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A former tv monetary analyst accused of defrauding investors out of tens of millions of {dollars} has been taken into custody in Washington state after spending years on the run, the Justice Division introduced.
James Arthur McDonald Jr., 52, was tracked down over the weekend to a residence in Port Orchard and can now be sent back to California to face federal fees, together with counts of securities fraud and funding adviser fraud.
“McDonald had been thought-about a fugitive since at the least November 2021, when he failed to seem earlier than america Securities and Change Fee to testify after allegations arose that he had defrauded traders,” the U.S. Legal professional’s Workplace for the Central District of California stated in a press launch.
“Previous to fleeing, McDonald additionally appeared to have terminated his earlier telephone and e mail accounts and advised one person who he deliberate to ‘vanish,’” the workplace added, citing court docket paperwork.
INVESTMENT COMPANY EXECUTIVE CHARGED FOR ALLEGEDLY WITHHOLDING MILLIONS OF DOLLARS FROM CLIENTS
James Arthur McDonald Jr. was arrested over the weekend in Washington state, the Justice Division says. (FBI)
The Justice Division stated McDonald was the CEO and chief investment officer of Hercules Investments LLC, and Index Technique Advisors Inc., each based mostly in California.
Prosecutors say McDonald bumped into hassle in late 2020, when he “misplaced tens of tens of millions of {dollars} of Hercules consumer cash after adopting a dangerous quick place that successfully wager towards the well being of america financial system within the aftermath of the U.S. presidential election.
“McDonald projected that the COVID-19 pandemic and the election would lead to main selloffs that may trigger the inventory market to drop,” the U.S. Legal professional’s Workplace stated. “When the market decline didn’t happen, Hercules shoppers misplaced between $30 million and $40 million. By December 2020, Hercules shoppers had been complaining to firm workers concerning the losses of their accounts.”
CALIFORNIA THIEVES TARGETING LEGO STORES FOR BLACK MARKET DEALS
James Arthur McDonald, Jr., who vanished in late 2021, has been discovered dwelling in Port Orchard, Washington. (FBI)
Then in early 2021, prosecutors allege, “McDonald solicited tens of millions of {dollars}’ price of funds from traders within the type of a purported capital increase for Hercules however allegedly misrepresented how the funds can be used and did not disclose the huge losses Hercules beforehand sustained.”
“As a part of the capital increase, McDonald obtained $675,000 in funding funds from one sufferer group on March 9, 2021. He allegedly misappropriated these funds in varied methods, together with spending roughly $174,610 of them at a Porsche dealership,” the U.S. Legal professional’s Workplace stated. “Roughly $109,512 was transferred to the owner of a house McDonald was renting in Arcadia; and roughly $6,800 was spent on an internet site that sells designer menswear, in response to court docket paperwork.”
Together with his different firm, McDonald allegedly despatched shoppers “false account statements, together with for one consumer who invested roughly $351,000, later wanted the cash to make a down cost on a house, was knowledgeable by McDonald that a lot of the cash had been misplaced, and by no means received his full funding again.”
In complete, the Securities and Exchange Commission stated McDonald “raised greater than $5.1 million from 23 traders and shoppers, and misappropriated greater than $2.9 million of these funds for private bills and Ponzi-like funds to earlier traders.”
The Justice Division stated “Previous to fleeing, McDonald additionally appeared to have terminated his earlier telephone and e mail accounts and advised one person who he deliberate to ‘vanish,’ in response to court docket paperwork.” (FBI)
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The FBI and the IRS have gotten concerned within the investigation, and McDonald has been served a seven-count indictment by a federal grand jury. He would face a most sentence of 20 years if he’s discovered responsible on securities and wire fraud counts, the Justice Division stated.
