Frequent CNBC analyst James MacDonald has been accused of fraud, believed to be a fugitive

Federal prosecutors said a man who ran two California-based investment firms and frequently appeared as a financial news analyst on television has been charged with securities fraud for allegedly costing clients millions of dollars.

The US Attorney’s Office said in a statement that James Arthur MacDonald Jr., 50, has been charged with one fraud charge and could face up to 20 years in prison if convicted.

The statement said MacDonald, who lived in the Los Angeles suburb of Arcadia, is believed to be in hiding. It was not immediately clear if he had a lawyer who could speak on his behalf.

Prosecutors allege that MacDonald hid huge financial losses from some clients and used some of the investment money for personal expenses, some of which was spent at a Porsche dealership and on a website selling designer men’s clothing.

Authorities said MacDonald was the CEO of Hercules Investments LLC in Los Angeles and Index Strategy Advisors Inc. at Redondo Beach, and frequently appeared as an analyst on CNBC’s television financial news network.

In late 2020, McDonald lost between $30 million and $40 million in Hercules client money after taking a “risky short position” based on his false prediction that the stock market would drop due to the COVID-19 pandemic and the outcome of the US presidential election, the office said. US Attorney General.

In early 2021, MacDonald “requested millions of dollars in funds from investors in the form of an alleged capital increase for Hercules but misrepresented how the funds were used and failed to disclose the heavy losses previously incurred by Hercules,” the statement said.

Also on Wednesday, the US Securities and Exchange Commission filed a civil complaint accusing MacDonald and Hercules of violating federal securities law.

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