Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, March 5, 2009

SEC Gets Freeze on Assets of Alleged Foreign Currency Trading Fraud

On March 4, 2009, the U.S. District Court for the Northern District of Texas appointed a receiver and froze the assets of a Mansfield, Texas resident who is alleged to have raised at least $10.9 million from over 250 investors in a purportedly lucrative foreign currency trading program. Defendant Ray M. White, on behalf of his company, defendant CRW Management, L.P., claimed to have achieved returns as high as 8.1% per week for investors. In truth, the Commission's complaint alleges that White and CRW have been operating a fraudulent scheme since at least April 2007, during which White has misappropriated several million dollars of investor funds to, among other things, finance his son's car-racing career, purchase real estate, and to make Ponzi payments to earlier investors with new investor funds.

The complaint further alleges that the defendants used only $93,900 of the investors' funds to trade in the foreign-currency market, loosing the vast majority of these funds in unsuccessful trades. According to the complaint, White perpetuated his scheme by sending investors fictitious account statements reflecting, in some instances, monthly returns of over 30%. White allegedly supported these bogus returns by making approximately $4.5 in Ponzi payments to investors. White used the remaining amount of investor funds to, among other things, purchase homes and cars, and finance car-racing activities. Approximately $3.5 million was paid to third parties for unknown and undisclosed purposes.

The complaint alleges that White and CRW violated the anti-fraud provisions and  seeks permanent injunctions, disgorgement together with prejudgment interest, and civil penalties.  The Court has frozen the defendants' and relief defendants' assets and appointed a receiver to recover and conserve assets for the benefit of defrauded investors.

http://lawprofessors.typepad.com/securities/2009/03/sec-gets-freeze.html

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