After more than two and a half years on the run, federal authorities caught up with one-time fiscal guru James Arthur McDonald Jr. who was wanted on fraud charges.
Deadline described McDonald as a “perennial presence as an analyst on CNBC shows over the years.”
However, the high-profile commentator had been living under the radar since November 2021, when the initial fraud allegations against him were made, according to a U.S. Attorney’s Office, Central District of California news release.
The former Arcadia, California, resident was arrested Saturday at a residence in Port Orchard, Washington. He will eventually be returned to California to face the charges against him.
McDonald had been summoned by the Securities and Exchange Commission to address fraud allegations, but the news release said at that time his phone and email accounts were terminated and he told at least one person he planned to “vanish.”
Fugitive James Arthur McDonald was arrested in Port Orchard, WA, on Saturday. A former guest on television programs, he is accused of defrauding investors. @usao_losangeles @fbiseattle @irs_ci
Link to Captured Poster: https://t.co/eFRwF6c2eT
Details: https://t.co/XeuixTV6AC pic.twitter.com/lYuI6j0voL
— FBI Los Angeles (@FBILosAngeles) June 18, 2024
In January 2023, a federal grand jury indicted McDonald on 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 unlawful activity.
McDonald was the CEO and chief investment officer of Hercules Investments LLC and Index Strategy Advisors Inc.
In 2020, the release said, he positioned clients’ investments to capitalize on what he expected to be a post-pandemic stock market drop. Hercules clients lost between $30 million and $40 million. According to the release, 2020 ended with clients upset about the losses.
In 2021, McDonald began raising money that the release said was spent on such things as a Porsche and designer clothes.
The SEC complaint said that in two separate schemes, “McDonald fraudulently raised approximately $5.1 million from about 23 investors and clients, misappropriating more than $1.5 million in investor money to fund his lavish lifestyle and making at least $1.4 million in Ponzi-like payments to investors.”
The complaint said that in one part of the scheme, $3.6 million was raised, but less than half was ever spent on trading.
While sending investors false statements, “McDonald also used $1 million of … investor monies to fund his extravagant lifestyle, including purchasing luxury vehicles, paying rent on his luxury home, and hundreds of thousands of dollars on personal credit card charges, as well as to pay expenses associated with operating Hercules,” the complaint said.
In a second scheme, the complaint alleged, “McDonald falsely represented” that investor funds “would be used to expand Hercules’s business, but he lied about the firm’s financial condition and failed to disclose that he had promised Hercules clients that the firm would repay earlier losses they had incurred as a result of bad trades McDonald had made in the fall of 2020.”
“McDonald also lied to the Hercules client investors telling them that their funds would be spent on Hercules business operations or be used to engage in securities trading,” the complaint said.
“In fact, McDonald commingled their funds with his personal assets, and used the money to make payments to clients and investors and pay personal expenses, including purchasing a Porsche,” the complaint said.
The news release said that if McDonald is convicted on all charges, he could face a “statutory maximum sentence of 20 years in federal prison for each securities fraud and wire fraud count, up to 10 years in federal prison on the monetary transactions derived from unlawful activity count, and up to five years in federal prison on the investment adviser fraud count.”
This article appeared originally on The Western Journal.
The post CNBC Analyst Arrested on Federal Charges After Disappearing and Being Declared a Fugitive appeared first on The Gateway Pundit.