing, Leucadia’s chief operating officer (“Leucadia 

COO”) inquired further about the nature of C3, Chirico’s disclosed Outside Business Activity.   

103. In an email to the Leucadia COO on October 11, 2022, responding to this inquiry, 

Chirico again declined to identify Water Station by name.  Chirico stated only that he played a 

strictly “passive role” in C3’s operations, which involved an external investment in “vending” assets 

that were “unrelated to debt/equity markets.”   

104. Chirco’s October 11, 2022 email to the Leucadia COO was misleading because (a) 

far from playing a merely “passive” role in C3, Chirico at the time was actively negotiating a buyout 

of his investment with Wear and Water Station; and (b) by stating that his investment was “unrelated 

to debt/equity markets,” Chirico concealed that the investment was in a company whose debt the 

352 Fund held.   

105. Chirico and Wear ultimately effectuated the buyout of Chirico’s water machines 

through a series of transactions culminating in a share purchase agreement dated November 15, 

2022, between C3 and Creative.  Pursuant to this agreement, Creative purchased all of C3’s shares 

for approximately $7.3 million, about the same amount that Chirico and his spouse had invested 

(through C3) in Water Station between 2018 and 2021. 

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106. Chirico understood that the proceeds from the Water Station Notes offering 

provided the funding for Creative’s repurchase of his machines.  In an August 2022 payment 

schedule prepared in contemplation of the buyback of his water machines, Chirico recommended 

that the payment be funded through “available cash in the bond deal” (i.e., Notes proceeds).     

107. Chirico did not disclose Creative’s purchase of C3’s water machines to the 352 Fund, 

to his supervisors, or to the Compliance Department.   

108. Additionally, in connection with the C3 buyout, Chirico secured Wear’s agreement to 

issue a promissory note to C3 in which Wear personally agreed to pay C3 $1.9 million via equal 

installments on the first of every quarter starting January 1, 2023, with any remaining balance due on 

April 1, 2024 (“Promissory Note”).   

109. The Promissory Note was in addition to the $7.3 million Chirico received from 

Creative for the repurchase of C3’s water machines. 

110. In email correspondence and draft payment schedules in August and September 

2022, Chirico described the additional amount reflected in the Promissory Note as compensation 

owed to him for “Outstanding Referral[s]” or a “referral balance.”   

111. Wear paid down the Promissory Note in three installments of $316,666 each in 

January, April, and July 2023, and an additional payment of $800,000 in February 2024.  These 

payments were made to Chirico from Water Station’s, Creative’s, and another Wear entity’s bank 

accounts. 

112. Chirico did not disclose to the 352 Fund, to his supervisors at Leucadia, or to the 

Compliance Department that he was owed $1.9 million from the founder and managing partner of 

the entity into which he had caused the 352 Fund to invest. 

113. In January 2023, while the Promissory Note was still outstanding, Water Station 

issued $25 million of additional Class A and B Notes under an Indenture supplement.     

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114. Chirico directed the 352 Fund to purchase $3.3 million in additional Class B Notes 

under the supplemental Indenture, upsizing his client’s investment in (and exposure to) Water 

Station.  Again, at this time, Chirico did not disclose to the 352 Fund, to his supervisors at Leucadia, 

or to the Compliance Department his continuing personal financial dealings with Water Station’s 

owner. 

115. On March 7, 2023, the Leucadia COO asked Chirico over email to explain the nature 

of his disclosed Outside Business Activity, C3.  Chirico replied that C3 had been closed and 

currently conducted “zero” Outside Business Activity.   

116. This was misleading because Chirico did not inform the Leucadia COO that the 

reason C3 had closed was because Water Station had repurchased Chirico’s water machines with 

Notes proceeds.  Nor did Chirico disclose that Water Station’s owner owed him additional money 

on the Promissory Note, or that Chirico had received payments from Water Station under the 

Promissory Note. 

117. In the same March 7, 2023 email, the Leucadia COO asked whether C3’s former 

business activity had anything to do with coin counting kiosks manufactured by a company 

(“Company A”) in which the 352 Fund held an investment.   

