Latest news with #Ponzi-like
Yahoo
6 days ago
- Business
- Yahoo
Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions
James Arthur McDonald Jr., an investor and financial analyst who frequently appeared on CNBC, was sentenced to five years in prison for defrauding investors in a multimillion-dollar scheme, the United States Attorney's Office said on Monday. McDonald, 53, a former San Gabriel Valley resident, was the CEO and chief investment officer of two Los Angeles-based companies: Hercules Investments LLC and Index Strategy Advisors Inc. In late 2020, McDonald adopted a "risky short position" betting against the U.S. economy following the presidential election, with the idea that the combination of the COVID-19 pandemic and the election would trigger a major sell-off in the stock market, according to the Justice Department. However, when the expected market drop did not happen, Hercules' clients lost between $30 million and $40 million. McDonald "solicited millions of dollars' worth of funds from investors" for the purposes of raising capital for Hercules at the start of 2021 after clients complained to the firm's employees about their losses. However, in doing so, McDonald "misrepresented how the funds would be used" and failed to disclose the firm's massive losses. According to the Justice Department, McDonald obtained $675,000 from "one victim group" and then misappropriated most of the money including spending $174,610 at a Porsche dealership and transferring an additional $109,512 to the landlord of a home he was renting in Arcadia. McDonald also defrauded clients at Index Strategy Advisors, his other firm, said the Justice Department, using less than half of $3.6 million he raised for trading purposes on personal and other expenditures. McDonald commingled clients' funds with his personal bank account and used the money to buy luxury cars, pay his rent, make credit card payments, pay off Hercules operating expenses and "to make Ponzi-like payments" to Index Strategy clients — including paying some of those clients using funds from other clients. Prosecutors claimed that McDonald caused his victims more than $3 million in losses. 'To his victims, [McDonald] seemed to embody the American Dream,' prosecutors argued in a sentencing memorandum. 'But looks can be deceiving, and as [McDonald's] victims learned, their trust had been betrayed.' In November 2021, McDonald failed to appear before the Securities and Exchange Commission to testify about the allegations he had defrauded investors, and remained a fugitive until last June when he was found at a residence in Port Orchard, Wash. At the time of his arrest, law enforcement found a fake Washington, D.C., driver's license with his photograph and the name "Brian Thomas." In April 2024, a U.S. District judge found McDonald and Hercules liable for violating federal securities law and ordered them to pay millions in disgorgement and civil penalties. McDonald pleaded guilty to one count of securities fraud in February. He will be ordered to pay restitution in this case before a United States district judge at a later date. Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Los Angeles Times
6 days ago
- Business
- Los Angeles Times
Former CNBC pundit and fugitive sentenced to prison for bilking investors out of millions
James Arthur McDonald Jr., an investor and financial analyst who frequently appeared on CNBC, was sentenced to five years in prison for defrauding investors in a multimillion-dollar scheme, the United States Attorney's Office said on Monday. McDonald, 53, a former San Gabriel Valley resident, was the CEO and chief investment officer of two Los Angeles-based companies: Hercules Investments LLC and Index Strategy Advisors Inc. In late 2020, McDonald adopted a 'risky short position' betting against the U.S. economy following the presidential election, with the idea that the combination of the COVID-19 pandemic and the election would trigger a major sell-off in the stock market, according to the Justice Department. However, when the expected market drop did not happen, Hercules' clients lost between $30 million and $40 million. McDonald 'solicited millions of dollars' worth of funds from investors' for the purposes of raising capital for Hercules at the start of 2021 after clients complained to the firm's employees about their losses. However, in doing so, McDonald 'misrepresented how the funds would be used' and failed to disclose the firm's massive losses. According to the Justice Department, McDonald obtained $675,000 from 'one victim group' and then misappropriated most of the money including spending $174,610 at a Porsche dealership and transferring an additional $109,512 to the landlord of a home he was renting in Arcadia. McDonald also defrauded clients at Index Strategy Advisors, his other firm, said the Justice Department, using less than half of $3.6 million he raised for trading purposes on personal and other expenditures. McDonald commingled clients' funds with his personal bank account and used the money to buy luxury cars, pay his rent, make credit card payments, pay off Hercules operating expenses and 'to make Ponzi-like payments' to Index Strategy clients — including paying some of those clients using funds from other clients. Prosecutors claimed that McDonald caused his victims more than $3 million in losses. 'To his victims, [McDonald] seemed to embody the American Dream,' prosecutors argued in a sentencing memorandum. 'But looks can be deceiving, and as [McDonald's] victims learned, their trust had been betrayed.' In November 2021, McDonald failed to appear before the Securities and Exchange Commission to testify about the allegations he had defrauded investors, and remained a fugitive until last June when he was found at a residence in Port Orchard, Wash. At the time of his arrest, law enforcement found a fake Washington, D.C., driver's license with his photograph and the name 'Brian Thomas.' In April 2024, a U.S. District judge found McDonald and Hercules liable for violating federal securities law and ordered them to pay millions in disgorgement and civil penalties. McDonald pleaded guilty to one count of securities fraud in February. He will be ordered to pay restitution in this case before a United States district judge at a later date.
