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United States News

John McAfee's Death Complicates US Efforts To Seize His Assets (bloomberg.com) 122

John McAfee's death last week in a Spanish prison complicates the U.S. government's intent to recover millions of dollars it says the software tycoon owed in taxes and allegedly ill-gotten gains from promoting cryptocurrencies. From a report: McAfee, who decades ago founded the anti-virus company that bears his name, was found dead in his cell just hours after Spanish courts approved his extradition to the U.S. to face charges of tax evasion. U.S. prosecutors accused McAfee of not filing tax returns from 2014 to 2018 even as he earned millions from "promoting cryptocurrencies, consulting work, speaking engagements and selling the rights to his life story for a documentary," according to an indictment last June in a U.S. court in Tennessee, where he once lived.

Spanish court documents released last week alleged he owed the U.S. government more than $4.2 million in taxes. Separately, the U.S. Securities and Exchange Commission claimed McAfee promoted investments in initial coin offerings without disclosing he was paid more than $23 million to do so. The U.S. Department of Justice has a similar case against him. According to the indictment, McAfee managed to avoid paying taxes by routing his payments through bank accounts and cryptocurrency accounts set up in other people's names and hiding assets like real estate, a vehicle and a yacht also under the names of others. Such a complex money trail could keep lawyers busy for years.

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John McAfee's Death Complicates US Efforts To Seize His Assets

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  • Deadman's Switch (Score:5, Insightful)

    by dbreeze ( 228599 ) on Tuesday June 29, 2021 @12:01PM (#61534016)

    Anyone gonna drop a link for us ..?

    • by shanen ( 462549 )

      What was your point?

      But my real disappointment was the lack of funny comments. I'd have thought this story was a natural to attract such. I'd try to fill the gap, but I have already proven I don't know how to write a joke. (Or maybe I wouldn't even try? It's a rather morbid story, after all.)

      • by Anonymous Coward

        Anyone gonna drop a link for us ..?

        What was your point?

        But my real disappointment was the lack of funny comments. I'd have thought this story was a natural to attract such. I'd try to fill the gap, but I have already proven I don't know how to write a joke. (Or maybe I wouldn't even try? It's a rather morbid story, after all.)

        McAfee publicly stated that he had information about powerful people linked to a deadman's switch. GP is wondering where it is. If it's a good switch, it probably has a couple week minimum wait time for emergency woopsie doodles.
        Of course since he publicly stated this, then there's a good chance that someone discovered the switch and disabled it before he died.
        They only have to worry if he had a second switch with the same information on a longer time limit.

  • more than $4.2 million. There are those who own a lot more than that living right here in the US that were not hounded to the point of suicide by the IRS/US Government. This reeks but then the government is involved.
    • by King_TJ ( 85913 )

      Sure --- but most who owe that kind of money in unpaid taxes aren't nearly as vocal about the problems with the government. If you keep a low profile, you can likely funnel a lot of income through other people's names and accounts and go unnoticed.

      McAfee was at a disadvantage from the get-go because most people assumed the guy was worth millions just by virtue of owning a successful software company for years.

      • by chuckugly ( 2030942 ) on Tuesday June 29, 2021 @12:39PM (#61534154)

        For a few years, a long time ago. He hasn't been a part of McAfee, Inc (or Network Associates, or McAfee Associates ...) any time in this CENTURY.

        But you're right, most people don't realize he sold his interests so long ago.

      • by gmack ( 197796 )

        His real mistake was not renouncing his citizenship. People keep forgetting that as long as you are a US citizen, you have to file taxes every year. That even goes for people with dual citizenship (by birth) who have never been to the US.

        • Most Americans don't know they have to pay US income tax on money they earn while outside the USA. It's not really something that is covered in school.

          As I recall the USA is one of the few countries that does that.

          If someone with more accurate info wants to chime in please do.

          • I was an official expat for a year. It was quite clear that federal income tax filings were required when working abroad. State taxes are much more complicated.

            What I didn’t understand was that when you don’t have any income you still need to file a return.

