CNBC monetary analyst turned fugitive, James Arthur McDonald Jr., arrested by FBI after 3 years on the run
A former CNBC monetary knowledgeable and CEO-turned-fugitive accused of defrauding hundreds of thousands from his buyers after a failed “wager” in opposition to the US economic system in 2020 has been arrested after being on the run for almost three years.
James Arthur McDonald Jr., 52, was arrested in Port Orchard, Washington, on Saturday, and shall be extradited to California to face trial “within the coming weeks” for his alleged crimes, the FBI mentioned. US Department of Justice.
McDonald has been on the run since November 2021 after he failed to seem earlier than the US Securities and Trade Fee to testify on fees of defrauding buyers.
He was the previous CEO and Chief Funding Officer of two Los Angeles monetary firms: Hercules Investments LLC and Index Technique Advisors Inc.
Alongside together with his firms, McDonald “often appeared as an analyst on the monetary tv information community CNBC,” the Justice Division mentioned.
His troubles started in early 2020 when the previous monetary advisor reportedly misplaced “tens of hundreds of thousands of {dollars} of Hercules shoppers’ cash after adopting a dangerous brief place that successfully wager in opposition to the well being of the U.S. economic system within the wake of the U.S. presidential election.” In keeping with the Ministry of Justice.
“McDonald anticipated that the COVID-19 pandemic and the election would result in a major sell-off that might trigger the inventory market to say no.”
However when the market downturn by no means got here to fruition, Hercules misplaced between “$30 million and $40 million” of its shoppers’ cash.
By December 2020, buyers “started complaining to firm staff about losses of their accounts.”
Then, in January 2021, McDonald’s firm solicited hundreds of thousands of {dollars} in funds from buyers to lift capital for Hercules, in response to the Justice Division.
To make issues worse, he allegedly “misrepresented how the funds have been used” and by no means disclosed to buyers the “huge losses beforehand incurred by Hercules.”
McDonald can also be suspected of taking $675,000 in funding cash he raised from one of many victims’ teams, which he used to spend on himself — “roughly $174,610 of which he spent on the Porsche dealership.”
In keeping with the Division of Justice, he additionally allegedly wired greater than $100,000 of that cash to the proprietor of a house he was renting in Arcadia, California, after which wired one other $6,800 to a web-based retailer to buy designer clothes.
The alleged scammer reportedly despatched clients pretend account statements, “together with one buyer who invested roughly $351,000.”
The shopper later requested cash for a down fee on a house, however McDonald informed him that “a lot of the cash was misplaced, and he by no means absolutely recovered his funding,” the DOJ mentioned.
In 2022, whereas in the US, a U.S. District Choose discovered McDonald accountable for $3,810,346, representing his internet earnings earned because of the alleged conduct, in response to second.
McDonald was charged with one depend of securities fraud, one depend of wire fraud, three counts of defrauding funding advisors, and two counts of partaking in financial transactions in property derived from criminal activity.
The previous CNBC monetary analyst appeared in court docket Monday in Tacoma, Washington, and is anticipated to be transferred to Los Angeles within the coming weeks.
If discovered responsible, the alleged con artist may resist 20 years in federal jail for every depend of securities fraud and wire fraud, 10 years for every depend of utilizing buyers’ funds to his benefit, and 5 years for one funding advisor fraud.
