The seal of the U.S. Justice Department is seen on the podium in the Department's headquarters briefing room.

Kevin Lamarque | Reuters

Two men have been indicted in New York on federal criminal charges in connection with a water vending machine Ponzi scheme that allegedly swindled investors out of more than $200 million, the Department of Justice said Thursday.

The two men were also hit by the Securities and Exchange Commission with civil charges of violating antifraud provisions of the federal securities laws in connection the same scheme.

Ryan Wear, 49, of Everett, Washington, is accused of "raising more than $200 million from investors by selling them water vending machines that, in many cases, did not exist, and paying promised returns through new investor money," the DOJ said in a press release.

Wear, who is the former owner and operator of a company called Water Station Management, is charged with securities and wire fraud. His company was forced into bankruptcy last August.

The indictment against him in U.S. District Court in Manhattan says that many of the people swindled in the scheme were retail investors and military veterans.

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Former fund portfolio manager Jordan Chirico, a 41-year-old from Carmel, Indiana, is accused of purchasing more than $100 million in bonds issued by Water Station while "concealing his personal financial stake in the company and, eventually, his knowledge of the fraud that had been perpetrated by Wear," the DOJ said.

Chirico is accused of a scheme to defraud 3|5|2 Capital ABS Master Fund LP, an investment fund
which was part of Jefferies Financial Group's Leucadia Asset Management.

Chirico, who was a manager for the fund, is charged with investment advisor fraud in a separate indictment in Manhattan federal court.

Both men face a maximum possible sentence of 20 years in prison if convicted.

"Ryan Wear raised hundreds of millions of dollars through false promises of a water vending machine business that became nothing more than a scam that victimized retail investors, including military veterans," said Manhattan U.S. Attorney Jay Clayton in a statement.

"Jordan Chirico made matters worse by putting his own financial interests before his professional duties, investing clients' money in Water Station — helping himself and hurting his investors — even after he knew it was a scam.  One fraud does not excuse another.  With the assistance of our dedicated law enforcement partners and our colleagues throughout the Department of Justice, this Office will continue to aggressively pursue financial frauds on Wall Street and Main Street."

FBI Special Agent in Charge W. Mike Herrington, who is based in Seattle, Washington, said, "The scale of this fraud, which resulted in at least $200 million in losses, is simply staggering."

"And the deception and obfuscation these two men allegedly engaged in to siphon funds from retail investors, even U.S. military veterans, is absolutely unconscionable," Harrington said.