Fugitive Ex-Advisor Who Appeared on CNBC Arrested on Fraud Charges
What You Need to Know
James A. McDonald Jr., arrested over the weekend, was a fugitive at least since Nov. 2021.
He used client and investor funds for personal expenses and Ponzi-like payments, authorities allege.
He allegedly lost client assets by taking a risky short position, prosecutors say.
A former advisor and paid CNBC guest analyst who was charged with defrauding investors after losing over $30 million in client assets in a risky short position has been arrested after nearly three years as a fugitive, authorities said.
James Arthur McDonald Jr., 52, formerly of Arcadia, California, was arrested Saturday at a residence in Port Orchard, Washington, and made his initial appearance two days later in U.S. District Court in Tacoma.
He will arrive in Los Angeles in the coming weeks to face federal charges there, the U.S. attorney’s office for California’s central district announced Monday.
At his appearance in Tacoma, McDonald, whom the government considers a serious flight risk, waived a detention hearing and agreed to being detained while reserving the right to such a hearing in the California district where he’s been charged, according to a court document.
McDonald had been considered a fugitive since at least November 2021, when he failed to appear before the U.S. Securities and Exchange Commission to testify after allegations arose that he had defrauded investors, the prosecutor’s office said.
In September 2022, the SEC filed a civil complaint charging McDonald and one of his firms with violations of federal securities law, alleging he misappropriated millions in investor and client funds that he used on personal expenses and “Ponzi-like payments.”
U.S. District Judge Percy Anderson has found McDonald liable for about $3.8 million in net profits gained from the alleged conduct, prosecutors said.
Before fleeing, McDonald appeared to have terminated his previous phone and email accounts and told one person that he planned to “vanish,” the U.S. attorney’s office said, citing court documents.
In January 2023, a federal grand jury in Los Angeles returned an indictment charging him with one count of securities fraud, one count of wire fraud, three counts of investment advisor fraud, and two counts of engaging in monetary transactions in property derived from unlawful activity.
If convicted of all charges, McDonald could face over 50 years in prison: a statutory maximum sentence of 20 years in federal prison for each securities fraud and wire fraud count, up to 10 years on the monetary transactions derived from unlawful activity count, and up to five years on the investment advisor fraud count.
McDonald was the CEO and chief investment officer of two companies — Hercules Investments LLC, based in downtown Los Angeles, and Index Strategy Advisors Inc., based in Redondo Beach — and frequently appeared on the CNBC financial television network, according to prosecutors.
