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James Arthur McDonald Jr., a former financial commentator on CNBC, was apprehended after evading authorities for over two years on fraud charges.
McDonald, the ex-CEO of Hercules Investments LLC and Index Strategy Advisors Inc., faced allegations of securities fraud, wire fraud, and misappropriating investor funds for personal expenses like luxury cars and clothing.
He reportedly misled investors, leading to substantial losses and using investor money to fund his lavish lifestyle.
“McDonald fraudulently raised approximately $5.1 million from about 23 investors and clients, misappropriating more than $1.5 million in investor money to fund his lavish lifestyle and making at least $1.4 million in Ponzi-like payments to investors,” the SEC complaint stated.
“McDonald also used $1 million of … investor monies to fund his extravagant lifestyle, including purchasing luxury vehicles, paying rent on his luxury home, and hundreds of thousands of dollars on personal credit card charges, as well as to pay expenses associated with operating Hercules,” the complaint added.
“McDonald falsely represented” that investor funds “would be used to expand Hercules’s business, but he lied about the firm’s financial condition and failed to disclose that he had promised Hercules clients that the firm would repay earlier losses they had incurred as a result of bad trades McDonald had made in the fall of 2020.”
“McDonald also lied to the Hercules client investors telling them that their funds would be spent on Hercules business operations or be used to engage in securities trading,” the complaint said.
“In fact, McDonald commingled their funds with his personal assets, and used the money to make payments to clients and investors and pay personal expenses, including purchasing a Porsche,” the complaint added.
If convicted, he could face up to 20 years in federal prison for various charges related to financial misconduct.
