The Fugitive
After three years on the run, a CNBC financial analyst pleads guilty to fraud
“Rather fail with honor than succeed by fraud.” - Sophocles
James Arthur McDonald Jr. was on CNBC in March 2021 warning of a disconnect between Main Street and Wall Street.
Undisclosed was a bigger disconnect.
As the business news network presented McDonald as a market expert, his clients had been complaining of massive losses for months.
McDonald, 53, was a paid contributor on CNBC as well as the CEO of two investment firms in Los Angeles: Hercules Investments and Index Strategy Advisors Inc.
He’d made a big bet that President Joe Biden was due for a downturn that never came.
“McDonald projected that the COVID-19 pandemic and the election would result in major selloffs that would cause the stock market to drop,” according to the Justice Department. “When the market decline didn’t occur, Hercules clients lost between $30 million and $40 million.”
McDonald didn’t just lose his customers’ money. He misappropriated millions to pay business expenses, rent, credit card bills and even a 2021 Porsche 911 Turbo S Cabriolet for $174,000. He also misrepresented how he invested client funds.
McDonald’s customers began complaining about losses as early as December 2020, according to court records, yet he was still building his credibility on CNBC as late as June 2021.
By September 2021, the Securities and Exchange Commission had filed an injunction and a slew of fraud allegations against him. In November 2021, instead of showing up to answer to the SEC’s civil complaint, McDonald went on the run.
It’s hard to do TV appearances when you’re dodging justice, but at least McDonald proved better at running and hiding than investing and scamming. Authorities didn’t catch up with him for three years.
They found him in June 2024 at a residence in Port Orchard, Wash., with a fake Washington state driver’s license under the name “Brian Thomas.”
He’s been in federal custody ever since, and on Wednesday he agreed to plead guilty to securities fraud. He faces up to 20 years in federal prison where cable TV channels can be somewhat limited.
And this is the third case involving rogue talking heads on CNBC that Business Blunders has covered since since it launched in March 2024.
There’s Andrew Left, 54, a frequent CNBC bloviator who was charged in July for stock manipulation. And then there’s Carlos Watson, 55, who once hosted his own show on the network. Watson was sentence to ten years in prison in December for the massive fraud at a company he founded, Ozy Media.
Full disclosure: I used to work at CNBC. All I say now is that you’ve got to watch CNBC, and by that I mean, you’ve got to watch out.
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