E. Martin Estrada, U.S. Attorney | U.S. Attorney's Office for the Central District of California
A former financial TV news analyst, James Arthur McDonald Jr., has agreed to plead guilty to securities fraud, according to an announcement by the Justice Department. The 53-year-old, who previously resided in Arcadia and frequently appeared on CNBC, was accused of defrauding investors out of at least $2.7 million.
McDonald has been in federal custody since June 2024 after being arrested in Port Orchard, Washington. He had been a fugitive since November 2021 when he failed to testify before the United States Securities and Exchange Commission (SEC) regarding allegations of investor fraud.
The plea agreement revealed that law enforcement found a fake Washington, D.C., driver's license with McDonald's photograph under the name "Brian Thomas" at his hideout in Washington state.
McDonald served as CEO and chief investment officer for two Los Angeles-based companies: Hercules Investments LLC and Index Strategy Advisors Inc. (ISA). His risky financial strategies led to significant client losses during late 2020 when he misjudged market trends following the U.S. presidential election and COVID-19 pandemic.
Despite these losses, McDonald continued soliciting funds from investors without disclosing past failures. In March 2021, he raised $675,000 from one victim group but misused these funds for personal expenditures such as luxury car purchases and rental payments for his home.
Additionally, McDonald mismanaged approximately $3.6 million raised through ISA by commingling client funds with personal accounts for non-trading purposes. These actions resulted in losses estimated between $2,745,892 and $3,025,892.
The FBI and IRS Criminal Investigation are handling this case. In September 2022, the SEC filed a civil complaint against McDonald and Hercules for federal securities law violations. By April 2024, United States District Judge Percy Anderson ordered them to pay several million dollars in penalties.
Assistant United States Attorneys Alexander B. Schwab and Nisha Chandran of the Corporate and Securities Fraud Strike Force are prosecuting the case.
