Monday, November 28, 2022
HomeLife InsuranceEx-CNBC Visitor Analyst and Advisor, Thought to Be in Hiding, Is Charged...

Ex-CNBC Visitor Analyst and Advisor, Thought to Be in Hiding, Is Charged With Fraud


What You Must Know

  • James Arthur McDonald Jr. allegedly misplaced hundreds of thousands of {dollars} of shopper funds in dangerous buying and selling and misappropriated hundreds of thousands extra.
  • He didn’t testify earlier than the SEC, closed cellphone and electronic mail accounts and informed somebody he deliberate to fade, in line with the DOJ.

A former advisor who served as a frequent visitor analyst on CNBC monetary TV information reveals who’s believed by investigators to be in hiding was charged Wednesday with securities fraud on complaints that he misplaced tens of hundreds of thousands of {dollars} of shoppers’ investments and misused cash from a purported capital increase.

Separate actions have been filed in U.S. District Court docket for the Central District of California by the Justice Division and the Securities and Alternate Fee.

The Justice Division charged James Arthur McDonald Jr., 50, previously of Arcadia, California, with one rely of securities fraud, against the law punishable by as much as 20 years in federal jail, it stated.

McDonald ran two Los Angeles County-based funding firms: Hercules Investments, primarily based in downtown Los Angeles, and Index Technique Advisors (ISA), primarily based in Redondo Seashore, serving because the CEO and chief funding officer of every agency, the Justice Division famous.

In line with an affidavit by Robert Chowthi, a particular agent with the Federal Bureau of Investigation, that was filed with the Justice Division’s criticism, McDonald “misplaced tens of hundreds of thousands of {dollars} of Hercules investor funds after adopting a dangerous quick place that successfully wager towards the well being of the U.S. financial system within the wake of the 2020 presidential election.”

McDonald predicted that the COVID-19 pandemic and election would end in main selloffs that might trigger the inventory market to tumble, in line with the Justice Division. When that outcome didn’t materialize, Hercules shoppers misplaced between $30 million and $40 million, in line with the affidavit.

By December 2020, Hercules shoppers have been complaining to that agency’s staff concerning the losses of their accounts, in line with the Justice Division.

In early 2021, McDonald “solicited additional funds from traders within the type of a purported capital increase” for Hercules, in line with Chowthi.

“In doing so, he misrepresented how the funds could be used and didn’t disclose the huge losses Hercules had beforehand sustained,” Chowthi alleged.

For example, Chowthi famous that, in reference to the Hercules capital increase, McDonald obtained $675,000 in funding funds from one sufferer group on March 9, 2021. McDonald then “misappropriated these funds in varied methods, together with spending roughly $174,610 of them at a Porsche dealership,” in line with Chowthi.

About $109,512, in the meantime, was transferred to the owner of a house McDonald was renting in Arcadia and about $6,800 was spent on a web site promoting designer menswear, in line with the Justice Division.

The FBI’s investigation additionally revealed McDonald’s “fraudulent capital increase is a part of a broader sample of misleading conduct, which incorporates the creation of false account statements for ISA shoppers, his ongoing misrepresentation to shoppers that ISA was a registered funding adviser even after he had terminated its registration, and even deceptive statements about his instructional background,” Chowthi alleged.

McDonald additionally allegedly falsely represented to shoppers that ISA was a registered funding advisor regardless that he had withdrawn ISA as a state-registered advisory agency in Might 2019, the Justice Division stated.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular