According to the U.S. Department of Justice (DOJ), the indictment that was unveiled yesterday (following McAfee’s arrest) charges him with “tax evasion and willful failure to file tax returns.”
The DOJ’s press release says that this indictment (dated 15 June 2020) alleges that for the 2014-2018 period John David McAfee “failed to file tax return” despite having “considerable income” from “promoting cryptocurrencies, consulting work, speaking engagements, and selling the rights to his life story for a documentary.”
The DOJ also states that per this indictment, McAfee “allegedly evaded his tax liability by directing his income to be paid into bank accounts and cryptocurrency exchange accounts in the names of nominees.”
Finally, the DOJ claims that the indictment also alleges that “McAfee attempted to evade the IRS by concealing assets, including real property, a vehicle, and a yacht, in the names of others.”
If McAfee is convicted, he will face “a maximum sentence of five years in prison on each count of tax evasion and a maximum sentence of one year in prison on each count of willful failure to file a tax return.”
On the same day that the DOJ announced McAfee’s arrest in Spain (where is awaiting extradition to the U.S.), the U.S. Securities and Exchange Commission (SEC) filed a 55-page complaint (20 Civ. 8281) against him (and Jimmy Gale Watson, Jr., whom the SEC describe as McAfee’s bodyguard).
The SEC’s complaint states that “from at least November 2017 through February 2018, McAfee leveraged his fame to make more than $23.1 million U.S. Dollars (‘USD’) in undisclosed compensation by recommending at least seven ‘initial coin offerings’ or ICOs to his Twitter followers.”
It then alleges that McAfee’s recommendations were “materially false and misleading” for the following reasons:
- “McAfee did not disclose that he was being paid to promote the ICOs by the issuers (the companies selling the securities in the ICOs).”
- “McAfee falsely claimed to be an investor and/or a technical advisor when he recommended several ICOs, creating the impression that he had vetted these companies, that they were benefitting from his technical expertise, and that he was willing to invest his own money in the ventures.”
- “… after a blogger exposed McAfee’s paid promotions and he could no longer generate interest in ICOs with tweets, McAfee was still holding a large number of virtually worthless securities from the ICOs he had previously touted.”
- “McAfee engaged in a practice known as “scalping” as to at least one digital asset security, by accumulating large amounts of the digital asset security and touting it on Twitter without disclosing his intent to sell it.”
- “McAfee was paid bitcoin (BTC) and ether (ETH) worth more than $11.6 million, plus an additional $11.5 million worth of promoted tokens, as undisclosed compensation for his promotions of seven ICOs.”
The SEC’s lawsuit was filed at U.S. District Court Southern District of New York.