An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Texas Man Pleads Guilty in Criminal Forex Ponzi Scheme
Written: June 9, 2010

Let's start with some basic facts: Ray M. White was never registered with the Securities and Exchange Commission (SEC) or the Commodities Futures Trading Commission (CFTC). In fact, White was never registered to sell securities anywhere. Also, in 2003 and 2006 he filed for bankruptcy.

Knowing what you know about Mr. White, lemme ask you a question -- you gonna pull out yer checkbook and write him a big, fat one for his can't-lose FOREX trading program with promised annual returns of between 200 and 400 or so percent?

Hey, before you hurt yourself laughing, how about you control those chuckles and read on. It isn't all that funny. Really.

CFTC Complaint

In a CFTC Complaint, the regulator charged that as early as November 2006, Defendant Ray M. White and Defendant CRW fraudulently told prospective investors that CRW would pool their funds and trade FOREX on their behalf, claiming that CRW would generate tremendous returns for investors of between five and eight percent weekly, or an annual return equivalent of between 260 and 416 percent.

SEC Complaint

Separately, the SEC alleged in its own Complaint that Defendant Ray White and Defendant CRW engaged in a fraudulent Ponzi scheme raising at least $10.9 million from approximately 250 investors in at least 22 states. Acting on behalf of CRW, Ray White promised investors that their money would be pooled into a "fund" and that they would receive profits from a lucrative foreign-currency trading program that he operated through CRW. Ray White led investors to believe that his special expertise at trading foreign currencies (FOREX) would yield exceptional returns. He claimed to achieve returns from 6.3% to 8.1% per week.

FOREX --fuggedaboudit

In reality, Ray White was not a successful foreign-currency trader, and he had no lucrative foreign-currency trading fund or program. Indeed, as I noted at the beginning of this article, he filed for bankruptcy in 2003 and in 2006, a fact he concealed from his investors. Oops!

In the early stages of White's scheme, he sent certain investors account statements purporting to reflect the performance of their investments --- some statements showed monthly returns of over 30%, which. White claimed he generated by trading FOREX overnight. Impressed by the purported returns, early investors informed their friends and family members, some of whom subsequently invested with the Defendants. In reality, Ray White had simply fabricated the account statements, and his claims of high monthly returns were bogus. Of the approximately $10.9 million raised, White and CRW traded FOREX with approximately $93,900, and these trades were ultimately unsuccessful and resulted in the loss of nearly all of that five-figure sum.

Lifestyles of the Rich and Infamous

As to the nearly $10 million that they didn't lose in FOREX, the Defendants spent, transferred, and otherwise disposed of investor funds in a manner contrary to their investor promises. For example, the Defendants made approximately $4.5 million in Ponzi payments to investors to create the illusion that their investments were profitable. Some investors received more money from the Defendants than they had invested with the Defendants. Most investors, however, received either no payments or payments amounting to less than their investments with the Defendants. In addition, included in the Defendants' misappropriation and misapplication ofinvestor funds are payments of at least the following amounts:

A. Payments to Ray White: $177,251.98

B. Purchase of Ray White's House: $164,000.00

C. Purchase of Real Property near Tyler Texas: $205,595.00

D. Payments to Christopher White: $81,590.35

E. Purchase of Vehicle for Christopher White: $59,062.29

F. Payments for Car-Racing Activities: $431,660.31

G. Purchase of Other Vehicles: $73,088.42

H. Payments for Hurricane Motorsports: $127,000.00

I. Payments to Third Parties: $3,472,661.70

The SEC Complaint named:

The SEC Defendants:

    • CRW Management, L.P. ("CRW") is a Texas-registered limited partnership located in Mansfield, Texas. Ray M. White is CRW's general partner and controls its operations.
    • Ray M. White ("Ray White"), aged 50, resides in Mansfield, Texas.

The SEC Relief Defendants:

    • Christopher R. White ("Christopher White"), aged 22, resides in Mansfield, Texas, and is Defendant Ray White's son. Christopher White improperly received funds and assets from investor funds.
    • Hurricane Motorsports, L.L.C. ("Hurricane Motorsports") is a Texas-registered limited liability company located in Arlington, Texas. Ray White and Christopher White co-manage Hurricane Motorsports, which is purportedly in the business of building and selling kit-based sports cars.

The SEC Complaint further seeks permanent injunctions, disgorgement together with prejudgment interest, and civil penalties, and alleges that White and CRW violated the

  • anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and
  • the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act.

