Two Raleigh men who were sued by the U.S. Commodity Futures Trading Commission for fraudulently soliciting funds from at least 11 people have been ordered to jointly pay $1.2 million in restitution and a $2.5 million civil penalty.
The federal agency announced Friday that it obtained a default judgment against Ron Earl McCullough and David Christopher Mayhew, both of Raleigh, in federal court. The court order was issued Aug. 14 by Senior Judge James Fox.
The agency sued McCullough and Mayhew last year for fraudulently soliciting approximately $2.3 million in funds from customers to trade leveraged or margined off-exchange foreign currency contracts. Among other things, the complaint alleged that, from December 2008 through January 2012, the two men: misrepresented the trading risks; falsely guaranteed the return of customers’ principal; and falsely promised high returns.
The complaint also alleged that the two men misappropriated at least $1.6 million in customers’ funds.
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In June, Mayhew also was found guilty, in a related criminal action, of one count of conspiracy, 10 counts of wire fraud, four counts of mail fraud and three counts of unlawful monetary transactions, according to the agency. His sentencing hearing is scheduled for Sept. 28.
McCullough also was indicted by a grand jury but is currently a fugitive, the agency said.
The agency cautions victims that restitution orders may not produce recovery of the money they lost because the wrongdoers may lack the funds and assets to pay them.