Antivirus software entrepreneur John McAfee was indicted on fraud and money laundering conspiracy charges alleging that he and cohorts made over $13 million by fooling investors zealous over the emerging cryptocurrency market, authorities said Friday.
McAfee, 75, was charged in a newly unsealed indictment in Manhattan federal court along with Jimmy Gale Watson Jr., who served as an executive adviser on what prosecutors described as McAfee’s “so-called cryptocurrency team.”
Prosecutors said Watson, 40, was arrested Thursday night in Texas and would make an initial appearance Friday before a federal magistrate judge in Dallas. McAfee, authorities said, is detained in Spain on separate criminal charges filed by the U.S. Justice Department’s tax division.
It was not immediately clear who would represent the men.
“McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception,” U.S. Attorney Audrey Strauss said in a statement describing crimes in 2017 and 2018.
“The defendants allegedly used McAfee’s Twitter account to publish messages to hundreds of thousands of his Twitter followers touting various cryptocurrencies through false and misleading statements to conceal their true, self-interested motives,” she added.
In October, McAfee was charged in federal court in Memphis, Tennessee, with evading taxes after failing to report income made from promoting cryptocurrencies while he did consulting work, made speaking engagements and sold the rights to his life story for a documentary.
McAfee developed early internet security software and has been sought by authorities in the U.S. and Belize in the past.
The indictment out of Tennessee said McAfee failed to file tax returns from 2014 to 2018, despite receiving “considerable income” from several sources.
In July 2019, McAfee was released from detention in the Dominican Republic after he and five others were suspected of traveling on a yacht carrying high-caliber weapons, ammunition and military-style gear, officials on the Caribbean island said at the time.
McAfee, a self-described “eccentric millionaire,” launched a bid to run for president of the United States and set up an Opelika campaign headquarters, which also served as a tech incubator that he ran.
“Anybody who tells you they have answers now is lying to you. You may get into the Oval Office and realize you have no power. The first thing is maybe a wizard comes out,” McAfee told AL.com in 2016 from The Round House in Opelika, where an outdoor sign urged passersby to welcome the presidential candidate.
“You’re asking me what’s behind the curtain. It could be a brand new automobile or it can be an outbreak of measles, I don’t know. Let me open the curtain and deal with it.”
McAfee was also linked to Kyle Geoffrey Sandler, an Auburn man who in 2018 pleaded guilty to accepting more than $1.8 million from more than 50 investors in a scheme to defraud them.
Sandler aligned himself with McAfee and landed national media coverage for an Opelika teenager with an idea for a new kind of vending machine said to be worth millions.
McAfee noticed Sandler driving a Jaguar and the two struck up a relationship.
“He was displaying ostentatious wealth. It didn’t seem like you needed to delve too deeply into it,” McAfee told The Associated Press in 2019.
McAfee said he didn’t invest money in the Round House, a launching pad for new tech companies launched in October 2014, but spent “millions of dollars’ worth” of time with Sandler.
A Bitcoin-mining company with ties to McAfee at the time, MGT Capital Investments, acquired a membership interest in the Round House in May 2016; Sandler said the company invested $125,000 and provided another $250,000 in stock bonuses.
AL.com contributed to this report.