Montecito Stock Fraud Couple on the Run

Andrew and Helen Waters exuded wealth and success. They lived in a $7 million home along a leafy Montecito cul-de-sac. They drove Range Rovers and rode horses and hosted posh dinner parties. Their most frequent guests were the parents of their children’s friends.

Andrew, a high-flying investment banker, had an easygoing attitude and sharp sense of humor. Helen, a socialite from Hong Kong, was six feet tall, loud, and an excellent cook. Together they made a formidable pair.

“They played it brilliantly,” said Michael Cox, who worked briefly with Andrew before uncovering what the U.S. Securities and Exchange Commission (SEC) has called the couple’s “fraudulent stock scheme.”

After multi-course meals and over expensive bottles of wine, Andrew would dangle a tempting business opportunity. He would offer his guests shares of his e-commerce company, ECom Products Group Corporation, for $0.21 with the promise of an “imminent public offering” that would raise the price to between $0.75 and $1, “a near-instant 300 percent to 400 percent profit.”

Andrew needed to quickly unload the stock at a discount, he’d say, because he was not a U.S. citizen and had overstayed his visa. Or because regulations required that he own less than 50 percent of the company. The reasons varied.

Between 2018, when they moved into the white stucco home on School House Road, and 2022, when they fled the United States, Andrew and Helen convinced nearly 20 of their guests to buy in. None, however, were ever paid out.

“Everyone who lost money to them had dinner at their house,” said Cox. “Every single one.”

This November, after a lengthy investigation, the SEC entered a final judgement against the Waterses for selling “virtually worthless” stocks to “community members whom they believed were wealthy or well-connected” in order to maintain their own “lavish lifestyle.” The agency also cited victims in Aspen, Colorado.

Andrew made false and misleading statements to his targets and “knew that he was diverting a significant portion of investor funds for personal use,” the SEC said. “[He] acted knowingly, or with extreme recklessness, in engaging in fraudulent conduct.”

The agency ordered the Waterses to pay back their victims, plus interest and penalties. Combined with other state and federal judgements against them, the couple now owes a cumulative $6 million to dozens of individuals.

“These are real people who never thought this would happen to them,” said Cox, referencing one man who lost $50,000 “that he really, really needed.”

But whether that money ever materializes is an unanswered question. Shortly after the SEC deposed Andrew, he and Helen packed up their family in the middle of the night and flew to Bali. They are now living in hiding in his home country of Australia.

Trade Secrets

Michael Cox met Andrew Wyles Waters through their children who were in the same elementary school class. Cox declined Waters’s overtures to invest, but his interest was piqued by an opportunity to serve as finance director of the e-commerce company.

This was not Cox’s first rodeo. He graduated from Stanford business school and had worked for Goldman Sachs. Waters, he said, was “messy and disorganized” but “well-connected.” He had made a fortune as chair of a Hong Kong investment bank and was currently courting Hearst Corporation for what promised to be a lucrative deal.

Cox agreed to the gig. “I was his perfect local foil,” he lamented. But just weeks into the job, as Cox did his due diligence to untangle the company’s “financial puzzle,” he made a heart-stopping discovery. He found a lawsuit filed in Santa Barbara Superior Court in which Waters owed a former business partner, Hong Kong lawyer Mark Schaub, $2 million for “theft, fraud, and concealment.”

Cox confronted Waters, who claimed innocence and said the funds had been frozen by authorities but would soon thaw out. Again, Cox did his homework and found that Waters had in fact drained the $2 million and closed the associated account.

“I knew it was BS,” said Cox. “I quit then and there.”

Cox filed a report with the SEC and was quickly contacted by the Federal Bureau of Investigation (FBI). In retaliation, Waters sued Cox for breach of contract and fiduciary duty, alleging he had no right to turn over the company’s business records. Waters ultimately lost the case and still owes Cox $250,000 in attorney fees.

“The only trade secret the company had was that it was a fraud,” Cox said.

Both the FBI and its law enforcement counterpart in Australia, the Australian Federal Police, declined the Independent’s request for additional information about the case. The SEC did not respond. In his own conversations with U.S. authorities, Cox said he was simultaneously encouraged and demoralized by the agencies’ statements about bringing the Waterses to justice.

‘Dead to Rights’

The FBI told Cox there is no doubt of the couple’s criminal culpability, that investigators have the pair “dead to rights.” (Thus far, all of the legal decisions against them have taken place in civil court.)

But tracking them down in Australia is another story, an agent at the FBI’s Los Angeles field office explained to Cox. The agency simply doesn’t have the resources and struggles to police its own backyard. The agent said he could throw a baseball and hit another con artist who ought to be arrested. Going overseas was unlikely.

The SEC, on the other hand, assured Cox it had one of the strongest collections units in the world and would do all in its power to identify and seize the Waterses’ assets to pay back victims. Cox predicted Waters had another trick up his sleeve to pay for the boat trips and luxury home rentals his family posts on social media. “His demonstrable skill is craftiness,” Cox said.

In fact, according to the SEC, Waters is actively soliciting investors for an electric scooter business that claims to be “expanding rapidly in North America.” “We are constantly looking for the right partners in major cities,” its website states. Consumer reviews are scathing, with 18 complaints filed with the Better Business Bureau since 2023. “The scooter does not work,” reads one review. “It never has worked. They took my money and sent a worthless object.”

Over the last few years, Cox has spoken with dozens of people from all over the world who have been caught in the Waterses’ wake, including “investors who lost their money, friends who lost their faith, employees who lost their livelihood, and partners who lost their businesses.” More locally, he heard the couple skipped out on rent for their horse stalls and stiffed organizers of a regional wine festival.

Throughout the saga, which put significant strain on Cox’s mental health and marriage, he learned one important lesson: “People are under the illusion that law enforcement is out there, on top of it, and knows what’s going on,” he said. “That’s not always the case.”

Instead of relying on the government for protection from white-collar crime, Cox said people should exercise healthy skepticism when investing. “Maybe don’t take that great deal now and save yourself a lot of trouble and money on the back end,” he said.

“There are sharks out there, looking for you,” Cox went on, hoping that by speaking out he’ll help stop the couple’s next con. “I feel so affronted by it all that I just want it to stop,” he said. “We have to look out for each other.”