Quick Summary:
The 352 Capital hedge fund lost nearly $100 million after portfolio manager Jordan Chirico invested in the fraudulent “Water Station Ponzi Scheme” involving fake automated water vending machines. Chirico allegedly continued using investors’ money to invest in the Water Station Ponzi scheme even after learning of the fraud. He also failed to disclose his personal financial stake to investors.
Both Chirico and Water Station founder Ryan Wear face federal fraud charges as of August 2025. Affected investors may be able pursue recovery through lawsuits or arbitration.
From Hedge Fund to Ponzi Scheme: The 352 Capital Water Station Fraud
Investors who invested in the 352 Capital ABS Master Fund LP understandably would be worried about their investment in light of the troubling allegations of fraud and breach of fiduciary duty contained in indictments recently filed in federal court. Regulatory investigations into the 352 Capital Fund suggest that the fund may have been entangled in the Water Station Ponzi scheme involving misrepresentations, inflated valuations, and other fraudulent acts. While regulatory and judicial investigations continue to focus on the fund, investors hoping to recover financial losses should be aware of their legal options, which may include filing their own lawsuit or arbitration claim.
The History of 352 Capital ABS Master Fund LP
According to filings with the U.S. Securities and Exchange Commission (SEC), the 352 Capital ABS Master Fund LP was a hedge fund established in New York in 2021 focused on asset-backed securities (ABS) and structured investments. The fund was affiliated with Jefferies Financial Group’s Leucadia Asset Management LLC (LAM), and Jordan Chirico served as its portfolio manager. Both institutional and individual investors are believed to have invested in 352 Capital.
Water Station Ponzi Scheme
While managing the 352 Capital Fund, Chirico invested almost $100 million of investors’ funds in what eventually would be referred to as the “Water Station Ponzi Scheme.” Water Station purportedly operated automated water vending machines marketed under the “Hylyte” brand and promised consistent returns on investments that were backed by tangible assets. In January 2024, Water Station founder Ryan Wear admitted that thousands of the alleged water machines that supposedly served as collateral for bonds did not exist and tens of millions in bond proceeds had been misappropriated. Not only did Chirico fail to disclose these admissions to the 352 Capital Fund investors, but he also allegedly directed the 352 Capital Fund to purchase an additional $19 million worth of Water Station bonds after learning of Wear’s admissions. Chirico also is alleged to have personally invested in the Ponzi scheme and is said to have received $1.6 million from referring friends and family members to invest in the Ponzi scheme. It is believed that Chirico’s personal financial interest in Water Station was not disclosed to 352 Capital fund investors. The Hylyte water vending machine fraud is now believed to have been a classic Ponzi structure wherein “dividends” paid to early investors were really investment funds from later investors instead of actual profits.
Who Is Responsible for the 352 Capital Investment Losses?
As allegations of fraud, mismanagement, and breach of fiduciary duty began to surface in connection with the 352 Capital ABS Master Fund, regulatory and law enforcement agencies started investigating to determine who was to blame for the catastrophic financial losses suffered by investors.
At the center of the investigations are Jordan Chirico, the 352 Capital Fund portfolio manager, and Ryan Wear, the founder of Water Station. Investors allege that Wear admitted to making fraudulent representations and that Chirico failed to disclose known material risks and misrepresented the nature of investments.
In addition to Wear and Chirico, Jeffries Financial Group and Leucadia Asset Management may share liability in connection with the 352 Capital losses. Both entities have been accused of failing to provide adequate oversight of affiliated investment structures.
Options for Recovering 352 Capital Investment Losses
If you suffered 352 Capital losses, it is essential to act quickly to protect your rights and your ability to recover damages. It is equally crucial to understand the legal remedies available to you as an investor who has suffered losses related to the Hylyte water vending machine fraud. Whether you pursue a lawsuit or an arbitration claim to recovery your 352 Capital losses, working with 352 Capital investor rights attorneys is crucial to ensure that your rights are protected. 352 Capital ABS Master Fund cases would involve complex financial transactions and securities laws, and you can expect the defendants to mount aggressive defenses, making it all the more important to have an experienced attorney on your side throughout the litigation or arbitration process.
352 Capital Investor Rights Attorneys
If you suffered 352 Capital investment losses, you should consult with an experienced securities fraud attorney as soon as possible. An attorney can review offering documents, communications, and account statements to identify claims you may have to recover your investment losses.. Applicable statutes of limitations and arbitration deadlines can impact your ability to pursue a claim. As such, 352 Capital investors should seek legal advice promptly.
352 Capital investor rights attorneys at DIMOND KAPLAN & ROTHSTEIN, P.A. are investigating potential claims against 352 Capital, its principals, its affiliates, its managers, or related entities, up to and including Jefferies Financial Group and Leucadia Asset Management LLC. Contact us today by calling 888-578-6255 or filling out our online contact form to schedule a confidential consultation to discuss your legal options.
