Former Montecito Resident Charged with Securities Fraud
It has been seven months since I had the pleasure of sharing my writing with the readers of this newspaper. My debut novel — Montecito — was serialized in these very pages from July of 2022 to February of 2023. As Gwyn Lurie and I expressed in our respective introductions to Chapter One, Montecito, while fictional, had its roots in a long history of con artists setting up shop in our slice of heaven.
What I left unsaid in that introduction was that I had a very personal dalliance with Montecito’s least savory side. For six months in 2020, I worked for Andrew Wyles Waters who I slowly came to realize was operating a company for his own personal enrichment. When the light finally clicked on, I resigned and began two tasks that would dominate my life for more than three years.
First, I began researching and writing my novel, Montecito. While actual events inspired this novel, the unfortunately real Andrew Waters is not the fabulously fictional Cyrus Wimby. Cyrus and Genevieve Wimby are stylized mashups of the many fraudsters and con artists who have blown through towns like Montecito since Man invented money to steal. Waters was simply the singular fraudster who sparked my fire to imagine more.
Second, I began beating the drum to bring my former friend and employer to justice.
On August 18, as also reported in the Aspen Daily News and the Australian Financial Review, the United States Securities and Exchange Commission – the SEC – charged former Montecito resident, Andrew Wyles Waters, with Securities Fraud. The SEC’s complaint alleges that Waters fraudulently induced investors, “including investors in and around Montecito, California,” to purchase shares of a company he owned and controlled called Ecom Products Group.
Like many who knew Andrew and Helen Waters during their time in Montecito, what I remember most about them is their extravagant dinner parties. But as the SEC alleges, those dinner parties were not innocent celebrations of friends, family, and community. Instead, “Waters’ wife, Helen Waters, befriended community members whom she believed were wealthy or well-connected – often times the parents of their children’s friends. Helen invited these prospective investors to dinner parties at the Waters’ home. Waters typically solicited investments after the meals.”
For those who ultimately succumbed to Waters’ sales pitch, the realization that it was all a wash, rinse, repeat façade is painful. For those who escaped – some of whom might be discovering that they escaped at this very moment – it is a sad reminder that evil is not bound by geography or socioeconomic status and may well invite you over for dinner.
The SEC alleges that Waters enticed his victims with false promises of the value of his company’s assets and business prospects and a special offer to buy shares at deeply discounted prices, guaranteeing, “a near-instant 300% to 400% profit.”
But those profits never materialized. Instead, “Waters and [his wife] Helen … used cash proceeds from Waters’ fraud for personal expenses – including expenses associated with horseback riding … and long-term luxury home rentals. 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 … Meanwhile, investors were left holding stock that was v
irtually worthless.”
These latest and most serious charges mark a long year of civil setbacks for Waters. In the fall of 2022, Waters and Ecom were ordered by a United States District Court to pay more than $220,000 to Michael Cox – yours truly – in Waters’ failed attempt to silence Cox with a retaliatory “Breach of Confidentiality” lawsuit. In December of 2022, Waters and Ecom were ordered by a Florida State Court to pay nearly $160,000 to a landlord for unpaid rent. And in January of 2023, Waters was ordered by a California State Court to pay more than $2 million in damages and interest in a lawsuit charging him with theft, fraud, and concealment.
According to the victorious parties in all three court cases, neither Waters nor his company have paid a penny of the court ordered judgments.
The SEC’s complaint alleges that, from 2019 to 2022, Waters stole approximately $3 million from investors. The $3 million tally of stolen funds is expected to climb as more accusers emerge now that the previously nonpublic investigation and charges have been revealed. Anyone with additional information or claims against Waters is encouraged to contact Jake Schmidt of the SEC Enforcement Division at schmidtj@sec.gov and Agent Gene Kennedy of the Federal Bureau of Investigation at glkennedy@fbi.gov.