      • Re: (Score:3, Insightful)

        by DrXym ( 126579 )
        McAfee's disadvantage was he was a life long crook who struck it big and then couldn't keep his mouth shut as he returned to form. If he had sold his namesake company and disappeared then nobody, probably including the IRS would have given a rat's ass where he was or what he was up to.
    • Many people who you claim a lot more, actually don't. If they were legally able to take advantage of the Tax System, or have responsibility for their bad actions redirected to a corporation, while reprehensible and immoral, is still legal. So thy don't owe more, even if they deserve to owe more.

      McAfee had issues, and exasperated the problem by making a bigger deal than it was.

      For example we have a Guy at a bar, he is flirting with a pretty lady. The lady wasn't interested in him, but he persists, so the b

    • He was owed $4.2 million based on what the IRS has already identified. There is plenty more they haven't yet. The final tally may well be much higher. As to "being hounded to the point of suicide", most people who own that much money to the IRS are narcissists, but not (unlike the dearly departed in question) actually insane. This guy has well and truly lost his marbles. Applying the same mental standards to him as to everyone else doesn't make any sense.

  • by Major_Disorder ( 5019363 ) on Tuesday June 29, 2021 @12:09PM (#61534042)
    I have followed his life for the past decade or so, with great amusement. I find it hard to believe he is gone. :(
    Honestly I would not be surprised if we find out in a decade or so that he faked his death, and has been found living someplace, seriously off the grid.

    Kind of hope so.
  • I guess at least one of them is not certain.
  • It sure seems like after someone is dead, you would have a rough time collecting anything put in someone else's name who is still alive... since he's dead those things are essentially gifts to the people they are registered under.

    • by mysidia ( 191772 )

      you would have a rough time collecting anything put in someone else's name who is still alive .. since he's dead those things are essentially gifts

      If the deceased person could not cover the debts, including the tax debts, then it becomes an insolvent estate and gets treated according to bankruptcy rules.

      Putting stuff in someone else's name to avoid debt in a bankruptcy = fraudulent transfer [wikipedia.org].

      The fraudulently-conveyed assets, the "Gifts" will be ordered by the courts transferred to the management of the ban

      • Cryptocurrency and international bank transactions makes all that more difficult. In some cases, impossible.

        Yes, the us government has good methods to track crypto transfers it appears (evidenced by their successful seizures) but fundamentally the nature of accounts labeled with a hash code, coin washers, and other mechanisms mean that some of the money they are not going to be able to find. Maybe most of it.

        • by mysidia ( 191772 )

          Cryptocurrency and international bank transactions makes all that more difficult. In some cases, impossible.

          Impossible if it was not very much money or the creditor was not the US Government.

          the nature of accounts labeled with a hash code, coin washers, and other mechanisms mean that some of the money they are not going to be able to find.

          These aren't much of a hinderance when they can work backwards --- All they need to do is make sure to identify all potential friends, family members, etc, whom McAfee m

          • The next issue the government would encounter is trying to summon someone to civil court who is not in the USA. Or to seize money from an account the us does not control. Or to seize money from a crypto account if they cannot arrest the individual who had the private key (good luck).

            Or to extradite someone from new Zealand.

            I am not saying any of these barriers are absolute but in many cases the cost to bypass them will cost far more than the government could hope to collect. We will see but if the IRS can

            • by mysidia ( 191772 )

              next issue the government would encounter is trying to summon someone to civil court who is not in the USA

              Maybe. Whether summoning the person is even necessary is a different thing; an Action In Rem [wikipedia.org] does not require summoning anyone, And they could potentially pursue it against any assets held in the US or other countries with agreements with the US, even if the owner is overseas - to enforce the repayment.

              Or to seize money from a crypto account if they cannot arrest the individual who had the private key

      • Putting stuff in someone else's name to avoid debt in a bankruptcy = fraudulent transfer.

        Sure but how can you really prove the transfer was fraudulent? It seems very difficult without a clear trail of the kind McAffe is very unlikely to have left.

  • regardless of the indictments, he is innocent, unless they try him (in absentia) or charge his estate.
    • Presumption of innocence is a principle of criminal jurisprudence. Since he is dead, his assets are subject to civil action. There is no such presumption in civil proceedings.

