James Arthur McDonald Jr in a shirt and tie

Ex-CNBC Financial Analyst James Arthur McDonald Jr. Captured By FBI After 3-Year Manhunt

Home / News / Ex-CNBC Financial Analyst James Arthur McDonald Jr. Captured By FBI After 3-Year Manhunt

By Kelly Coffey-Behrens on June 18, 2024 at 3:00 PM EDT

Former CNBC financial pundit James Arthur McDonald Jr., 52, became a fugitive after being accused of defrauding investors.

McDonald Jr. had been considered a fugitive since November 2021 after he failed to appear before the United States Securities and Exchange Commission to testify regarding accusations of defrauding investors.

On September 21, 2022, a federal arrest warrant was issued for McDonald, Jr., after he was charged with securities fraud in the United States District Court, Central District of California.

Three years later, James Arthur McDonald, Jr. was captured by the FBI after allegedly stealing client funds and concealing his investment firm's massive financial loss.

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Why Was James Arthur McDonald, Jr. Wanted?

James Arthur McDonald Jr mugshot

James Arthur McDonald, Jr., was wanted for securities fraud after allegedly stealing client funds and concealing his investment firm's massive financial loss, per the FBI. McDonald, Jr. was the CEO and chief investment officer of two companies: Hercules Investments LLC, based in downtown Los Angeles, California, and Index Strategy Advisors Inc. (ISA), based in Redondo Beach, California.

Prior to fleeing, he also seemed to have shut off his former phone and email accounts and reportedly informed someone of his intention to  “vanish,” according to court documents. "A federal grand jury in Los Angeles in January 2023 returned a seven-count indictment against McDonald," the United States Department of Justice reported.

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He is charged 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.

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James Arthur McDonald Jr. Captured

According to the United States Department of Justice, James Arthur McDonald Jr. was arrested Saturday at a residence in Port Orchard, Washington. He is expected to make his initial appearance today, June 18, in the United States District Court in Tacoma, Washington.

He will arrive in Los Angeles "in the coming weeks" to face federal charges in this district.

McDonald Jr.'s troubles all began in early 2020 when he reportedly lost “tens of millions of dollars of Hercules client money after adopting a risky short position that effectively bet against the health of the United States economy in the aftermath of the US presidential election,” according to the DOJ.

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How It All Began

“McDonald projected that the COVID-19 pandemic and the election would result in major selloffs that would cause the stock market to drop." However, when the time came, Hercules lost between “$30 million and $40 million” of clients’ funds.

By the end of 2020, investors began “complaining to company employees about the losses in their accounts.”

"Since McDonald’s compensation for his investment advisory services primarily was based on a percentage of assets under his management – typically 2% of a client’s total assets held by Hercules – the massive losses to Hercules clients significantly decreased the fees McDonald was entitled to collect," the DOJ reported.

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The Legal Drama Continues...

James Arthur McDonald Jr in a t shirt

But it doesn't end there... In early 2021, James Arthur McDonald Jr. "solicited millions of dollars' worth of funds from investors in the form of a purported capital raise for Hercules, but allegedly misrepresented how the funds would be used and failed to disclose the massive losses Hercules previously sustained," the DOJ reported.

McDonald, an avid football fan, stated that "he planned to launch a mutual fund under the ticker symbol 'NFLHX.' The losses to Hercules clients and the potential for litigation related to those losses jeopardized the success of that fund because any litigation would have had to be publicly disclosed."

McDonald Jr. is also accused of obtaining $675,000 in investment funds that he raised from one victim group and decided to treat himself  — “spending roughly $174,610 of them at a Porsche dealership.”

It is also alleged that McDonald Jr. transferred more than $100,000 of those funds to his landlord for a rental property in Arcadia, California, and then another $6,800 to an online store to buy designer clothing.

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What Happens Next?

If McDonald is found guilty on all counts, he could potentially receive a maximum sentence of 20 years in federal prison for each charge of securities fraud and wire fraud, up to 10 years for the monetary transactions stemming from illegal activities, and up to five years for the investment advisor fraud charge.

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