Head Of Justice Department’s Criminal Division Announces Guilty Plea Of Texas Man In Commodities Ponzi Case; Multiagency Crackdown Against Scammers Continues
In yet another sign that U.S. policy is to turn up the heat on Ponzi and HYIP purveyors, the head of the Justice Department’s Criminal Division announced the guilty plea of a Texas man accused both criminally and civilly of running a Forex HYIP and Ponzi scheme.
Ray M. White, 51, of Mansfield, faces up to 10 years in federal prison after pleading guilty yesterday to a criminal count of commodities fraud. The announcement was made by Assistant Attorney General Lanny A. Breuer, who was appointed to the post by President Obama in 2009.
White also faces civil prosecutions by the SEC and CFTC.
Breuer was joined in the announcement by U.S. Attorney James T. Jacks of the Northern District of Texas. Multiple news releases by the government yesterday in the White case referenced President Obama’s Financial Fraud Enforcement Task Force.
The Obama administration has made Ponzi- and financial-fraud busting one of its top priorities. Ponzi schemes have drained tens of billions of dollars from the economy during a period in which the United States and much of the world are trying to rebound from a growth-killing recession.
In January, U.S. Attorney General Eric Holder announced that fraudsters were writing their own tickets to jail.
“White admitted that in July 2008 he contracted with an investor to sell $50,000 in commodities through CRW Management LP,” the Justice Department said. “[F]rom 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.”
The scheme featured a claim “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,” the Justice Department said.
Like many Ponzi schemes, “White provided written account statements showing purported returns, and represented to this investor that CRW would maintain separate bank accounts for each investor,” the Justice Department said. “White admitted that in fact, these account statements were false and that he did not maintain separate bank accounts for the investors.”
Prosecutors said “the vast majority of the funds were never used to trade off-exchange foreign currency.”
White, in fact, lost money in his trading scheme, despite his 7- percent- per-week profits claim, prosecutors said.
White solicited at least $10.9 million from late 2006 until March 2009 from more than 250 investors, according to the SEC and CFTC.
“White used at most $93,900 of the $10.9 million he raised to trade in the foreign currency market,” prosecutors said. “The remaining approximately $10.8 million was either misappropriated or returned to CRW customers as part of the Ponzi scheme.”
Prosecutors were quick to point out that White’s Ponzi meant pain for his family and others.
“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,” prosecutors said.
He faces a maximum prison sentence of 10 years and a maximum fine of $1 million. U.S. District Judge Barbara M.G. Lynn is scheduled to sentence White on Sept. 17.
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