February 13, 2020
CFTC Orders Florida Resident and His Company to Pay Over $1 Million for Fraud
Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Matthew R. White and M.W. Global Futures LLC (MWGF), both of Florida, for fraudulently soliciting approximately $1.2 million for a pooled investment vehicle trading commodity futures contracts, misappropriating over $280,000 in pool participants’ funds to pay for personal expenses, and operating without registration as required. The order requires White and MWGF to pay a $200,000 civil monetary penalty and $883,974 in restitution, of which $602,003 has already been paid. The order also requires White and MWGF to cease and desist from further violations of the Commodity Exchange Act, as charged.
The order finds that from at least February 2014 to July 2018, White and MWGF solicited and received funds from at least six individuals (pool participants) residing in Florida and Washington state, for the purpose of trading commodity futures contracts. White pooled the participants’ funds in his personal bank and trading accounts and deposited only a portion of the pooled funds into commodity interest trading accounts. From 2014 to 2018, White traded pool participants’ funds in two commodity interest accounts, both in his own name. In the first account, there were at least 31 months in which no trading occurred, and the account was closed with a total cumulative loss of $687. In the second account, opened in April 2018, trading occurred in only one month and ended with a cumulative loss of $308.
White made false or misleading statements and omitted material facts regarding the profitability of his commodity futures trading to prospective and current pool participants. For example, White failed to disclose that his trading had actually resulted in a net loss and that the highest monthly profit he had earned was roughly $934. Additionally, White created and delivered monthly account statements to at least two pool participants, which falsely represented that he engaged in trading every month, that his trading was profitable, and that participants were earning positive returns on their deposits.
The order further finds that White misappropriated $281,970 of pool participants’ funds, diverting most of it for personal expenses, including credit card, auto loan, and rent payments. This amount was far greater than any commissions that White and MWGF could have claimed on the minor, sporadic profits generated by his trading.
Of the approximately $1.2 million collected from pool participants, MWGF and White initially repaid more than $400,000, and during the CFTC’s investigation, White repaid an additional $602,003 to pool participants.
The order also finds that in soliciting and holding funds for a pooled investment vehicle trading commodity futures contracts, White and MWGF illegally operated as unregistered commodity pool operators and White illegally acted as an unregistered associated person of MWGF.
The order recognizes White’s cooperation, which expedited the investigation of this matter, in the form of a reduced civil monetary penalty.
Related Criminal Action
In a separate action brought by the U.S. Attorney’s Office for the Western District of Washington, White pleaded guilty to one count of wire fraud in connection with fraudulent solicitation and misappropriation of funds from investors. USA v. White, CR19-253 RSL (W.D.Wash. ECF No. 16). White is scheduled to be sentenced on April 10, 2020.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington and the Federal Bureau of Investigation.
The Division of Enforcement staff members responsible for this case are Dmitriy Vilenskiy, Julia Colarusso, Christine Ryall, and Paul G. Hayeck, as well as former staff member Greta Gao.
CFTC’s Fraud Advisories
The CFTC has issued several customer protection Fraud Advisories including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that company. A company’s registration status can be found using NFA BASIC.