June 08, 2010
Mansfield, Texas, Man Pleads Guilty to Commodities Fraud Involving Foreign Currency Trading Ponzi Scheme
WASHINGTON - Ray M. White, 51, pleaded guilty today before U.S. Magistrate Judge Paul D. Stickney in Dallas to a criminal information charging him with one count of commodities fraud, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney James T. Jacks of the Northern District of Texas.
According to court documents, White admitted that in July 2008 he contracted with an investor to sell $50,000 in commodities through CRW Management LP, which White operated in Mansfield, Texas. White admitted that, from July 2008 until January 2009, he knowingly and willfully cheated and defrauded, made false statements to, and deceived the investor by making several misrepresentations in connection with the contract to sell commodities.
Specifically, according to court documents, White represented to the investor that his funds would be used to trade off-exchange foreign currency contracts and that CRW averaged 7 percent per week returns through off-exchange foreign currency trading. According to the court documents, White provided written account statements showing purported returns, and represented to this investor that CRW would maintain separate bank accounts for each investor. White admitted that in fact, these account statements were false and that he did not maintain separate bank accounts for the investors.
According to the criminal information, the vast majority of the funds were never used to trade off-exchange foreign currency. White admitted that he either misappropriated investor funds or paid them to other investors in the form of Ponzi payments. White admitted losing more than $86,500 on off-exchange foreign currency trading, rather than making the 7 percent per week profits he claimed.
According to March 2009 emergency civil enforcement actions filed in the Northern District of Texas by the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC), White solicited at least $10.9 million from late 2006 until March 2009 from more than 250 investors to trade in the foreign currency market. The SEC and CFTC court documents also allege that CRW never traded off-exchange foreign currency, and that White lost money in the limited off-exchange foreign currency trading in which he engaged. According to the SEC and CFTC court documents, White used at most $93,900 of the $10.9 million he raised to trade in the foreign currency market. The remaining approximately $10.8 million was either misappropriated or returned to CRW customers as part of the Ponzi scheme. The complaint filed by the SEC states that White used the funds to finance his son’s car-racing career, to purchase a company called Hurricane Motorsports LLC, in Arlington, Texas, and to purchase a home and other real property.
The SEC and CFTC court documents also state that White was never registered with the SEC or the CFTC, and has never been licensed to sell securities. While White led investors to believe that his special expertise in trading foreign currencies would yield exceptional returns, in reality he was not a successful foreign currency trader and had no lucrative foreign currency trading fund or program. In fact, White filed for bankruptcy in 2003 and in 2006, a fact he concealed from investors.
White faces a maximum prison sentence of 10 years and a maximum fine of $1 million. He is scheduled to be sentenced by U.S. District Court Judge Barbara M.G. Lynn on Sept. 17, 2010.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The case is being prosecuted by Trial Attorney Bill Bowne of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Alan Buie and Special Assistant U.S. Attorney Stephanie Tourk for the Northern District of Texas. The case was investigated by the CFTC, the SEC, the FBI and the U.S. Postal Inspection Service.