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Defendant Name, Crime, State Year
CHARLOTTE, N.C. – James Alexander Shepherd, 58, of Vass, N.C., has agreed to plead guilty to securities fraud charges filed today, defrauding investors of approximately $6 million, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
Shepherd has agreed to plead guilty to one count of securities fraud in U.S. District Court. The charges stem from his operation of investment funds, including The Shepherd Major Play Option Fund, L.P. (the Major Play Fund) and the Shepherd’s Model Hedge Fund (the Hedge Fund), from 2006 through the spring of 2013.
According to court documents and court proceedings, Shepherd defrauded over 100 investors in Union County and elsewhere of approximately $6 million. Court documents indicate that Shepherd perpetrated the fraud by promising his victims returns on their investments in funds he owned and controlled, including the Major Play Fund and the Hedge Fund.
Court records show that in about 2006 and unbeknownst to his investors, Shepherd began misappropriating investor money from the Major Play Fund. Shepherd used the misappropriated funds for other purposes, including to pay investors of his Hedge Fund, to trade in his personal accounts, and to fund the operations of Shepherd’s newsletter which offered investment news and advice to thousands of subscribers.
According to court records, Shepherd never informed his investors of the misappropriations. To conceal his fraudulent conduct, Shepherd sent to investors certified financial statements for the Major Play fund, accompanied by an Independent Auditor’s Report which assured the investors that an independent audit on the fund had been conducted in compliance with the rules of the U.S. Commodities Futures Trading Commission (CFTC). The false financial statements also misrepresented to investor victims the financial condition of the fund.
Shepherd was able to obtain the Independent Auditor’s Report each year by tricking the accountant who provided it. Shepherd would forge the name of a fictitious bank employee, Charles Fisher, on a fake bank letter and send forged bank statements with fake balances. Shepherd controlled the P.O. Box the accountant’s letters were mailed to and controlled the fax number that supposedly belonged to Charles Fisher at the bank.
The scheme was uncovered when in March 2013 the accountant sent a letter of inquiry to the bank the fund held its account, requesting the fund’s cash balance. However, court records show that the accountant received a letter or fax confirmation from “Charles Fisher” verifying the Major Play Fund’s bank balance, as well as a copy of the bank statement confirming the cash balance of the fund. In reality, Charles Fisher was a fictitious bank employee. Shepherd used a version of Adobe Acrobat to type false numbers over true bank statements.
Shepherd’s scheme was uncovered, and he has agreed to plead guilty to the charge. The case is being investigated by the Federal Bureau of Investigation (FBI), Charlotte Division.
Key Facts
- State: North Carolina
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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