SEC Folds Forex Fraud
By Hal M. Bundrick
NEW YORK (
)--Claiming to be "one of the world's leading private investment firms," an unregistered firm has been charged by the Securities and Exchange Commission with defrauding investors in a $7.1 million foreign currency exchange trading scheme.
The SEC alleges that Kevin G. White of Plano, Texas and his forex funds purported to use "highly sophisticated and proprietary software" based on a statistical arbitrage strategy to monitor 105 separate currency pairings 24 hours a day, five days a week. White touted returns of more than 393% since January 2009 and a compound annual rate of return of 36%. In reality, in less than two years the fund had incurred realized trading losses of more than $550,000 plus approximately $1,419,600 in unrealized losses through May 31, 2013.
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The agency says White used more than $1.7 million of investor money to pay personal expenses, finance expensive trips, and fund other unrelated and undisclosed businesses and investments.
"White and his companies brandished phony credentials and a can't-miss trading strategy to lure investors into a web of deceit," said David Woodcock, Director of the SEC's Fort Worth Regional Office. "In reality, White was suffering forex trading losses and putting investor money to other uses."
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Using websites, press releases and seminars, the KGW Capital Management and Revelation Forex Fund had raised more than $7.1 million from investors. The SEC says White claimed a "25-year Wall Street career" but actually spent only six years as a licensed securities professional in Houston before being barred by the New York Stock Exchange in 1992.
While White and KGW Capital claimed the fund began in January 2009, Revelation Forex did not actually receive investor funds or begin forex trading until September 2011, according to the SEC. Meanwhile, bank records reveal that White has taken more than $1.7 million for himself, KGW Capital, and two of his other businesses, including approximately $248,600 in investor funds from Revelation Forex to fund an unrelated and undisclosed propane business and $97,000 on another business entitled KGW Real Estate. The SEC's complaint names both of these companies as relief defendants for the purpose of seeking disgorgement of investor funds in their possession.
The SEC requested and was granted an asset freeze and temporary restraining order against White, KGW Capital, Revelation Forex, and RFF GP LLC, which is the general partner of Revelation Forex. The Commodity Futures Trading Commission (CFTC) also announced parallel charges against White and his companies.
--Written by Hal M. Bundrick
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