  • and selling the rights to his life story for a documentary

    While the documentary production company probably paid a fixed fee for the rights, their actual production costs will be reduced because there is no exposure to post-sale zaniness that they'll have to portray. Now there's a finite beginning, a middle, and an end to the story, with women paid to crap in his mouth inserted somewhere in between.

  • He was living abroad so he was not getting any services from the US govt. Yet US govt wanted to tax his worldwide income. Dropping US citizenship would have avoided these issues
    • by ShanghaiBill ( 739463 ) on Tuesday June 29, 2021 @01:29PM (#61534350)

      It is difficult to renounce American citizenship. In addition to other barriers, there are substantial exit taxes.

      If you have few current assets but expect to have high future earnings, it is best to renounce your citizenship when you are young.

    • Dropping US citizenship would have avoided these issues

      Dropping citizenship does not clear your tax record. He would have had to drop his citizenship years ago. The taxes being sought go back quite a while.

      Also what you can't drop a citizenship leaving you stateless. Only a couple of years ago he was still living in the USA. Only 2 years ago he apparently living on a boat "internationally". I will wager he didn't have another citizenship to fall back on meaning dropping his US citizenship wouldn't have been possible.

      • by ghoul ( 157158 )
        As far as I know hes been in Costa Rica for over 10 years including the 2014-2018 period the govt went after him for.
        • Well that we know is definitely false since he fled to Cuba in 2013 (8 years ago) after being accused of the murder of his nextdoor neighbour in 2012, and then he returned to the USA in 2014 to live in Tennessee after the case was effectively dropped. I can only find mention of him leaving again in 2016 after the Tax hoohar started. In between he's been in Guatemala, Spain, and I have no doubt he probably had some ties to Costa Rica as well, but frankly he hasn't lived anywhere long enough outside of the US

          • by ghoul ( 157158 )
            Many countries give you citizenship if you invest a million dollars no residence requirement
            • Indeed, but those normally come with at least some conditions, and it's not quite as "many" as you think. Quite a few do that's for sure, but having wealth is normally a minimum requirement and not a price tag. Monaco comes to mind, but not the countries he is documented as having been in.

              • by ghoul ( 157158 )
                Again doesnt matter what countries hes been in. Invest 100K and Granada will give you citizenship no need to even set foot in Granada.
  • It's practically identical to the Epstein situation. When you threaten people with that much power, it's shockingly easy to find yourself dead in prison or in a shallow grave somewhere. Investigations are pointless. Do you want to be the guy who uncovers the conspiracy theory? Hell no. If they can kill John McAfee, who has resources, what chance do you have? So the media reports exactly what they are told. John McAfee committed suicide. End of story.
    • by alvinrod ( 889928 ) on Tuesday June 29, 2021 @01:15PM (#61534296)
      What government would want to kill McAfee and why? If anyone had enough beef it would be someone he screwed over through any number of his own shady dealings. He no doubt exaggerated a lot or embellished parts of his life, but he had no problem dealing with the sort of people who would kill someone over a debt, probably related to drugs.
      • If anyone had enough beef it would be someone he screwed over through any number of his own shady dealings

        McAfee bought Demonsaw from my colleague and I for $40M, but paid for it in "preferred" shares of MGT-Future Tense.

        Later he pulled a pump-and-dump on the stock, it was delisted, and the stock was worthless.

        I told my colleague to stay the fuck away from McAfee but he just wouldn't listen. I get the feeling this stuff happened a lot with McAfee

    • by lorinc ( 2470890 )

      The dude had tens of millions of dollars flowing through his hands in shady operations so it's probably not difficult to find someone with a good reason and the means to have him killed. No need to involve any government here.

    • The basis of a great conspiracy is that it has to be of a great benefit to those doing the conspiring. The US government wasn't threatened. They gained nothing by his death. In fact they lost quite a bit. He was rich and owed taxes, but he wasn't a powerful kingmaker.

      Epstein was a powerbroker who presumably had dirt on the whos who of powerful America as he dragged them all into some very illegal activities.
      McAfee was just a rich dude, a certified nutcase whose money just made him go mad in the most literal

    • It is unfortunately not unusual for people to commit suicide in jail, but we only care when it's a wealthy white dude. Then we don't want people to think we only care about wealthy white dudes, so we invent a conspiracy.

