Fugitive ex-executive arrested on investor fraud charges | Wilnesh News

A former investment firm executive who appeared as a paid contributor to CNBC has been arrested on fraud charges after more than two years as a corporate fugitive. Securities and Exchange Commission investigation, federal prosecutor explain.

Defendant James Arthur McDonald Jr. is accused of misrepresenting and hiding from investors how he would use millions of dollars he raised from investors between 2019 and 2021 “huge losses” to his company. Hercules Investment Co., Ltd. According to one report, it has continued Prosecution filed in U.S. District Court in Los Angeles.

McDonald was arrested Saturday at a residence in Port Orchard, Wash., a day after a federal judge found him civilly liable for more than $3.8 million in damages. U.S. Securities and Exchange Commission for violating securities laws.

On Monday, a judge in federal court in Tacoma, Washington, ruled that the 52-year-old man was a flight risk and was being held without bail.

McDonald agreed to be transferred from Washington to Los Angeles within weeks, where he faces one count of securities fraud, one count of wire fraud, three counts of investment adviser fraud and two counts of engaging in unlawful property monetary transactions.

If convicted solely of securities fraud or wire fraud, he could face up to 20 years in prison.

An FBI agent seeking McDonald’s arrest stated in a 2022 deposition that “McDonald is also a paid contributor to CNBC and appeared on CNBC multiple times in late 2020 and 2021, commenting on topics including those based on 2020 Stock recommendations for companies likely to grow, etc.

The affidavit also alleges that McDonald often described himself in promotional materials to investors as having a bachelor’s degree in economics from Harvard University, when in fact he was a graduate of the Harvard School of Continuing Education. That school is not a traditional college and does not offer a bachelor’s degree in economics.

“McDonald’s transcript from Harvard Extension School listed his major as ‘Social Sciences,’ and only one of the sixteen courses he took… appeared to be an economics course,” the affidavit reads.

Hercules was one of two firms led by McDonald that lost $30 million to $40 million in client investments in late 2020 due to risky short positions held by McDonald that effectively bet against the U.S. The health of the economy after the crisis.

According to a 2022 FBI deposition, McDonald’s bet could pay off if the election triggers a “massive sell-off that causes the stock market to fall.” “But the market didn’t go down as much as McDonald had hoped.”

McDonald, 52, allegedly spent nearly $175,000 of the $675,000 raised from a group of victimized investors at a Porsche dealership and transferred another $109,512 to a house he rented in California. landlord and spent about $6,800 on a website that sold designer men’s clothing, the indictment says.

In November 2021, McDonald failed to attend a scheduled deposition with the U.S. Securities and Exchange Commission (SEC) to testify about his alleged deception of investors in a mutual fund program with the stock code “NFLHX” that he promoted to investors. He then absconded in November 2021. The stock is a nod to McDonald’s love for NFL football.

“Prior to escaping, MacDonald also appears to have terminated his previous phone and email accounts and told one person that he planned to ‘disappear,'” prosecutors said.

McDonald is also accused of falsely representing that he was a registered investment adviser to clients of another of his Redondo Beach-based firms, Index Strategy Advisors, even though he had revoked the firm’s national registration as a registered investment advisor in May 2019 identity.

“McDonald misappropriated ISA’s customer funds and used those funds to pay for his personal expenses, make payments to Hercules’ customers and/or creditors, and pay investors Ponzi scheme returns to create a successful ISA,” the indictment reads. Wrong impression of the company.

“McDonald falsely represented to ISA clients that their funds would be held in personal accounts. Instead, defendant McDonald commingled ISA client funds with Hercules client funds and personal funds.”

In the case of one ISA client who invested about $351,000 and later “required the money for a down payment on a home, MacDonald informed him that he had lost most of his money and never recouped the full investment,” prosecutors said .