Port Orchard, Washington – A former CNBC financial pundit and CEO, James Arthur McDonald Jr., has been captured by the FBI after nearly three years on the run. McDonald is facing charges for allegedly defrauding investors of millions of dollars following a failed financial gamble against the US economy in 2020.
McDonald, 52, was apprehended in Port Orchard, Washington, over the weekend and is set to be extradited to California for trial. The United States Department of Justice announced his arrest, noting that McDonald had been evading authorities since November 2021 after failing to appear before the Securities and Exchange Commission.
As the former CEO and chief investment officer of Hercules Investments LLC and Index Strategy Advisors Inc. in Los Angeles, McDonald had a prominent presence as a financial analyst on CNBC. However, his troubles began in 2020 when he reportedly lost tens of millions of dollars of client money due to a risky short position taken against the US economy post-presidential election.
Despite projecting major market downturns due to the COVID-19 pandemic and the election, McDonald’s strategy backfired, leading to substantial losses for Hercules Investments. This led to investor complaints and further actions by McDonald to raise capital, allegedly misrepresenting the use of funds and hiding previous losses from investors.
Furthermore, McDonald is accused of diverting funds for personal use, including significant spending at a Porsche dealership and purchasing designer clothing online. He also allegedly provided falsified account statements to clients, deceiving them about the status of their investments.
In 2022, while on the run, a judge held McDonald liable for over $3.8 million in net profits gained through his alleged fraudulent activities. He is facing multiple charges including securities fraud, wire fraud, investment adviser fraud, and engaging in monetary transactions from unlawful activities.
McDonald made his initial court appearance in Tacoma, Washington, and is awaiting transport to Los Angeles for trial. If found guilty, he could face significant prison time for each count of fraud and misuse of investor funds.