A former television financial analyst accused of defrauding investors out of millions and evading authorities for years has been sentenced to five years in prison, the Justice Department announced.
James Arthur McDonald Jr., 53, pleaded guilty to securities fraud on April 7 and is also expected to be ordered to pay restitution to his victims.
“To his victims, McDonald appeared to embody the American Dream,” prosecutors stated in a sentencing memorandum. “But looks can be deceiving, and as his victims soon learned, their trust was betrayed.”
McDonald, a frequent guest financial analyst on CNBC, was arrested in June 2024 at his Florida residence after years on the run. He was extradited to California, where he served as CEO and chief investment officer of Los Angeles-based Hercules Investments LLC and Index Strategy Advisors Inc.
Before fleeing, McDonald reportedly shut down his phone and email accounts and told an acquaintance he planned to “vanish,” according to court documents.
In 2020, prosecutors say McDonald lost tens of millions of dollars of client money at Hercules after taking a risky short position that bet against the U.S. economy following the presidential election. He misrepresented how funds would be used and failed to disclose the significant losses Hercules had already incurred.
The Justice Department said McDonald misappropriated much of the money for personal expenses, including spending $174,610 at a Porsche dealership and transferring $109,512 to the landlord of a home he rented in Arcadia.
Overall, prosecutors estimate McDonald lost around $3 million of his clients’ money.
At his other company, McDonald allegedly sent clients false account statements. One client, who invested about $351,000 to make a home down payment, was later told much of the money was lost and never recovered the full amount.
According to the U.S. Securities and Exchange Commission, McDonald raised over $5.1 million from 23 investors and clients, misappropriating more than $2.9 million for personal expenses and Ponzi-like payments to earlier investors.
A federal arrest warrant was issued in 2022 after McDonald was charged with securities fraud.
