June 20th 2024.
James Arthur McDonald used to be a well-known financial analyst on CNBC, appearing regularly to share his insights on the stock market. However, his once-prominent career has taken a shocking turn as he finds himself in the hands of law enforcement. On June 15, McDonald was arrested in Port Orchard, Washington, after being on the run for several months. The FBI had listed him as one of their Most Wanted for white-collar crimes, and it was a relief for authorities to finally have him in custody.
The news of McDonald's arrest was announced by federal prosecutors on Monday, putting an end to a manhunt that began back in November 2021. It all started when McDonald failed to show up and testify before the Securities and Exchange Commission (SEC) regarding allegations of investor fraud. Shortly after, he cut off all communication and made it known that he intended to disappear. In January 2023, a federal grand jury in Los Angeles indicted him on seven counts related to securities fraud, wire fraud, and investment adviser fraud.
Before his downfall, McDonald held positions as CEO and chief investment officer at Hercules Investments LLC and Index Strategy Advisors Inc. According to the Department of Justice, his troubles began with a risky investment strategy in late 2020. This decision resulted in the loss of tens of millions of dollars of client money, as he bet against the health of the U.S. economy following the presidential election. He then allegedly misled investors by hiding these losses and falsely promoting a capital raise for Hercules.
One particular incident involved McDonald obtaining $675,000 from investors on March 9, 2021, which he reportedly spent on luxury items and property rentals. He also deceived clients by falsely claiming that his firm, ISA, was a registered investment adviser and providing them with fake account statements. The SEC took legal action against McDonald and Hercules in September 2022. In April 2024, U.S. District Judge Percy Anderson found McDonald liable for nearly $4 million in illegal profits.
On June 18, 2024, the FBI announced that McDonald had been captured in Port Orchard and updated his profile to "captured." He was also listed as a fugitive by the FBI Los Angeles and Seattle divisions for defrauding investors. McDonald faces the possibility of up to 20 years in federal prison for each fraud count if convicted, along with additional penalties for other charges. It is a shocking downfall for someone who was once a familiar face on television programs, and only time will tell the outcome of his case.
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