CNBC Pundit Gets 5-Year Prison Term in $2.7M Investor Fraud Suit

0
44

A Risky Bet Gone Wrong

Prosecutors argued McDonald’s troubles began in 2020, when he wagered heavily that the U.S. economy would crash following the presidential election. The bet backfired, wiping out tens of millions in client funds.

Instead of coming clean, McDonald allegedly raised millions in new investments for Hercules, while concealing prior losses. According to the Department of Justice, he used investor funds to make personal purchases, including at a Porsche dealership, and even funneled money to cover rent on a luxury Arcadia, California home.

Losses from the scheme totaled between $2.7 million and $3 million, court filings state.

Signup for the USA Herald exclusive Newsletter

Was It “Garden Variety” Fraud?

Defense attorney Danielle McKenzie Tyukody of O’Melveny & Myers LLP argued the misconduct amounted to “garden variety” fraud, claiming the sentencing enhancement for “sophisticated means” was overblown. The fake account statements McDonald issued, she said, were “very basic.”

But prosecutor Alexander B. Schwab countered that McDonald’s ploy — a capital raise under false pretenses while juggling Ponzi-style payouts — went far beyond simple deception.

Judge Fischer agreed, ruling the enhancement applied. She acknowledged McDonald may have initially sought to repay investors, but added: “That is no comfort to those who lost nearly everything along the way.”