Cybersecurity Pioneer McAfee Arrested on Tax Evasion Charges

(Bloomberg) -- Elusive cybersecurity pioneer John McAfee was arrested on tax-evasion charges for failing to file tax returns for four years, U.S. prosecutors said.

McAfee is accused of failing to file tax returns from 2014 to 2018 and hiding assets that include real estate, a vehicle and a yacht in the name of others, the Justice Department said. An indictment returned in June was unsealed on Tuesday after he was taken into custody in Spain, where he is awaiting extradition, according to the department.

Prosecutors allege that McAfee earned millions of dollars through the promotion of cryptocurrencies, speaking engagements, consulting jobs and the sale of the rights to his life story for a documentary, but never filed tax returns, instead having his income paid into accounts held in other names. He faces as much as five years in prison if convicted.

The announcement is the latest legal complication for the eccentric software mogul, who was a person of interest in a murder in Belize, though not charged with a crime, and last year was detained in the Dominican Republic for entering the country with a cache of firearms and ammunition. The charges were announced just hours after the U.S. Securities and Exchange Commission sued McAfee for promoting the sale of cryptocurrencies without disclosing that he was being paid to do so.

The commission sued McAfee Monday, alleging he recommended at least seven initial coin offerings to his Twitter followers from at least November 2017 to February 2018 without revealing that he earned more than $23 million to boost them. He's also accused of denying that he was being paid when asked by investors.

Read more on McAfee fleeing Belize

The SEC is seeking to force McAfee to disgorge all his ill-gotten gains, and to prohibit him from taking part in the issuance, purchase or sale of any digital asset securities and unspecified monetary penalties.

McAfee didn't immediately respond to a request for comment. His wife Janice posted a statement on their Twitter accounts Tuesday morning, confirming that he had been detained in Spain, saying he was in “good spirits” and thanking his followers for their support.

“Regardless of whatever John may or may not have done, he has spent most of his retirement fighting for not only his own freedom, but everyone's freedom, in America and across the world,” Janice McAfee said. “For your freedom and the right to make your own choices in life. Now more than ever he needs your support, all of our support really, in this battle against injustice.”

The commission also accused McAfee of claiming to be an investor or technical adviser, “creating the impression that he had vetted these companies, that they were benefiting from his technical expertise, and that he was willing to invest in the ventures.”

When a blogger exposed that he was being paid, McAfee was still holding “virtually worthless” securities from the offerings he promoted and encouraged investors to buy them -- without revealing that they were his own securities and he had paid a third party to recommend them, according to the complaint.

McAfee also engaged in a practice called scalping, in which he accumulated large amounts of digital securities and promoted it on Twitter without disclosing his intention to sell it, the SEC said.

McAfee founded his eponymous software firm in 1987. Intel Corp., seeking to build security features directly into its chips, bought the company for $7.7 billion in 2010, with TPG and Thoma Bravo taking stakes later. In 2016, Intel announced that it had signed a deal to transfer a 51% stake in the business to TPG for $1.1 billion. The company filed to go public last month.

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