    • I don't know how government got involved in my post. I mentioned no such thing.
    • by DrXym ( 126579 )
      Yeah because John McAfee who spent his life in Belize and on the run, snorting coke off hooker's asses when he wasn't murdering people or running scams must have the goods on so many prominent people! That or he was lying.

      And if the US government wanted to whack him they'd have thrown the asshole off his boat years ago or waited until he was in their custody and give him a heart attack or something. They certainly wouldn't go through the protracted effort of indicting him & extradition proceedings and

  • and Al Sharpton owes, and the reports vary, around $4.5 million in back taxes. I would venture to guess that nearly all of the money that McAfee earned was outside the USA, and the Sharpton earnings took place entirely within the USA.

    Yes, you could argue that the crypto pump and dump earnings by McAfee were shady at best. I would argue that the "Sharpton Shakedowns" are equally shady.

    The point being that the IRS sure seems to pick and choose who they go after. My guess is that the McAfee money is stored in

  • Of course, the US tax regime is nearly criminal. No other Westen country tries to tax people who don't live within its borders. Why didn't McAfee just give up his citizenship?
    • Why didn't McAfee just give up his citizenship?

      Exit tax. The US isn't going to recognize his renunciation if he isn't up to date with taxes and pays the exit tax.

    • Re:US tax regime (Score:5, Informative)

      by Qwertie ( 797303 ) on Tuesday June 29, 2021 @03:40PM (#61534840) Homepage

      Of course, the US tax regime is nearly criminal. No other Westen country tries to tax people who don't live within its borders. Why didn't McAfee just give up his citizenship?

      A lot of Americans who move abroad (myself, for instance) didn't know that filing U.S. taxes was required abroad, or that the U.S. double-taxes income above $100,000 or so (i.e. you must pay income tax to the U.S. and to the country in which you reside on income above $100,000 [americansabroad.org].

      You can only renounce your citizenship after you've paid the U.S. government the double tax.

      But it can be worse. Much, much, much worse. Because there is a another law, FATCA, that says you must file a form called an FBAR about every foreign account you have outside the U.S. There are no taxes associated with this form, you just have to declare your maximum account balance during the year. If you don't file this form, you have to pay a penalty of 50% of all the money in the account. This is an annual penalty. so if the IRS feels like it, they can take 50% of all your money for every year you don't report it, up to a maximum of 6 years or about 300% of all your money. And I have heard of cases where the U.S. has indeed assessed a penalty larger than all the person's foreign wealth. Again, you can only renounce your citizenship after you've paid the U.S. government this "penalty". Which, again, is not "a tax" but simply a "penalty" on top of all other taxes.

      Think about this. A person leaves the U.S. as a child. He works his whole life and by age 65 he's saved $1,000,000. In the last four years he gets a pay raise to $104,000, and in the last year someone, maybe the H&R block guy, mentions that the U.S. has a double-taxation system for that. He grudgingly pays the pays the double tax in the final year, but skips over the taxes in the other three years hoping the IRS won't notice. He thinks it's a fairly small tax anyway and it won't be that a big deal even if the IRS finds out, and since double-taxation isn't fair, why should he report? It's water under the bridge anyway... but the IRS sees "wilful tax evasion" in an "offshore account". As a result, he can be subject to investigation and a penalty of up to $1,500,000 from the IRS.

      "Hold on," you might say. "Surely this isn't legal under the 8th Amendment against excessive fines and punishments?" Well, I wouldn't think so either, but it held up in court [lexology.com]:

      Schwarzbaum argued that the [$15.6 million] FBAR penalties in his case violate the Eighth Amendment.... The government argued that FBAR penalties are not "fines" subject to the Eighth Amendment, and that in any event, Schwarzbaum failed to meet his burden of showing that the penalties are unconstitutionally excessive.

      The Eighth Amendment provides that "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." U.S. Const. amend. VIII. In order to evaluate whether a penalty violates the Eighth Amendment, the Court first had to determine whether the penalty is a "fine" subject to the Eighth Amendment, before deciding whether it is excessive. The court determined that the FBAR penalties are not a fine subject to the Eighth Amendment, and therefore did not evaluate whether the penalties were excessive.

