September 30, 2010
CFTC Charges Rodney W. Whitney, Nicholas T. Cox and Their Trading Firm, Integra Capital Management LLC, with Operating a $3 Million Ponzi Scheme
Federal court freezes assets of the North Carolina-based defendants charged with fraud and misappropriation.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained an emergency federal court order freezing the assets of defendants Rodney W. Whitney of Thomasville, N.C., Nicholas T. Cox of Denton, N.C., and Integra Capital Management LLP (Integra Capital), which formerly operated out of High Point, N.C. The order, entered on September 29, 2010 by Judge Thomas D. Schroeder of the U.S. District Court for the Middle District of North Carolina, also prohibits defendants from destroying books and records and grants CFTC staff access to such documents. The court scheduled a hearing for October 15, 2010, on the CFTC’s motion for a preliminary injunction.
The order stems from a CFTC enforcement action charging the defendants with fraud and misappropriation in connection with operating a commodity pool Ponzi scheme involving both commodity futures and off- exchange foreign currency (forex) transactions.
The CFTC’s complaint alleges that, from at least September 2006 to August 2009, Whitney, Cox and Integra Capital fraudulently solicited and accepted at least $3 million from at least 16 customers to invest in a commodity pool and solicited at least five customers to trade off-exchange forex contracts.
Whitney and Cox falsely represented to these customers that Integra Capital consistently earned 3 percent to 5 percent monthly returns and sustained virtually no losses in its futures and forex trading, according to the complaint. Whitney also allegedly distributed false account statements and false 1099 tax forms to Integra Capital’s customers, showing that their investments were profitable. Instead, the defendants’ trading accounts consistently lost money, according to the complaint.
Furthermore, the complaint charges that Whitney and Cox misappropriated customer funds to pay personal expenses, including dining, entertainment, travel and real estate purchases.
In its continuing litigation, the CFTC seeks preliminary and permanent injunctions against the defendants, a return of ill-gotten gains, restitution to defrauded customers and civil monetary penalties.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Middle District of North Carolina, the U.S. Department of Justice and the U.S. Postal Inspection Service in this action.
The CFTC Division of Enforcement staff members responsible for this case are Susan Gradman, David Slovick, Judith McCorkle, Eleanor Oh, Scott Williamson, Rosemary Hollinger and Richard Wagner.
Last Updated: September 30, 2010