118. At around the time of this inquiry to Chirico, the Leucadia COO had declined to 

approve a pre-clearance request from another member of Chirico’s team to invest in Company A 

because it would have presented a conflict between that employee’s interests and the 352 Fund’s 

interests given the Fund’s investment in Company A.  The Leucadia COO reported this request to 

Chirico, told Chirico that it was improper, and reminded Chirico that neither he nor his team could 

personally invest in companies that were also part of the portfolio.  This incident was the basis of 

the Leucadia COO’s March 7, 2023, inquiry seeking to confirm whether Chirico’s former Outside 

Business Activity likewise had anything to do with Company A.   

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119. Chirico replied, in reference to C3’s business activity:  “No, it was bottled water!”  

120. This response was misleading because Chirico concealed that this “bottled water” 

investment was actually an investment in water machines manufactured by Water Station, another 

company (like Company A) in which Chirico had invested the 352 Fund’s assets. 

121. The Leucadia COO instructed Chirico to “let compliance know that the business has 

ceased operations.”  Shortly thereafter, Chirico submitted an update to the Compliance Department 

stating that “the outside business activity within my portal has been closed as of Q4 2022.  The 

business is no longer in operation and may be removed from the file.”   

122. In May 2023, Individual A told Chirico that he intended to loan Water Station $1.4 

million to assist Wear in meeting obligations to earlier Water Station investors. 

123. Chirico provided a $700,000 loan to Individual A as part of this larger loan to Water 

Station.   

124. Chirico received $800,000 (his principal plus an additional $100,000) back from 

Individual A one month later, in June 2023, in satisfaction of the May 2023 loan, which Chirico 

understood reflected his share of the loan repayment from Water Station.    

125. Chirico also made an additional $750,000 in loans to Wear entities in the fall of 2023, 

on which he was paid back, by December 2023, a total of $815,000 (his principal plus $65,000 in 

interest). 

126. In total, Chirico loaned $1.45 million to Wear and/or Wear’s entities in 2023.   

127. Chirico never disclosed these loans to the 352 Fund, to his supervisors at Leucadia, 

or to the Compliance Department.   

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IV. CHIRICO INCREASES THE 352 FUND’S EXPOSURE TO WATER STATION 
NOTES DESPITE RED FLAGS. 

A. Chirico Discovers that Water Station Falsified Collateral for the Notes. 

128. In the summer of 2023, the Collateral Manager began to question the accuracy of the 

data reported by Water Station concerning the Notes’ collateral.  

129. In or around August 2023, the Collateral Manager commissioned a third-party firm 

to perform spot checks of the water machines that were purportedly collateralizing the Notes.  

130. This firm determined that 163 of the 164 locations it visited had no Water Station 

water machines on site, a finding the Collateral Manager conveyed to Chirico and Wear by email on 

August 11, 2023. 

131. The Collateral Manager further determined that it could not locate or account for 

water machines associated with approximately 3,500 (out of the approximately 10,500) serial 

numbers for the machines purportedly securing the Notes. 

132. On August 16, 2023, the Collateral Manager informed Wear via email that Water 

Station had 90 days (a “Cure Period”) per the terms of the Indenture to provide information 

verifying the existence and location of “3000+ machines” ostensibly securing the Notes that were 

“actually missing.”  Chirico was copied on this email.   

133. On or around September 12, 2023, the Collateral Manager informed Chirico that 

Wear was not allowing it access to the vending management system Water Station used to track each 

of its water machines in real time, frustrating the Collateral Manager’s efforts to locate the missing 

machines. 

134. The Collateral Manager also communicated to Chirico on multiple occasions during 

the Cure Period that Wear and Water Station were becoming increasingly delinquent in their 

financial reporting and their payment obligations under the Indenture.   

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135. At the time, Chirico was also communicating with Wear about significant cash 

shortfalls Wear was experiencing and about how those cash flow issues were impairing Wear’s ability 

to satisfy distribution payments owed to other Water Station investors.   

136. Aware of Wear’s liquidity constraints, Chirico pressed Wear in emails and phone calls 

to prioritize payments to him and his spouse under the personal loans still outstanding to them, as 

well as to a select group of Water Station investors that Chirico and/or Individual A had referred.  

137. For example, on October 17, 2023, after learning that Wear had come into receipt of 

approximately $400,000 in loan proceeds to another of Wear’s entities, Chirico wrote to Wear: “I 

would appreciate a payment to my wife and I of $100K” and directed Wear to pay an additional 

$270,000 to twelve of Chirico’s investor referrals (including his brother).   

