‘Maybe charge me for being an idiot’: SEC hunts Aussie banker

For the first time since the filing, from Bali, Waters has spoken publicly. The SEC allegations are a long way from his previous life, as a former chairman of Hong Kong-headquartered investment bank First Capital Partners, through which he partnered with wealthy businessman Peter Scanlon to invest in a cash card company in China. That business, OneCard, even secured investment from Richard Pratt and James Packer.

“It must be the dumber [and] dumber Ponzi scheme if [it was] one,” Waters says of the SEC allegations, which he denies and intends to dispute. “Maybe they should just charge me for being an idiot.”

The SEC alleges Waters defrauded more than 20 investors in the United States and previously also raised funds from Australian investors.

Water says he did not defraud the investors, but stepped into a company – EPGC – that already had plenty of issues. He also blames Chicago banker Stephen Calk for the investigation, who he convinced to invest in the company.

Calk was the former chairman of The Federal Savings Bank who went on to become an adviser to Donald Trump during his presidential run. In the hope of securing a position in the Trump administration, however, Calk lent the election campaign chairman, Paul Manafort, some $US16 million ($25 million), a New York court found. It was the bank’s largest loan and was made despite Calk knowing Manafort had a chequered history with repayments.

Last year, Calk was sentenced to jail for corruptly using his position as the head of a federally insured bank to issue a high-risk loan in exchange for personal benefit. He is appealing the verdict.

But Waters says Calk and Michael Cox, a former EPGC employee, “used their connections in the SEC” to encourage the regulator to pursue him over the allegations that he defrauded the company’s investors.

“It seems like someone is using the SEC here, as this case is made up and just follows Cox’s claims,” Water says. “It’s sad the system can be used this way.”

Waters says Calk “threatened to use his connections in the SEC and other government departments to try and to harass” him. “The reason we left the US was because of the harassment by Stephen Calk,” he adds.

Waters says police in Basalt, a town of 4000 people near Aspen, are investigating. The Basalt Police Department told AFR Weekend there were no records of an investigation. Calk does not dispute Waters made a complaint, but added: “If harassment is calling someone to ask for my money back, then I don’t know.”

The scheme, according to the SEC’s claims, worked like this. Waters allegedly told prospective investors that EPGC’s value would surge in an “imminent public offering”, suggesting they purchase shares from him for US21.2¢ before an offering that would price them at between US75¢ and $US1. But the SEC alleges that the stock was “virtually worthless” and some of the company’s assets were mischaracterised or nonexistent.

“Waters knew that he was diverting a significant portion of investor funds for personal use,” the regulator alleges. “Waters acted knowingly, or with extreme recklessness, in engaging in … fraudulent conduct.”

The spending on the luxury homes and expensive cars “enabled Waters and his wife to maintain their lavish lifestyle and thereby make contact with the next round of victims,” its filings read.

AFR Weekend does not suggest the allegations against Waters are true – only that the claims have been brought by the SEC.

Calk says he met the Waters through his girlfriend. “They are so disarming, him and his wife welcome you into their home, you ... meet and play with their children,” he says, claiming he lost $US540,000 before complaining to the SEC.

Michael Cox met the couple while they were living in Montecito and started working for the company after his son became friendly with Waters’ daughter. He says Waters convinced him to be paid in EPGC stock, which he was unable to sell, and resigned after six months in June 2020 when he became concerned about the state of the company’s finances.

Cox, who says he lost $US175,000 fighting allegations made by Waters that he misused confidential information, subsequently made reports to the SEC.

“I was working on the company’s financial records, which were horrendous,” he says. “There were all these transactions that involved in moving money between various entities, bank accounts ... there was no revenue.”

Cox alleges Waters said his father founded the company that sells Bundaberg ginger beer, a claim which made him suspicious. “One other person I’ve talked to ... swears that Andrew told him that he was the son of the founder of Bundaberg Rum,” he says. “I think Andrew knew ... how ignorant Americans were about Australia.”

The Waters are yet to file a defence.