CNBC financial analyst turned fugitive James Arthur McDonald Jr. arrested by FBI after 3 years on the run

A former CNBC financial expert and CEO turned fugitive accused of defrauding his investors of millions following a failed 'bet' against the US economy in 2020 has been arrested after being on the run for nearly three years.

James Arthur McDonald Jr., 52, was arrested Saturday by the FBI in Port Orchard, Washington, and will be extradited to California to stand trial “in the coming weeks” for his alleged crimes, according to the US Department of the Environment. Justice.

McDonald had been on the run since November 2021 after failing to appear before the U.S. Securities and Exchange Commission to testify regarding charges of defrauding investors.

He served as CEO and chief investment officer of two Los Angeles financial firms: Hercules Investments LLC and Index Strategy Advisors Inc.

Alongside his companies, McDonald “frequently appeared as an analyst on the television financial news network CNBC,” the DOJ reported.

His troubles began in early 2020 when the former financial advisor allegedly lost “tens of millions of dollars of Hercules client money after taking a risky short position that effectively bet against the health of the U.S. economy in the aftermath of the American presidential election. according to the DOJ.

“McDonald predicted that the COVID-19 pandemic and the election would lead to massive sell-offs that would cause the stock market to fall.”

But when the market downturn never materialized, Hercules lost between “$30 million and $40 million” in customer funds.

In December 2020, investors began “complaining to company employees about losses in their accounts.”

Then, in January 2021, McDonald solicited millions of dollars in funds from investors to raise capital for Hercules, according to the DOJ.

Worse, he allegedly “misrepresented how the funds would be used” and never disclosed to investors “the massive losses Hercules had previously suffered.”

McDonald is also suspected of obtaining $675,000 in investment funds he collected from a group of victims, which he used to spend on himself – “spending approximately $174,610 at a Porsche dealership.

According to the DOJ, he also allegedly transferred more than $100,000 of those funds to the owner of a home he was renting in Arcadia, California, and then another $6,800 to an online store to purchase designer clothing.

The alleged fraudster allegedly sent his clients falsified account statements, “including for one client who invested approximately $351,000.”

The DOJ reported that the customer later asked for his money for a down payment on a house, but McDonald told him “that a lot of the money was lost and he never got it back his entire investment.

In 2022, while on the run, a United States district judge found McDonald liable for $3,810,346, representing his net profits earned as a result of the alleged conduct, according to the SEC.

McDonald was 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 illegal activities.

The former CNBC financial analyst made his first court appearance Monday in Tacoma, Washington, and is expected to be transported to Los Angeles in the coming weeks.

If convicted, the alleged scammer could face up to 20 years in federal prison for each count of securities fraud and wire fraud, 10 years for each count related to using of investor funds for his benefit and five years for investment advisor fraud.