FBI Search For Fraud Suspect James McDonald Comes To An End
June 20, 2024
A judge ruled McDonald liable for over $3 million and the DOJ says he could face up to 20 years in federal prison for each fraud count.
Once a familiar face on CNBC as a financial analyst, James Arthur McDonald has found himself in the hands of law enforcement after he was arrested for fraud in Port Orchard, Washington, on June 15 after becoming one of the FBI’s Most Wanted for white-collar crimes.
Federal prosecutors announced his arrest on Monday, ending a manhunt that the U.S. Department of Justice reported began in November 2021 when McDonald failed to testify before the SEC regarding investor fraud allegations. Prior to his disappearance, McDonald reportedly terminated his communication channels and expressed intentions to “vanish.” In January 2023, a federal grand jury in Los Angeles indicted him on seven counts, including securities fraud, wire fraud, and investment adviser fraud.
McDonald, who frequently appeared as an analyst on CNBC, was CEO and chief investment officer of Hercules Investments LLC and Index Strategy Advisors Inc. The Department of Justice revealed that McDonald’s troubles stemmed from a risky investment strategy in late 2020. McDonald lost tens of millions of dollars of Hercules’s client money after adopting a risky short position that effectively bet against the health of the United States economy in the aftermath of the U.S. presidential election, a news release stated. Subsequently, he allegedly misled investors about a capital raise for Hercules, concealing previous losses.
One incident involved McDonald obtaining $675,000 from investors on March 9, 2021, which he allegedly spent on luxury items and property rentals. He also reportedly misrepresented his firm, ISA, as a registered investment adviser and provided false account statements to clients. The SEC filed civil charges against McDonald and Hercules in September 2022. On April 21, U.S. District Judge Percy Anderson found McDonald liable for approximately $3,810,346 in illicit profits.
If convicted on all charges, he could face up to 20 years in federal prison for each fraud count, ten years for unlawful monetary transactions, and five years for investment adviser fraud.
The FBI has updated McDonald’s profile to “captured.”
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