Asset Freeze

On March 4, 2009, U.S. District Judge Ed Kinkeade, for the Northern District of Texas, Dallas Division, appointed a receiver and froze the assets of the defendants and relief defendants, and appointed a receiver to recover and conserve assets for the benefit of defrauded investors.

Criminal Plea June 8, 2010

On June 8, 2010, U.S. Attorney James T. Jacks of the Northern District of Texas and Assistant Attorney General Lanny A. Breuer of the Criminal Division, announced that Ray M. White, 51, pleaded guilty before U.S. Magistrate Judge Paul D. Stickney to a criminal information charging one count of commodities fraud. Ray White faces a maximum statutory sentence of 10 years in prison, a $1 million fine, and restitution, and is scheduled to be sentenced by U.S. District Judge Barbara M.G. Lynn on September 17, 2010.

Ray White admitted that, in July 2008, he contracted with an investor to sell $50,000 in commodities through CRW Management LP. 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.

White represented to the investor that his funds would be used to trade off-exchange foreign currency contracts (forex) and that CRW averaged a 7% per week returns through forex trading. He provided written account statements showing purported returns, and represented to this investor that CRW would maintain separate bank accounts for each investor. These account statements were false, and White did not maintain separate bank accounts for the investors.

The vast majority of the funds were never used to trade forex; White admitted to either misappropriating investor funds or paying them to other investors in the form of Ponzi payments. White admitted losing more than $86,500 on forex trading, in sharp contrast to the 7% per week profits he claimed.

For Further Reading:

Securities and Exchange Commission v. Ray M. White and CRW Management, L.P., (Civil Action No. 3-09CV0407-K (U.S.D.C./N.D. Texas, Dallas Division) / Litigation Release No. 20925 / March 5, 2009)http://www.sec.gov/litigation/complaints/2009/comp20925.pdf 

Commodities Futures Trading Commission v. Ray M. White and CRW Management, L.P., (Civil Action No. 3-09CV0407-K (U.S.D.C./N.D. Texas, Dallas Division)http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfcrwcomplaint03042009.pdf

http://www.sec.gov/litigation/complaints/2009/comp20925-tro.pdf (EXPARTE ORDER FREEZING ASSETS AND GRANTING TRO AND OTHER EMERGENCY RELIEF / March 4, 2009 Asset Freeze) http://www.sec.gov/litigation/complaints/2009/comp20925-tro.pdf

Criminal Plea: http://www.justice.gov/usao/txn/PressRel10/white_ray_ple_pr.html


 
[^top^]

Previous Entries
November 21, 2014
Yeah, I know . . . Iím getting older and grouchier and if I were nominated for Curmudgeon of the Year, I would probably complain about that accolade a... Read On
November 21, 2014
Few battles on Wall Street become more pitched than those involving disputes over a registered person's commissions, fees, or bonuses.  Typically... Read On
November 20, 2014
First: Study. Second: Study more. Third: Take the test. Fourth: Pass the test.  Four simple steps you need to follow in order to p... Read On
November 19, 2014
We got this registered person who is acting as the CFO of his son's company and is also promoting an anti-wrinkle cream.  How do those two roles ... Read On
November 18, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page BrokeAndBroker.com Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS... Read On
November 17, 2014
According to the homepage of The Financial Industry Regulatory Authority ("FINRA") Dispute Resolution:FINRA operates the largest dispute resolution... Read On
November 15, 2014
Medical Expenses,Condo Fees,and Loans From Elderly Customer Undo StockbrokerWritten: November 14, 2014Philosopher Soren Kierkegaard captured it perfec... Read On
November 14, 2014
Philosopher Soren Kierkegaard captured it perfectly: "Life can only be understood backwards; but it must be lived forwards."  Much the same can b... Read On
BrokeAndBroker.com Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration Counterclaim BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Thain Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 Eligibility RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Rule 3050 Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker RIA Prison Disclosure NASAA Aguilar FCPA Subway Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education Cheating OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS AML PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Sexist NML Argentina Embezzlement Silver Investor Alert Judgment Bank Fraud Deceased TSSB Mary Jo White Trustee Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Rule 3040 Class Action Beneficiary NYAG Schneiderman Gallagher White Self Regulation Short Sale Compromise Website TRO Supervision Vacatur SDNY BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Confidential Inside Information VA Regulation SP Customer Rule 3270 Rule 3240 Annual Compliance Questionnaire OWB 2Cir Stockbrokers
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+