"THIS CASE WAS MODIFIED JULY 25, 2008." The pilot reported that he was towing a banner along the ocean shoreline at an altitude of 500 feet and an airspeed of 40 mph when the engine lost power. He dropped the banner into the water, but was unsuccessful in attempting to restart the engine. The pilot ditched the airplane in the ocean about 100 feet from shore. A Federal Aviation Administration inspector examined the airplane after it was pulled onto the beach. The inspector reported that the right wing sustained structural damage. Additionally, the inspector noted that the airplane had been modified extensively, and one of the modifications included replacement of the original two position (ON/OFF) fuel selector valve with a four position fuel selector valve (BOTH ON/LEFT/RIGHT/OFF). The fuel selector valve was found in the LEFT tank position. The left tank contained about 1 gallon of fuel, and the right tank was full of fuel. The pilot stated that he was aware the airplane had been extensively modified, but was not aware that the fuel selector valve had been changed. He further stated that he had never touched the fuel selector switch, as he thought it was ON or OFF only. The operator reported that the pilot had received training in the airplane that included use of the four position fuel selector valve.