138. The same day, Wear paid Chirico and his spouse $100,000, as instructed.    

139. The Cure Period expired on November 29, 2023, without Wear providing any 

additional information about the missing water stations or curing the deficiencies of which he had 

been notified by the Collateral Manager. 

140. As of early December 2023, the Collateral Manager still had not located the water 

machines it had identified as missing over the prior summer and continued to seek information from 

Wear.  Chirico was copied on emails during this period between the Collateral Manager and Wear 

relating to these efforts and was thus aware that these issues remained unresolved.  

141. Under the Indenture, Water Station’s failure to validate the existence and operability 

of the missing water machines identified by the Collateral Manager within the Cure Period should 

have required Water Station to refund the purchase price for those machines to the noteholders.  

However, Chirico did not take any steps to enforce this Indenture provision on behalf of the 352 

Fund after the Cure Period expired. 

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B. Chirico Increases the 352 Fund’s Exposure to Water Station Notes in the Face 
of These Red Flags. 

142. Despite his knowledge of Wear’s inability to explain the status—or even demonstrate 

the existence—of the water machines serving as collateral for the Water Station Notes, Chirico 

repeatedly caused the 352 Fund to increase its investments in the Notes.   

143. Institutional Investor A, which had purchased over $70 million of Class A Notes 

between April 2022 and January 2023, was not informed by the Collateral Manager about any 

potential issues with the Water Station Notes’ collateral until December 2023, after the Cure Period 

had expired.   

144. Upon learning of the Collateral Manager’s concerns about the Notes’ collateral, 

Institutional Investor A agreed to sell the entirety of its position in the Class A Notes at a discount 

to par of 82 cents on the dollar.   

145. On December 15, 2023, Chirico directed the 352 Fund to purchase a significant 

portion of Institutional Investor A’s Class A Notes at a discounted price for approximately $41.8 

million, increasing the 352 Fund’s holdings of Water Station Notes from $12.9 million to $54.7 

million.   

146. Chirico directed that a Jefferies affiliate and a separately managed account he advised 

purchase of the remainder of Institutional Investor A’s Class A Notes holdings at their offered 

discounted price.   

147. That same month, Chirico also authorized the 352 Fund to enter into another 

supplemental Indenture (the third), whereby the Fund agreed to loosen the restrictions on certain 

uses of funds by Water Station and gave Water Station the ability to substitute new collateral for 

collateral that was “non-performing” (i.e., collateral that Wear could not demonstrate actually 

existed). 

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148. On January 29, 2024, Chirico and Individual A participated in a phone call with 

Wear, which Chirico recorded. 

149. During the call, Chirico asked Wear if a substantial portion of the collateral for the 

Water Station Notes were actually other types of vending machines, such as snack vending 

machines, rather than water machines.  Individual A raised the possibility that a large portion of the 

water machines did not exist at all. 

150. Wear did not deny the allegations that that he had misrepresented the Notes 

collateral and provided no explanation as to the existence or whereabouts of the missing water 

machines.  Wear acknowledged that he did not know where the relevant water machines were and 

suggested instead that Wear would look for alternative funding sources to repay Water Station’s 

investors.  

151. On the call, Individual A accused Wear of running “the largest franchise fraud in the 

history of the United States.”  

152. Around the time of the call, Chirico also became aware of over a dozen pending or 

threatened lawsuits against Water Station and Wear by earlier investors in Water Station.  These 

lawsuits contained allegations that Water Station and Wear had failed to pay them required 

distributions and, in some cases, alleged that Wear was running a Ponzi scheme. 

153. Despite the foregoing, on February 1, 2024, Chirico directed the 352 Fund to 

purchase approximately $20.8 million in Water Station Notes (approximately $15.9 million of Class 

A Notes, and approximately $4.9 million of Class B Notes) from the Jefferies affiliate holding them. 

154. On February 2, 2024, Chirico caused the 352 Fund to enter into another 

supplemental Indenture (the fourth), under which the Fund acknowledged that “certain Issuer 

and/or Servicer covenant breaches, defaults, Events of Default have either occurred, or may occur . 

. . .” and agreed to waive those events of default by Water Station “now and in the future.”   

