WASHINGTON, D.C. – James A. Shepherd, 51, of North Carolina, is facing charges of fraud following a civil enforcement complaint filed by the Commodity Futures Trading Commission (CFTC) on June 17, 2013. Shepherd, along with his company James A. Shepherd Inc., allegedly defrauded approximately 176 investors out of $10 million through the Shepherd Major Play Option Fund LP.
According to the CFTC complaint, Shepherd fraudulently solicited funds from investors, promising to invest them in on-exchange options on commodity futures. He assured participants that pool assets would remain separate from his other business dealings. However, the CFTC alleges that Shepherd misappropriated at least $4.45 million of the pooled funds, transferring them to his personal bank account, losing them through trading in accounts held in his name, and diverting them to a hedge fund he operated, using the money to fulfill redemption requests from that fund’s investors.
The scheme involved a deliberate effort to conceal the misappropriation. Shepherd allegedly distributed false statements and certified financial reports to pool participants, inflating the net asset value of the fund. He further masked the fraud by forging bank statements and confirmations, and by making false statements to the fund’s auditor and the National Futures Association (NFA) during audits.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against Shepherd to prevent further violations of the Commodity Exchange Act. The agency acknowledged the assistance of the U.S. Attorney’s Office for the Western District of North Carolina, the Federal Bureau of Investigation, and the NFA in the investigation.
The case is being pursued by CFTC staff members Elizabeth C. Brennan, Patryk J. Chudy, W. Derek Shakabpa, Michael P. Geiser, Philip Rix, David Acevedo, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
Source: CFTC.gov
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