N.C. firm must pay $6.9M for Ponzi scheme

The following is from the CFTC...

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained federal court orders requiring Rodney W. Whitney of Thomasville, N.C., Nicholas T. Cox of Denton, N.C., and Integra Capital Management, LLC (Integra), which formerly operated out of High Point, N.C., to pay over $6.9 million in restitution, disgorgement, and civil monetary penalties. The orders, entered against Cox on October 27, 2011 and against Whitney and Integra on October 13, 2011, find that they defrauded investors in a commodity pool Ponzi scheme involving commodity futures and off-exchange foreign currency transactions.

The orders, entered by U.S. District Judge Thomas D. Schroeder of the U.S. District Court for the Middle District of North Carolina, stem from a CFTC complaint filed in September 2010, charging Whitney, Cox, and Integra with fraud and misappropriation in connection with the scheme (see CFTC Press Release 5907-10, Sept. 30, 2010).

The orders require Whitney and Integra jointly and severally to pay restitution of $2,185,063, disgorgement of $1,198,316, and a civil monetary penalty of $3,594,948 and require Cox to pay restitution of $2,185,063 and a $2,185,063 civil monetary penalty. The orders provide for a dollar-for-dollar credit for Whitney, Cox, and Integra for any restitution or civil monetary penalty payments paid by the other party. The orders also permanently prohibit Whitney, Cox, and Integra from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC.

Judge Schroeder found that, beginning in or about September 2006 and continuing through at least August 2009, Whitney, Cox, and Integra violated the anti-fraud provisions of the Commodity Exchange Act (CEA) by misrepresenting Integra’s trading performance and by misappropriating pool participants’ funds, among other violations.

The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Middle District of North Carolina.

CFTC Division of Enforcement staff members responsible for this case are Susan Gradman, David Slovick, Judith McCorkle, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

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