A former CNBC financial analyst was nabbed by the FBI over the weekend, bringing an end to a lengthy search. James Arthur McDonald Jr., accused of dodging the Securities and Exchange Commission for nearly three years, was finally arrested at a home in Port Orchard, a small town about an hour from Seattle. McDonald is slated to appear in court in Tacoma, WA, on Tuesday, according to Deadline.
The Department of Justice revealed McDonald, who once helmed Hercules Investments, faces “a statutory maximum sentence of 20 years in federal prison for each securities fraud and wire fraud count” against him. He also faces “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.”
The U.S. Attorney’s office for Central California, Martin Estrada, anticipates McDonald’s transfer to Los Angeles County later this month for further proceedings.
McDonald, a former CNBC analyst, was known for his market insights until his resignation in July 2021. The SEC had been investigating him for allegedly defrauding investors in his hedge fund of millions. He skipped a crucial meeting with the agency in November 2021 and has been on the run since.
The DOJ claims Hercules Investments lost massive amounts after betting on a market crash at the pandemic’s onset. When the market soared instead, McDonald allegedly tried to cover up the financial fiasco.
In a fraud action, the DOJ stated, “McDonald engaged in a scheme to defraud whereby he defrauded… investors by making and/or disseminating false and misleading statements, misused investor funds by using them to pay his personal expenses, to pay Hercules clients and/or creditors, and to pay Ponzi-like returns to investors.”
Despite his miscalculations, McDonald reportedly kept a substantial sum for personal use. The DOJ cited $700,000 spent on personal expenses, including “$174,610 at a Porsche dealership,” and “approximately $109,512 to the landlord of a home McDonald was renting in Arcadia; and approximately $6,800 on a designer menswear website,” Deadline reported.
Earlier this year, a federal judge ruled McDonald must repay $3,810,346, the alleged profit from his fraudulent activities. The FBI, IRS, and Assistant U.S. Attorney Alexander B. Schwab of the Corporate and Securities Fraud Strike Force have been collaborating on the case since McDonald’s capture.
"*" indicates required fields
