Former TV financial analyst-turned-fugitive arrested in Washington

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James Arthur McDonald, Jr. (Federal Bureau of Investigation)

WASHINGTON - A former financial TV news analyst, who became a fugitive and is accused of defrauding investors, was arrested over the weekend in Washington state, according to the United States Department of Justice.

James Arthur McDonald, Jr., 52, was wanted for securities fraud after allegedly stealing client funds and concealing his investment firm's financial loss. He also made frequent appearances on CNBC.

McDonald was arrested Saturday at a home in Port Orchard. He was scheduled to make his first appearance Monday in district court in Tacoma, and is expected to be brought to Los Angeles in the coming weeks.

McDonald, was the CEO and chief investment officer of two California-based companies: Hercules Investments and Index Strategy Advisors (ISA).

In 2020, McDonald projected the COVID-19 pandemic and 2020 election would lead to major selloffs that would cause the stock market to plunge. And when the market decline didn't happen, Hercules clients lost between $30 to $40 million.

Early 2021, he solicited millions of dollars' worth of investor funds for capital raise for Hercules, but allegedly misrepresented how the funds would be used and failed to disclose the massive losses, the DOJ said.

He allegedly obtained $675,000 in investment funds from a group as part of the capital raise. He allegedly misappropriated those funds, including spending roughly $174,610 of them at a Porsche dealership.

Approximately $109,512 was transferred to the landlord of a home McDonald was renting and approximately $6,800 was spent on a website that sells designer menswear, according to court documents.

He has been considered as a fugitive since at least Nov. 2021, when he failed to appear before the United States Securities and Exchange Commission to testify after allegations arose that he had defrauded investors, the Department of Justice said.

Before leaving, he appeared to terminate his phone and email accounts and told one person that he planned to "vanish."

On Sept. 21, 2022, a federal arrest warrant was issued for McDonald after he was charged with securities fraud in the United States District Court, Central District of California.

The Department of Justice said if McDonald is convicted, he would face a maximum sentence of 20 years in federal prison for each securities fraud and wire fraud count, up to 10 years in federal prison on the monetary transactions derived from unlawful activity count, and up to five years in federal prison on the investment adviser fraud count.