Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions

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On Monday, the U.S. Attorney’s Office announced that James A. McDonald Jr., a frequent financial analyst and investor on CNBC, was given a five-year prison sentence for swindling investors in a large-scale fraudulent scheme worth millions of dollars.

McDonald, aged 53, who previously resided in the San Gabriel Valley, served as both the CEO and the primary investment strategist for two Los Angeles-based firms: Hercules Investments LLC and Index Strategy Advisors Inc.

At the end of 2020, McDonald placed a daring investment strategy known as a “short position” that was against the U.S. economy after the presidential election. The reasoning behind this move was that the confluence of the COVID-19 pandemic and the election would lead to a significant stock market crash. However, when the predicted market downturn failed to materialize, McDonald’s clients incurred losses ranging from $30 million to $40 million. This information comes from the Justice Department.

In early 2021, McDonald requested substantial investments from various parties, claiming it was for increasing capital for Hercules. This was after clients had expressed concerns about their losses within the company. Unfortunately, McDonald deceived investors by not truthfully explaining how the funds would be utilized and concealing the significant financial losses the firm was experiencing.

As reported by the Justice Department, McDonald obtained a sum of $675,000 from a single group of victims. The majority of this money was subsequently misused; for instance, $174,610 was spent at a Porsche dealership, and an additional $109,512 was transferred to the landlord of a house he was renting in Arcadia.

According to the Justice Department, in addition to defrauding clients at Index Strategy Advisors, McDonald misused a significant portion of the $3.6 million he collected for trading, instead spending it on personal expenses and other non-trading costs.

McDonald mixed client funds with his own personal bank account, utilizing the combined sum for luxury car purchases, rental payments, credit card bills, covering Hercules business costs, and making what resembled Ponzi-style payments to Index Strategy clients. This included transferring funds from one client to another.

Prosecutors claimed that McDonald caused his victims more than $3 million in losses.

In a sentencing document, prosecutors stated that McDonald appeared to symbolize the American Dream to his victims. However, appearances can be misleading, and as his victims discovered, their faith in him was cruelly broken.

Last November (2021), McDonald did not show up for his scheduled testimony before the Securities and Exchange Commission concerning accusations of fraudulent activities against him. He remained elusive, or in hiding, until June of this year when he was finally located at a home in Port Orchard, Washington.

During his apprehension, authorities discovered a counterfeit District of Columbia driver’s license bearing his picture and the name “Brian Thomas.

In the spring of 2024, a federal court judge ruled that McDonald and Hercules had broken securities laws and ordered them to repay large sums as disgorgement and fines as penalties.

McDonald pleaded guilty to one count of securities fraud in February.

In the future, I’ll find myself mandated to compensate for any damages in this particular case under the supervision of a U.S. District Judge.

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2025-08-06 01:31