PRESS RELEASE
For Immediate Release
Confirmation.com Uncovers Another Multi-Million Dollar Financial Fraud
Brentwood, Tenn. – June 18, 2013 – In less than nine months after uncovering the $215 million
Peregrine Financial Group (PFG) fraud, Confirmation.com’s electronic audit confirmation service
was used to uncover another financial fraud. This time it was hedge fund operator James A.
Shepherd Inc., and the company’s owner, James A. Shepherd of Vass, North Carolina pled guilty
to stealing millions of dollars from more than 100 investors over a seven-year period.
According to court records, James Shepherd engaged in a commodity pool fraud where he
solicited pool participants to invest in the Shepherd Major Play Option Fund (Major Play Fund).
Instead of using the funds for trading on-exchange options on futures contracts, he stole
approximately 60% of the fund’s assets to support his personal lifestyle including building a $2
million home. To conceal his fraud for so long, he used Adobe Acrobat to create fraudulent
bank statements and misdirected the auditor’s bank confirmation letters.
“The Shepherd fraud is almost identical to the Russell Wasendorf PFGBest fraud,” said Chris
Schellhorn, CEO of Confirmation.com. “Just like Wasendorf’s 20-year fraud, for over seven
years Shepherd used readily available software tools to create fake bank statements, he
directed the auditors to send bank confirmation letters to a PO Box he had rented, forged a
fictitious bank employee’s signature, and he sent the fraudulent audit confirmations back to the
auditor.”
The fictitious bank statement from December 31, 2012 indicated that the Major Play Fund had
$6,041,085 in cash, but the fund’s only bank account had a balance of approximately $81,584.
It was the auditor for the National Futures Association (NFA) that insisted on using
Confirmation.com to verify the fund’s bank balance electronically that led to the discovery of
Shepherd’s fraud scheme.
“He (James Shepherd) failed to authorize Confirmation.com to electronically confirm the
balances” said NFA President Dan Roth in the official case against Shepherd. In the statement
by the U.S. Attorney’s Office from the FBI’s website, “the accountant insisted on verifying the
cash balance of (the) fund’s bank account electronically, through the audit confirmation
website www.confirmation.com, which is now the commonly used method of verification by
accountants. Shepherd delayed and then refused to give the accountant authority to utilize the
website to verify the cash balance.”
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“Like Wasendorf, by refusing to give the auditor authorization to use Confirmation.com to
confirm the fund’s bank balance, Shepherd was essentially admitting guilt,” said Brian Fox,
founder and chief marketing officer of Confirmation.com. “When an auditor’s client won’t
authorize the use of Confirmation.com that’s a strong warning sign that fraud is taking place.”
Auditors and financial institutions in more than 100 countries use Confirmation.com because
the propensity for fraud and the magnitude of those frauds on a global scale are both
increasing. By verifying the authenticity of each user, the Confirmation.com’s cloud-based
solution not only improves the quality of audits, it greatly improves investor confidence in the
audited financial statements.
About Confirmation.com
Confirmation.com is the creator and world’s leading provider of secure electronic audit
confirmation services. It processes over $1 trillion in confirmation information annually for a
majority of public companies, as well as private companies, non-profits and government
agencies. In addition to its bank confirmation solution, the company provides solutions for
more than 30 different types of audit confirmations including accounts receivable
confirmations. Confirmation.com holds six patents and is the Preferred Provider of Electronic
Confirmations for the AICPA Trusted Business Advisor™ Solutions Program and is endorsed by
the American Bankers Association. Confirmation.com has also received numerous awards
including being a multi-year alumnus on the Inc. 500 list for 2010 and 2011. Several hundred
In-Network responding companies including all of the Top 10 banks in the U.S. and over 11,000
accounting firms in more than 100 countries trust Confirmation.com for their audit
confirmation needs. For more information, visit Confirmation.com.
Official Filings
The U.S. Attorney’s Office filing on the FBI website can be found here:
http://www.fbi.gov/charlotte/press-releases/2013/investment-fund-owner-and-operatoragrees-to-plead-guilty-to-defrauding-investors-of-approximately-6-million
The National Futures Association (NFA) filing can be found here:
http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=3590
Contact
Debbie Gray, Director of Marketing
Confirmation.com
888-716-3577
Debbie.gray@confirmation.com
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