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Greed-to-Grief, No. 21

Greed-to-Grief, No. 21

Famous people can also be crooks

George Pillari
September 25, 2025

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James McDonald was on the run. He shut down his email accounts and telephone numbers and did his best disappearing act. He was successful for four years until he was found and arrested thousands of miles from his Los Angeles base of operations.

Among his belongings was a Washington, DC driver’s license with his picture, but the name Brian Thomas on it.

James McDonald, second from lefr

McDonald started life claiming he was a Harvard graduate, when his only connection to the school was a few classes he took in the Harvard Extension School. The Extension School offers online classes and certificates aimed workforce skills like software coding and general management. From this inauspicious start, McDonald progressed to the point of running an outright Ponzi scheme.

McDonald ran two investment funds and was adept at moving his investors’ millions back and forth between the funds to show good returns. Using his investors’ money, he helped himself to a new Porsche and the rental of a luxury home. Gotta look the part, right?

McDonald had a money-making strategy; it just didn’t work. He theorized that the combination of the results of the 2020 presidential election combined with the effects of Covid on the economy would crash the stock market.

Betting on a decline, McDonald “sold short” certain stocks, which is the opposite of when we buy a stock (a “long buy”). With a short position, you make money when the stock goes down. Short selling is a legitimate and successful investment strategy that is widely used.

When you “short'“ a stock, you make money when the stock price declines

McDonald got burned since the markets went up, resulting in his short bets losing a lot of money. His investment vehicles were running dry. While all of this was going on, McDonald was a regular guest analyst on CNBC and other financial news shows.

McDonald successfully juggled his television appearances, the rent on his mansion, and moving funds around his different investments to create the appearance of success.

It came crashing down when investors started complaining to McDonald’s staff about not being able to cash out of the different investment funds. McDonald saw the writing on the wall and skipped town, which was another widely used strategy for scammers. And it worked for McDonald for four years.

When he was caught, the then 53-year-old McDonald was tried and convicted of defrauding investors of millions of dollars. He was sentenced to five years in prison.

Key Takeaways

McDonald was on television surrounded by other rich and smart people. Was it crazy to assume he knew what he was talking about? Who could have figured what a mess his life was when he was off camera?
Law enforcement can be patient. McDonald evaded capture for more than four years, but in the end, the FBI got its man.
McDonald disappeared at the first signs of trouble. What should we do it we start hearing negatives about an investment advisor? Pull your money out, fast. You can always put it back.

Things I think about

One of the greatest short sales of stock involved betting on the decline of Enron. Some investors shorted the stock as high as $90 per share and then closed their positions at less than a dollar for a profit of $89+ per share.