Thursday, 25 August 2016
Last updated 20 hours ago
Jun 18 2013 | 10:01am ET
A North Carolina hedge fund manager has been charged with defrauding investors of $6 million.
James Shepherd was hit with both criminal charges and a Commodity Futures Trading Commission lawsuit. He has struck a plea deal on the former, although his agreement with prosecutors is sealed.
Shepherd ran his fraud for seven years and duped 176 clients, prosecutors said. The scam bears similarities to that run by Peregrine Financial Group's Russell Wasendorf, with Shepherd using a post-office box he controlled to mislead his auditor, telling him it was his bank's address. But when his accountant demanded electronic confirmation of the fund's bank balances, Shepherd refused, and the accountant called the National Futures Association.
Shepherd fooled his clients by sending phony account statements. And while he told investors in December that one fund was managing $6 million, it actually held less than $100,000.
"He definitely wants to pay back people who have lost money," John Keating Wiles, his lawyer, told Reuters.
Shepherd used the stolen money to build himself a $2 million house, among other things.