James Arthur McDonald Jr., 53, formerly of Arcadia, California, has agreed to plead guilty to securities fraud after defrauding investors of at least $2.7 million, according to the U.S. Attorney’s Office for the Central District of California.
McDonald, who was once a financial analyst on CNBC, has agreed to plead guilty to one count of securities fraud, which carries a maximum sentence of 20 years in federal prison.
Details of the Fraudulent Scheme
Authorities arrested McDonald in June 2024 at a residence in Port Orchard, Washington. During his arrest, they found a fake Washington, D.C., driver’s license under the alias “Brian Thomas.”
McDonald, the former CEO and chief investment officer of Hercules Investments LLC and Index Strategy Advisors Inc. (ISA), misled investors beginning in late 2020. After suffering major losses from risky bets against the U.S. economy, McDonald sought millions in new investments under the false pretense of raising capital for his firm, without disclosing prior losses.
He misappropriated millions from investors, spending significant amounts on personal luxuries. McDonald spent $174,610 at a Porsche dealership and paid $109,512 in rent for his home in Arcadia, the U.S. Attorney’s Office stated. He also commingled funds from his other firm, ISA, to buy luxury cars and cover personal expenses.
McDonald’s actions resulted in total losses between $2.7 million and $3 million, according to his plea agreement.
