COURT FREEZES ASSETS AND PROTECTS BOOKS IN COMMODITY POOL FRAUD CASE

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
July 12, 2013
CFTC Charges Texas-based RFF GP, LLC, KGW Capital Management, LLC, and Kevin G. White with Commodity Pool Fraud

Federal court issues emergency Order freezing assets and protecting books and records

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the Eastern District of Texas entered an emergency Order freezing and preserving the remaining pool participants’ assets under the control of Defendants RFF GP, LLC (RFF GP), KGW Capital Management, LLC (KGW Capital), and Kevin G. White, and Relief Defendants Revelation Forex Fund, LP, Meridian Propane LP, and W Corporate Real Estate, LP (d/b/a KGW Real Estate), all of Plano, Texas. The Order also prohibits defendants and relief defendants from destroying books and records, grants the CFTC immediate access to those records, and appoints a temporary receiver to protect pool participants’ funds.

The Order arises out of a civil enforcement Complaint filed by the CFTC on July 9, 2013, charging RFF GP, KGW Capital, and White with fraudulently soliciting at least $5.8 million from at least 20 actual and prospective pool participants to participate in an off-exchange foreign currency (forex) commodity pool and misappropriating at least $1.7 million of pool participants’ funds.

According to the CFTC’s Complaint, the Defendants lured the public to invest by fraudulently telling prospective pool participants that their trading had been profitable, specifically touting compound annual growth rates as high as 37.08% and a total return on investment of 385.84% from 2009 to April 30, 2013. Further, Defendants allegedly told prospective pool participants that White had a 25-year successful career as a Wall Street broker. The Complaint alleges that, in fact, defendants had been losing money since beginning trading, which had not commenced until September 2011. The Complaint alleges further that the Defendants failed to disclose the fact that they had been losing money, that they had been misappropriating pool participants’ funds, that White had been fired from his employment as a broker after a seven-year career in the securities industry, and that White had been both censured and barred by the New York Stock Exchange.

In its continuing litigation, the CFTC seeks a permanent injunction from future violations of federal commodities laws, permanent registration and trading bans, restitution to defrauded pool participants, disgorgement of ill-gotten gains, and civil monetary penalties.

The CFTC appreciates the assistance of the Nevada Office of the Attorney General and the U.S. Securities and Exchange Commission’s Fort Worth, Texas regional office.

CFTC Division of Enforcement staff responsible for this case are Harry E. Wedewer, Dmitriy Vilenskiy, Jeremy Christianson, Rainey Perez, John Einstman, Paul G. Hayeck, and Joan Manley.