Just because white-collar crimes are non-violent crimes doesn’t mean they can’t lead to many years in prison. Take the case of James Arthur McDonald Jr., 52, a former CEO and CNBC financial analyst accused of defrauding millions from his investors. He could face decades in federal prison if convicted.
Arrested by the FBI in June after he’d spent three years as a fugitive on the run, McDonald faces a seven-count indictment which was issued by a federal grand jury in Los Angeles in January of 2023. Investigating the case were the FBI and IRS Criminal Investigation.
In the indictment, McDonald was charged with one count of securities fraud, one count of wire fraud, three counts of investment adviser fraud and two counts of engaging in monetary transactions in property derived from unlawful activity.
If he is found guilty and convicted of those charges, he could face a statutory 20-year maximum sentence in federal prison for both the securities fraud charge and for the wire fraud charge. He also could face 10 years in prison for each count related to using investor funds for his benefit,, as well as five years in prison for one count of investment adviser fraud.
After his arrest in Port Orchard, WA and his first court appearance in Tacoma, WA, McDonald was expected to be taken to Los Angeles for trial, according to the United States Department of Justice.
The DOJ said McDonald had been considered a fugitive since at least November of 2021, when he failed to appear before the U.S. Securities and Exchange Commission to testify after allegations arose that he’d defrauded investors.
According to the New York Post, McDonald is the former CEO and chief investment officer for two Los Angeles financial companies: Index Strategy Advisors Inc. and Hercules Investments LLC. He’d often appeared as a financial analyst on the CNBC financial television news network.
His alleged crimes followed a failed “bet against” the US economy in early 2020, when he reportedly 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 US presidential election,” according to the DOJ.
“McDonald projected that the COVID-19 pandemic and the election would result in major selloffs that would cause the stock market to drop,” the DOJ said. But when the market downturn never came, Hercules lost between $30 million and $40 million of its clients’ funds.
By December of 2020, investors began complaining to company employees about losses in their accounts. Then, in January of 2021, McDonald solicited millions of dollars worth of funds from investors to raise capital for Hercules.
He allegedly “misrepresented how the funds would be used,” said the DOJ, and never disclosed to investors the “massive losses Hercules previously sustained.”
McDonald also is suspected of obtaining $675,000 in investment funds from one victim group which he used to spend on himself, including about $174,000 at a Porsche dealership, $6,800 to buy designer clothing and another $100,000 paid to the landlord of a home he was renting in Arcadia, CA.
Fraud or theft are among many kinds of white-collar crimes
The federal government has been cracking down on white-collar crimes, which often include fraud or theft but also many other kinds of non-violent yet destructive offenses.
Among such white-collar crimes are embezzlement, money-laundering, tax fraud, healthcare/Medicare fraud, bank/mortgage fraud, compounding pharmacy fraud, antitrust violations, insider trading, wire fraud, mail fraud, identity theft, intellectual property theft, bribery, conspiracy and counterfeiting.
White-collar offenses can be on the state level or the federal level. In Texas, crimes known as fraud on the federal level instead are known as crimes of theft. Either way, such crimes tend to be considered a breach of trust or an intentional deceit.
Award-winning Houston white-collar crime defense lawyer Neal Davis says charges are brought on the state or federal level depending on which one has jurisdiction and the severity of the offense. The scale of the offense also can be a factor in increasing punishments for a crime.
Texas defenses against white-collar crime charges
Davis is licensed to handle cases both on the state level and on the federal level in U.S. District Court. Not all defense attorneys have that distinction.
In federal court, the judge has been appointed for life by the U.S. Senate or the President and may have more strict deadlines and guidelines than would a judge in a state court.
Sentencing in a federal white-collar case also tends to be more predictable and standardized than on the state level. It can involve harsh punishments based on federal sentencing guidelines – guidelines which have been criticized as being unfair punishments.
However, the U.S. Supreme Court has held that federal sentencing guidelines are merely advisory, not compulsory. This gives federal judges discretion in deciding on an appropriate sentence, which could be lighter than the guidelines suggest.
A skilled and experienced defense attorney may be able to fight for a plea deal for a client prior to trial. That can involve negotiating for a lesser charge in exchange for a guilty plea, making a trial unnecessary.
When handled in a skillful manner, such negotiations also can lead to a charge even being declined or a case being dismissed before the case goes to trial.
If a case does go to trial, a knowledgeable white-collar defense lawyer can protect a client’s legal rights in many ways, such as arguing that the evidence is not substantial enough to merit a charge or conviction.
Victory spotlight
Statement from Gary Deel, on the dismissal of his $100 million federal securities fraud case in an unprecedented pre-trial win.
Get an experienced white-collar defense attorney
The Neal Davis Law Firm has successfully resolved federal and state white-collar-crime cases for defendants throughout Texas for more than two decades. In fact, the firm has been consistently honored and awarded by its peers for the work it does, particularly in the realm of white-collar crimes.
If you live in Sugar Land, Katy, The Woodlands, Conroe, Houston or elsewhere in Fort Bend County, Montgomery County or Harris County, contact the Neal Davis Law Firm today to arrange a confidential consultation for your white-collar crime case. And don’t delay. Your future may depend on it.
