US accuses antivirus software maker John McAfee of tax evasion

John McAfee, Co-Founder of McAfee Crypto Team and CEO of Luxcore and Founder of McAfee Antivirus, speaks at the Malta Blockchain Summit in St Julian’s, Malta on November 1, 2018.

Darrin Zammit | Reuters

Federal prosecutors on Monday unveiled an indictment against John David McAfee, creator of the eponymous anti-virus software, for evading tax and willfully failing to file tax returns.

The US Department of Justice announced the charges shortly after the Securities and Exchange Commission revealed it had initiated civil lawsuits against McAfee, alleging he had received more than $ 23.1 million in unpaid compensation. leaked recommending seven cryptocurrency offers on Twitter that were materially false and misleading.

The indictment, filed under seal in June, was unsealed following his arrest in Spain where the United States is seeking to extradite him.

He is said to have earned millions of dollars in income through the promotion of cryptocurrencies, as well as through consulting, speaking engagements, and selling the rights to his life story for a documentary. Despite this income, the Justice Department said it did not file any tax returns from 2014 to 2018.

The SEC alleged that from at least November 2017 to February 2018, McAfee recommended cryptocurrencies for which it was paid to promote, while wrongly denying such payments.

“McAfee leveraged its fame to earn more than $ 23.1 million in undisclosed compensation” by recommending at least seven initial coin offerings or ICOs to its Twitter followers, the SEC said.

McAfee’s recommendations were “materially false and misleading,” in that it was attempting to sell “virtually worthless” cryptocurrency tokens by encouraging investors to buy the securities without disclosing its own holdings, the SEC said. .

The SEC seeks to impose a civil sanction on McAfee as well as restitution of ill-gotten gains, with interest. The agency also wants to ban him definitively from exercising the functions of manager or administrator of any company listed on the stock exchange or of any company that files reports with the agency.

The SEC is also pursuing charges against Jimmy Gale Watson, Jr., a bodyguard for McAfee, for aiding and abetting the sale of digital currencies, among other allegations.

“Potential investors in digital asset securities have a right to know whether the promoters have been remunerated by the issuers of those securities,” said Kristina Littman, head of the SEC cyber unit. “McAfee, assisted by Watson, allegedly took advantage of its fame to deceptively tout many digital asset titles to its subscribers without informing investors of its role as a paid promoter.”