      It's a "penalty", not a "fine", so it's constitutional, get it?

      Now, I have no idea if any of this is why McAfee was in prison. But I hope we can agree that this law is pure insanity. As for me? I lived outside Canada since I was a child and now I'm desperately trying to figure out how to get 6 years of records for my accounts. Two accounts, just for example, are located thousands of miles away, contain little money, haven't been used in years and I forgot my password to log in. The banks w

      • by Qwertie ( 797303 )
        (Freudian slip there, I meant to say "I lived outside the U.S." obviously)
        • by dryeo ( 100693 )

          Well, there are Canadians with an American parent who later in life find out they're US citizens with all the tax etc shit and that Canada helpfully shares their banking info with America.
          Question, does the 8th actually mean anything? I've never heard of a ruling based on it. Here in Canada, 3 strike laws, minimum penalty laws have been struck down as being cruel and unusual. America executes people in slow cruel ways and the courts just say that's fine as it would have been OK in the 18th century.

      • U.S. double-taxes income above $100,000

        The link you provided clearly states this is not the case.

        The U.S. imposes a tax floor. If you move to a country with very low taxes, then you'll have to pay the difference. If you move to a country with a high taxes, then you owe the U.S. nothing.

        As the United States tends to have lower taxes than many countries you would go for work, most likely end up paying nothing (other than wasted time filing paperwork).

        • by Qwertie ( 797303 )

          Thanks for the correction! I have been misinformed and sadly passed on the misinformation. I am sorry.

          I think something is worth noting, though, that could complicate/limit a U.S. citizen's options a lot. For instance, I might put a lot of money into a Canadian registered retirement account, and donate a lot of money to Canadian charities. The Canadian government gives me large tax relief for both of those things, especially giving to charity. But the U.S. doesn't recognize Canadian charities or Canadian

      • Yes to all of this. Tip: hire an EA to handle the crap. Hand back your passport. The peace of mind is worth it, believe me.
  • What a deal, it's probably going to cost tax payers millions to chase the money and only claw back a fraction of it.

  • ...this is an extreme "if I can't have it neither can you" kind of scenario.

  • So as gov does everywhere. They will burn trough 50million or so in paying lawyers etc to collect what? Maybe 10-15 million if even that?
  • What taxes? (Score:4, Insightful)

    by WolfgangVL ( 3494585 ) on Tuesday June 29, 2021 @02:28PM (#61534594)

    But Mr. Tax man, I've been operating @ a loss for years... no profit, no tax. Oh.... you mean those crypto gains? I never actually sold them... so unrealized gains....

    You mean those speaking engagements? Oh those profits were reinvested in my business in the form of research. Still no profit. The house? Mortgage my man, the interest and deprecation is off-setting the tax... it's a wash.

    Oh yea you must be talking about those consultation fees right? Sorry tax man, all of those profits have been "Donated" to the "Not-for-profit foundation" of which I am the chairman, and take no salary. 40% of nothing is.... still nothing.

    Where did I get the thousands in my pocket I throw around like water every time I go out? Oh that was a big loan against those untaxable unrealized gains we discussed earlier so... loans aren't income.

    You know what though? I think maybe I aught to do my civic duty and donate the paltry sum of an annual middle class income to the political fortunes of.... oh I don't know, who do YOU like?

  • He owes $4.2M in taxes, and this is going to take lawyers (plural) years (plural, again) to figure out. I am pretty sure a single lawyer will eat that money up in fees in a 2-3 years (at most). Multiple lawyers for say 3 years -> probably $10M+, without breaking a sweat. And it is likely they will fail collecting most of what they claim he owed, anyway.

    How I wish governments were strictly opt-in, so that only people who enjoys this kind of shit had to pay for it.

    • by bws111 ( 1216812 )

      Are you somehow under the impression that the DOJ goes out and gets some law firm to work for them? The lawyers are salaried employees of the DOJ, with a salary between $71K and $190K.

  • I'm betting that he did kill himself, and promoted the specter of death by black ops specifically to cause the US government problems. The fact that his death is also complicating seizure of his assets is just a happy accident.

Keep up the good work! But please don't ask me to help.

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