August 28, 2015

Federal Court in North Carolina Enters Judgment against Ron Earl McCullough and David Christopher Mayhew in Foreign Currency Ponzi Scheme

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced that Senior Judge James C. Fox of the U.S. District Court for the Eastern District of North Carolina entered a default judgment Order against Defendants Ron Earl McCullough and David Christopher Mayhew, both from Raleigh, North Carolina. The Order requires McCullough and Mayhew jointly to pay $1,223,388.43 in restitution and a $2,486,619.87 civil monetary penalty. The Order also enters a permanent injunction that imposes permanent trading and registration bans against the Defendants and prohibits them from violating the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

The Court’s Order stems from a CFTC Complaint filed on February 18, 2014 against McCullough and Mayhew (see Complaint and CFTC Press Release 6860-14).

In the Order, the Court found that, from approximately December 2008 to January 2012, McCullough and Mayhew operated a fraudulent scheme that solicited approximately $2.3 million from at least 11 members of the public to trade leveraged or margined off-exchange foreign currency contracts. The Court also found that McCullough and Mayhew misrepresented their trading record, used some customer funds to repay other customers in the manner of a Ponzi scheme, and misappropriated more than $1.6 million from their customers, including $829,000 for their personal use.

CFTC Earlier Issued an Administrative Order against Travis Cox, a Partner of McCullough and Mayhew

In a separate but related matter, on February 19, 2014, the CFTC issued an Administrative Order against Travis Maurice Cox also from Raleigh, North Carolina, that sets forth Cox’s fraudulent conduct in connection with his solicitations on behalf of his forex trading partners, McCullough and Mayhew (see Administrative Order and CFTC Press Release 6860-14). The CFTC Order found that Cox misrepresented the results of McCullough and Mayhew’s trading on his behalf and misappropriated approximately $114,000 of his customers’ funds. The Order also required Cox to pay restitution of $1,306,010.95 to his defrauded customers and a $330,000 civil monetary penalty.

Related Criminal Action

In a related criminal action, on June 12, 2015, a jury found Mayhew guilty of one count of conspiracy, ten counts of wire fraud, four counts of mail fraud, and three counts of unlawful monetary transactions (see United States v. Mayhew, No. 13-cr-199 (E.D.N.C.)). The Court has scheduled Mayhew’s sentencing hearing for September 28, 2015. The grand jury also indicted McCullough, but McCullough is currently a fugitive.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers, and to ensure that persons who violate the CEA by committing fraud are held accountable.

The CFTC thanks the U.S. Attorney’s Office for the Eastern District of North Carolina, the Federal Bureau of Investigation, the Internal Revenue Service, and the U.S. Postal Inspection Service for their assistance.

CFTC Division of Enforcement staff members responsible for this case are Glenn Chernigoff, Maura Viehmeyer, James H. Holl, III, Rick Glaser, and Gretchen L. Lowe.

* * * * * *

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online. 

Media Contact
Dennis Holden
202-418-5088

Last Updated: August 28, 2015