Jefferies sues Regional Bank on suspected water machine scam | Company Business News

(Bloomberg) – A Jefferies Financial Group hedge fund has expanded its legal battle to recover more than $ 100 million that his former portfolio manager has invested in an alleged fraud scheme involving water sales machines. Jefferies’ 352 Capital sued Port Angeles, Washington’s first Fed Bank last week in Seattle, claiming that the first Northwest Bancorp subsidiary was aware of the alleged fraud. But the bank facilitated the scheme to prioritize the repayment of its own loans to the machine business and its franchisee, 352 said. The case is the latest turn in the saga of 352’s investment in bonds issued by Waterstation Management, which claims to run thousands of filtered water sales machines. According to 352, the company in Washington raised the money raised to pay guaranteed returns to franchisees and insiders in a ‘Ponzi scheme’, as well as paying loans to the first. First North West announced the case in a June 13 regulatory filing stating that it strongly disputed the allegations and intended to “defend powerfully against the claims.” In a Wednesday interview, Fed CEO Matthew Deines said he felt there was ‘no earnings’ for the case against the bank. “We are a 102-year-old community bank,” says Deines. “It’s a Wall Street firm trying to raise funds from this. We were a victim like many others. ‘ Water station could not be reached for comment. A spokesman for Jefferies declined to comment. The litigation began last year when 352, which is part of Jefferies’ Leucadia Asset Management Arm, sued former portfolio manager Jordan Chirico. The fund claims to have conspired with Water Station to have 352 buying bonds supported by a thousand machines that do not exist. Chirico denied the claims. He suggested in the eurgates that he was victimized by Waterstation and emphasized that all his investment decisions were revised and authorized. He accused his former employer of a “wrong attempt to blame.” The case was rejected by a federal judge last month, but 352 won his claims against Chirico and others again in the New York state court on June 9. Neither Chirico nor his lawyer could be reached for comment on the recharge case on Wednesday. According to 352’s case against First Fed, the bank had access to the serial numbers of the machines, so would have known that they did not exist. The bank was also responsible for the proceeds of the bonds in which 352 invested and facilitated their deduction to other loans. The fund says that the yields of mortgage should only be used to buy more machines, but some were used instead to repay First Fed’s loans, to pay water station insiders or retail investors. At its peak, Waterstation and its related businesses, according to the case, owed $ 30 Minion for the first time. In the case against Chirico, who joined 352 in 2020, the fund claimed that in April 2022 he first invested $ 15 million of his money in Water Station bonds. At the time, 352 that Chirico and his wife had already invested $ 7 million of their own money in Waterstation franchises, a conflict he did not disclose to his employee. He eventually invested nearly $ 107 million of 352’s money in Water Station bonds, the fund claims. The fund also sued Water Station and several people associated with it, including founder Ryan Wear. No wear and tear could be reached for comment. Last month, the Washington Department of Financial Institutions brought regulatory costs against Water Station, Wear and other managers. -With help from Yizhu Wang. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP