Jefferies Sues Regional Bank Over Alleged Water Machine Scam

A Jefferies Financial Group hedge fund widened its legal fight to recover more than $100 million that its former portfolio manager invested in an alleged fraud scheme involving water vending machines.

Jefferies’ 352 Capital sued Port Angeles, Washington’s First Fed Bank last week in Seattle, claiming the First Northwest Bancorp subsidiary was aware of the alleged fraud. But the bank facilitated the scheme in order to prioritize repayment of its own loans to the machine company and its franchisees, 352 said.

The suit is the latest twist in the saga of 352’s investment in bonds issued by WaterStation Management, ...