Texas Man Pleads Guilty for Role in Commodities Insider Trading Scheme

According to a Department of Justice press release, on February 1, John Ed James, 51, of Katy, Texas pleaded guilty to conspiracy to commit commodities fraud and wire fraud for his role in an insider trading scheme.

In his guilty plea, James admitted that he conspired to use nonpublic information to engage in illegal, pre-arranged trades in natural gas futures contracts. Through these trades, he and his co-conspirators acquired over $966,403 in illegal profit. They falsified income information for the IRS to conceal the nature of the funds and depict them as legitimate income.

Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division explained, “When individuals engage in deceptive trade practices and manipulate the commodities market for their personal gain, they undermine the public’s confidence in the U.S. markets and stack the deck against other traders and investors. The department and our law enforcement partners will continue to pursue and prosecute those who engage in such activity.”

This case is similar to that of Marcus Schultz, 41, who pleaded guilty to conspiracy to commit wire fraud and violating various provisions of the Commodity Exchange Act in 2020. That case was the first effort by the DOJ to prosecute insider trading in the commodity markets under Section 180.1, part of the Commodity Exchange Act.

Special Agent in Charge Perry K. Turner of the FBI’s Houston Field Office said of James’ crime, “Commodities fraud and insider trading undermine the integrity of the markets, in this case the energy market which plays a key role in the Houston area economy. The FBI will continue to combat criminal violations of the commodities laws to eliminate unscrupulous activity and protect market participants so that the public will continue to have trust in the system.”