SEC v. James Arthur McDonald, Jr. and Hercules Investments, LLC (ponzi schemes, 2022)

Judgment entered

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In September 2022 the SEC sued investment adviser James McDonald Jr. and Hercules Investments, LLC over two allegedly fraudulent securities offerings. The SEC later posted a notice of covered action listing April 27, 2023 as the date of a qualifying judgment or order in the case. The notice gives no amounts and does not say which defendants it covers.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

—

Alleged gain

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A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Securities and Exchange Commission announced this matter on September 22, 2022 as release LR-25515. The complaint alleges that McDonald, a former television commentator, raised over $5.1 million from 23 investors and clients and misappropriated more than $2.9 million for personal expenses and Ponzi-like payments to earlier investors.

This library tags the matter as a Ponzi scheme because the document describes returns to earlier investors paid from later investors' money, as alleged or found. The tagging is ours, not the regulator's: agencies charge statutory provisions, not technique names.

A parallel criminal proceeding is referenced. Civil and criminal outcomes are recorded separately, because they resolve on different standards of proof.

Outcome. SEC whistleblower notice of covered action 2023-081 (posted June 29, 2023) identifies SEC v. James Arthur McDonald, Jr. and Hercules Investments, LLC, No. 22-cv-06799 (C.D. Cal.), filed September 21, 2022, with a "Date of Qualifying Judgment/Order" of April 27, 2023. Such notices are published for actions in which the SEC obtained sanctions above a monetary threshold, so the entry indicates a judgment or order of that date, but the notice itself gives no amounts, no description of its terms and no list of defendants it covers. I could not open the docket or the judgment, so no money is recorded and the type of judgment (consent or contested) is unknown. The allegations remain the SEC's unless the judgment says otherwise.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Ponzi schemes — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2022-09-22 Litigation release published
2. 2023-04-27 Qualifying judgment or order entered (per SEC notice of covered action)

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC litigation release
• SEC notice of covered action 2023-081

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 10, 2026. submit a correction.