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Former CNBC analyst James McDonald arrested on fraud charges
A California man who frequently appeared as a guest analyst on the financial news network CNBC before being charged with fraud was arrested Saturday at a Port Orchard home, concluding a nearly three-year search.
According to the U.S. Attorney’s Office for the Central District of California, James Arthur McDonald Jr., 52, has been considered a fugitive since November 2021 after failing to testify before the U.S. Securities and Exchange Commission regarding allegations that he defrauded investors. .
McDonald appeared in U.S. District Court in Tacoma yesterday, according to Public Information Officer Ciaran McEvoy. McDonald will then be transferred to Los Angeles to face federal charges in the Central District of California.
McEvoy declined to comment on what brought McDonald to Port Orchard. McEvoy also did not say how investigators discovered McDonald’s presence there.
In January 2023, a federal grand jury in Los Angeles charged McDonald with one count of securities fraud, one count of wire fraud, three counts of investment adviser fraud, and two counts of engaging in monetary transactions in property derived from activities illegal.
McDonald, former CEO and chief investment officer of Hercules Investments, LLC and Index Strategy Advisors, Inc., lost between $30 and $40 million in Hercules client money in late 2020 after incorrectly predicting that the US economy would decline upon exiting the crisis. the COVID-19 pandemic. In 2021, he allegedly failed to disclose these losses when soliciting money from investors for what he claimed was a capital increase intended to establish a mutual fund through Hercules Investments. McDonald allegedly misappropriated $675,000 of the funds he raised, spending various amounts of that money on cars, high-end men’s clothing and rent.
McDonald is also accused of misrepresenting his other company, ISA, and providing ISA customers with falsified account statements.
In April 2022, McDonald was found liable for $3,810,346 in a civil lawsuit filed by the SEC.
If McDonald is found guilty of all current federal charges levied against him, he could face up to 20 years in federal prison for each count of securities fraud and wire fraud, up to five years in federal prison for investment adviser fraud, and up to 10 years in federal prison for engaging in monetary transactions on property derived from illegal activities.