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155. Also pursuant to the February 2, 2024, supplemental Indenture, Chirico directed the 

352 Fund to purchase an additional $12.7 million in Class A Notes from Water Station at a discount 

to par, and an additional $4 million in Class B Notes from Water Station at par, increasing the 352 

Fund’s total investment in Water Station’s Notes to $92.2 million. 

156. On February 5, 2024, Chirico personally received a lump sum repayment of $800,000 

from Wear to pay down the Promissory Note.   

157. Wear used the proceeds from the 352 Fund’s purchase of Water Station Notes on 

February 2, 2024 to fund this payment.   

158. On February 14, 2024, Chirico authorized the fifth supplemental Indenture, which 

permitted Water Station to withdraw Notes proceeds without approval from the Collateral Manager 

or the 352 Fund. 

159. On February 16, 2024, Chirico authorized the release of all water machines and 

related agreements, revenues, and proceeds, from the lien of the Indenture, which left the Water 

Station Notes held by the 352 Fund entirely unsecured. 

V. LEUCADIA ISSUES DEFAULT NOTICES AND TERMINATES CHIRICO. 

160. In the spring of 2024, Chirico informed Leucadia that a Water Station investor 

intended to file a complaint in federal court naming, among others, Chirico and Leucadia as 

defendants.   

161. After conducting an internal investigation, Leucadia terminated Chirico effective 

June 5, 2024.   

162. In May and June 2024, at the 352 Fund’s direction, the trustee for the Water Station 

Notes issued notices of default to Water Station under the Indenture.   

163. The 352 Fund’s valuation committee marked down the value of the Fund’s holdings 

of Water Station Notes by 50% by June 2024. 

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164. The 352 Fund has not collected any interest on its outstanding Water Station Notes 

since June 2024, nor has it recovered any of its principal investment.   

165. Leucadia is in the process of winding down the 352 Fund.   

FIRST CLAIM FOR RELIEF 
Violations of Advisers Act Sections 206(1) and (2) 

 
166. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1 through 165.  

167. At all relevant times, Chirico was an investment adviser under Advisers Act Section 

202(a)(11) [15 U.S.C. § 80b-2(a)(11)]. 

168. Chirico, by use of  the mails or any means or instrumentality of  interstate commerce, 

directly or indirectly has: (i) knowingly or recklessly employed one or more devices, schemes, or 

artifices to defraud any client or prospective client, and/or (ii) knowingly, recklessly, or negligently 

engaged in one or more transactions, practices, and courses of  business which operated or would 

operate as a fraud or deceit upon any client or prospective client. 

169. By reason of  the foregoing, Chirico, directly or indirectly, singly or in concert, has 

violated and, unless enjoined, will again violate Advisers Act Sections 206(1) and (2) [15 U.S.C. 

§§ 80b-6(1) and 80b-6(2)]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining Chirico and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Advisers Act Sections 206(1) and 206(2) [15 U.S.C. §§ 80b-6(1) and 80b6-(2)].  

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II. 

Ordering Chirico to disgorge all ill-gotten gains he received directly or indirectly, with pre-

judgment interest thereon, as a result of the alleged violations. 

III. 

Ordering Chirico to pay a civil monetary penalty pursuant to Advisers Act Section 209(e) [15 

U.S.C. § 80b-9(e)]; 

IV. 

Permanently enjoining Chirico from directly or indirectly acting as, or being associated with, 

any investment adviser, broker, or dealer.  For purposes of this paragraph, (i) a person is associated 

with an investment adviser if such person is a partner, officer, or director of such investment adviser 

(or performs similar functions), or directly or indirectly controls or is controlled by such investment 

adviser, including any employee of such investment advisor; and (ii) a person is associated with a 

broker or dealer if such person is a partner, officer, director, or branch manager of such broker or 

dealer (or occupies a similar status or performs similar functions), directly or indirectly controls, is 

controlled by, or is under common control with such broker or dealer, or is an employee of such 

broker or dealer; and  

V. 

Granting any other and further relief this Court may deem just and proper.  

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JURY DEMAND 

 The Commission demands a trial by jury.  

 
 
Dated: New York, New York 

August 14, 2025 

_/s/ David Zetlin-Jones _____________________   
Lee A. Greenwood 
David Zetlin-Jones 
Heather L. Shaffer 
Ming Ming Yang 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
(212) 336-0978 (Zetlin-Jones) 
[email protected] 
  

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