The U.S. District Court for the Eastern District of North Carolina has entered a default judgment Order against Ron Earl McCullough and David Christopher Mayhew over running a fraudulent Forex scheme.
The defendants will have to jointly pay $1,223,388.43 in restitution and a $2,486,619.87 civil monetary penalty. In addition, the Court imposed permanent trading and registration bans against the defendants and prohibited them from violating the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
The Court’s ruling is related to a complaint from the U.S. Commodity Futures Trading Commission (CFTC) filed on February 18, 2014, against McCullough and Mayhew.
The Court has concluded that from approximately December 2008 to January 2012, McCullough and Mayhew ran a fraudulent scheme that solicited about $2.3 million from at least 11 members of the public to trade leveraged or margined off-exchange foreign currency contracts.
In addition, the Court also found that McCullough and Mayhew misrepresented their trading records, used a part of the customer funds to repay other customers, in a manner typical for a Ponzi scheme. The defendants were found to have misappropriated over $1.6 million from their customers, including $829,000 for their personal use.
This is not the first legal ruling against Mayhew. In a related criminal action in June this year, a jury found him guilty of one count of conspiracy, ten counts of wire fraud, four counts of mail fraud, and three counts of unlawful monetary transactions. The grand jury also indicted McCullough, but he is currently a fugitive.
To view the official press release on the latest court judgement against McCullough and Mayhew, click here.