New York Post
7 days ago
- Business
- New York Post
Former CNBC analyst James Arthur McDonald Jr., who betrayed investors, sentenced in multimillion-dollar fraud scheme
A former television financial analyst accused of defrauding investors out of millions of dollars and spending years on the run was sentenced to five years in prison, the Justice Department said Monday. James Arthur McDonald Jr., 53, is also expected to be ordered to pay restitution to his victims following his April 7 guilty plea for securities fraud. 'To his victims, [McDonald] seemed to embody the American Dream,' prosecutors argued in a sentencing memorandum. 'But looks can be deceiving, and as [McDonald's] victims learned, their trust had been betrayed.' McDonald, who frequently appeared as a guest on CNBC as a financial analyst, was arrested in June 2024 at his Florida home after spending years on the run and extradited back to California, where he was the CEO and chief investment officer of Los Angeles-based Hercules Investments LLC, and Index Strategy Advisors Inc. 3 James Arthur McDonald Jr. is expected to be ordered to pay restitution to his victims following his April 7 guilty plea for securities fraud. CNBC Prior to fleeing, McDonald also appeared to have terminated his previous phone and email accounts and told one person that he planned to 'vanish,' according to court documents. In 2020, McDonald 'lost tens of millions of dollars of Hercules client money after adopting a risky short position that effectively bet against the health of the United States economy in the aftermath of the U.S. presidential election,' prosecutors said. He misrepresented how the funds would be used and failed to disclose the 'massive losses' Hercules previously sustained. 3 Prior to fleeing, McDonald terminated his previous phone and email accounts and told one person that he planned to 'vanish'. FBI 'He misappropriated most of those funds in various ways, including spending $174,610 at a Porsche dealership and transferring $109,512 to the landlord of a home McDonald was renting in Arcadia,' the Justice Department said. In total, McDonald lost around $3 million of his clients' money, prosecutors said. With his other company, McDonald allegedly sent clients 'false account statements, including for one client who invested approximately $351,000, later needed the money to make a down payment on a home, was informed by McDonald that much of the money had been lost, and never got his full investment back.' 3 In total, McDonald lost around $3 million of his clients' money, prosecutors said. Hercules Investments In total, the US Securities and Exchange Commission said McDonald 'raised more than $5.1 million from 23 investors and clients, and misappropriated more than $2.9 million of those funds for personal expenses and Ponzi-like payments to earlier investors.' A federal arrest warrant was issued for McDonald in 2022 after he was charged with securities fraud. Fox News Digital's Greg Norman contributed to this report.
Cision Canada
14-07-2025
- Business
- Cision Canada
ASC permanently bans Raymond Cawaling and RTAX Financial Corp. for contravening Alberta securities laws
CALGARY, AB, July 14, 2025 /CNW/ - The Alberta Securities Commission (ASC) has sanctioned Raymond Cawaling and RTAX Financial Corp. (the Respondents) for illegally distributing securities and perpetrating a fraud on investors. Between October 2016 and November 2019, the Respondents misappropriated at least CAD$462,421 from investors who were told that the funds would be used to invest in or provide loans to third parties, including an overseas mining company. An ASC panel previously found that a significant portion of the money was redirected for personal use, to repay unrelated debts, and to pay principal and interest to other investors in a Ponzi-like scheme. The panel has ordered the Respondents to jointly pay $462,421 as a result of their non-compliance with Alberta securities laws, plus an administrative penalty of $175,000 and investigation and hearing costs of $81,755. In addition: Cawaling is ordered to resign from all positions he may have as a director or officer of any issuer and is subject to a broad array of permanent market-access bans. RTAX is ordered to permanently cease trading in, purchasing, or advising in securities or derivatives. All trading in or purchasing of RTAX securities must cease. In its decision, the panel noted that the Respondents' misconduct caused harm to both investors and Alberta's capital market, and stated that in addition to sanctions related to the fraud, "consequences must also fall on those who illegally distribute securities and deprive investors of the protections our regulatory system is intended to provide." A copy of the decision is available on the ASC website at The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
12-07-2025
- Business
British man extradited to US to face federal charges in alleged $99 million wine scam
NEW YORK -- A British man has been brought to the U.S. to face charges in connection with an alleged $99 million Ponzi-like fraud involving expensive wines. James Wellesley, 58, pleaded not guilty during his arraignment Friday in Brooklyn federal court following his extradition from the United Kingdom, where he was arrested in 2022. He was ordered detained by a judge pending trial on wire fraud and money laundering charges. A lawyer for Wellesley didn't immediately respond to an email seeking comment. His co-defendant, Stephen Burton, was extradited from Morocco in 2023 after using a bogus Zimbabwean passport to enter that country. Burton, a 60-year-old British national, has also been detained and pleaded not guilty to similar charges in the same Brooklyn court. Prosecutors say the two men ran a company called Bordeaux Cellars that brokered loans between investors and wealthy wine collectors that were secured by their wine collections. From 2017 to 2019, they solicited $99 million in investments from residents of New York and other areas, promising their clients that they would profit from interest on the loans. But the wealthy wine collectors did not exist, no loans were made, and Bordeaux Cellars did not have custody of the wine securing the loans, prosecutors say. Instead, Burton and Wellesley used loan money provided by investors for themselves and to make fraudulent interest payments to other investors, prosecutors alleged.
