Australian couple defrauded wealthy Americans, SEC claims
An Australian couple defrauded wealthy Americans in California and Aspen by selling “worthless” shares, enabling them to live a lavish lifestyle before fleeing to Bali, regulators in the United States claim.
In a public filing, the Securities and Exchange Commission alleges Sydney-born Andrew Wyles Waters, 59, and his wife Helen Waters, 47, “befriended community members whom [they] believed were wealthy or well-connected” before inviting them to dinner and soliciting investments after the meal.
The Waters’ targeted investors in the wealthy ski resort town of Aspen in Colorado, the SEC alleges. Getty
Those prospective investors were often the parents of their children’s friends, and the money was allegedly used to pay for their expensive lifestyles, which included “horseback riding and luxury home rentals”.
The SEC alleges that Mr Waters first raised $US1.4 million ($2.2 million) while living in Asia, largely from Australians, before moving to the US and using ECom Products Group Corporation, known as EPGC, to target investors in Aspen and Montecito – a wealthy Californian enclave where Oprah Winfrey, Ellen DeGeneres and Prince Harry and Meghan Markle all own homes.
EPGC has traded on the over-the-counter market since 2017, and Mr Waters allegedly told prospective investors that its value would surge. He allegedly said this was because EPGC had acquired ELLEShop China, a retail platform, from Hearst Corporation, the publisher of Elle. That was despite Hearst telling Waters in 2020 that they would not proceed with any deal because he was an “unacceptable … partner”, the SEC claims.
“Nonetheless, through at least early 2022, Waters continued to invoke the ELLE name and to make false statements about the status of the contemplated deal,” the US regulator has alleged, according to filings lodged with a California court late last month.
Mr Waters allegedly told prospective investors they could buy EPGC shares from him for US21.2¢ before an “imminent public offering” would price them at between US75¢ and $US1.
The SEC alleges that the Waters’ defrauded at least 20 investors, receiving more than $US1.3 million from the scheme. The couple allegedly spent $US94,113 on two Land Rovers, $US378,470 on renting luxury homes, three horses, and $US29,516 on horse-riding lessons.
Montecito in California. The town’s wealthy residents were allegedly targeted as part of the Waters’ scheme, the SEC claims. Getty
“Such expenditures enabled Waters and his wife to maintain their lavish lifestyle and thereby make contact with the next round of victims in and around Montecito, California, and Aspen, Colorado. Meanwhile, investors were left holding stock that was virtually worthless,” the filing reads.
“Waters knew that he was diverting a significant portion of investor funds for personal use,” the regulator has alleged. “Waters acted knowingly, or with extreme recklessness, in engaging in … fraudulent conduct.”
Mr Waters was forced to provide evidence to the SEC about the allegations in October. The regulator says it now believes the Waters – having lived in the US for four years – have “fled the country”. The SEC, in its court filings, alleged the couple is now in Bali.
The SEC claims the Waters’ were involved in a myriad of deceptions. Mr Waters allegedly told some investors EPGC was earning a licensing fee of up to 20 per cent on annual revenues of between $US8 million and $US12 million. He is said to have told another that EPGC had between $US8 million and $US12 million in annual sales. That investor ultimately paid $US548,000 for shares.
However, according to the SEC, EPGC had less than $US355,000 in revenues between 2019 and 2022, partly because it had “not been operational for most of 2020 and 2021 due to the pandemic and restructuring”.
“Nonetheless, in a February 2022 conversation with an existing EPGC investor, Waters falsely claimed that $8 million in sales revenue from China was not included in EPGC’s 2021 financial reports because it would have been too difficult to get the figures in time. Waters assured the investor that such revenue existed and would recur on an annual basis,” the SEC claims.
The Waters could not be reached for comment. They have not yet filed a defence and The Australian Financial Review is not asserting that the claims against them are true.
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