Trial next year in water vending machine case

Published 1:30 am Tuesday, August 4, 2026

PORT ANGELES — A King County Superior Court judge has scheduled a trial for next year in a lawsuit accusing First Fed of helping to further an alleged fraud run by an Everett businessman behind a failed vending machine company.

The hedge fund 3|5|2 Capital filed the claim in King County Superior Court in June 2025, accusing First Fed of conspiring with Ryan Wear, the founder of Water Station Management, LLC.

First Fed set up a financing program to extend loans to Water Station investors, most of them backed by the U.S. Small Business Administration, according to court documents. The lawsuit alleges the bank diverted Water Station bond proceeds from 3|5|2 Capital to Wear and to itself, and it used the money to repay loans it had made to Wear’s businesses and to cover delinquent SBA loans.

First Fed answered 3|5|2 Capital’s complaint with counterclaims, and the two sides have been trading motions since — over the counterclaims, over discovery and over what stays public.

The trial is set for July 17, 2027.

The bank has settled at least one related claim. In July 2025, First Fed reached a settlement with a group of investors who sued Wear in Snohomish County Superior Court in April 2024. It agreed to pay between $2.87 million and $5.74 million while admitting no wrongdoing.

While First Fed’s case in King County unfolds, Wear faces a federal criminal trial in Manhattan. U.S. District Judge Jennifer L. Rochon set jury selection to begin Oct. 12, 2027, in an order filed on July 20 in the U.S. District Court for the Southern District of New York.

Wear was indicted in August 2025 on one count of securities fraud and one count of wire fraud, both felonies. Each is punishable by a maximum 20-year sentence.

First Fed is not named in the federal indictment.

Prosecutors allege that, beginning in 2016, Water Station Management sold more than 22,000 water vending machines to individual investors and military veterans while manufacturing fewer, perhaps no more than 6,000.

The indictment alleges Wear sold the same machine to more than one investor and paid returns to earlier investors with money raised from new ones.

According to a lawsuit by 3|5|2 Capital, which bought about $100 million in Water Station bonds, Wear hid the fact that most of the machines didn’t exist by moving tracking modems from a real one onto ordinary snack vending machines owned by an affiliated company, so their revenue would appear to come from the water dispensers.

The alleged ruse was discovered when the bond deal’s collateral manager visited the sites where the water machines were supposed to be. The manager visited 164 sites, and 163 of them didn’t have a water machine, according to the lawsuit.

Separately, the state Department of Financial Institutions in January finalized a consent order against Water Station Management and affiliate Creative Technologies — both of which are in voluntary Chapter 11 bankruptcy — over the water vending machine sales. The companies neither admitted nor denied the findings, but they agreed to cease-and-desist orders. Each faces a $500,000 fine.

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Reporter Paula Hunt can be reached by email at paula.hunt@peninsuladailynews.com.