SEC v. JOHN DAVID MCAFEE; JIMMY GALE WATSON; and PLAINTIFF, No. 1:20-cv-08281, Southern District of New York (July 15, 2022)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF
NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
V.
JOHN DAVID MCAFEE and
JIMMY GALE WATSON, JR.,
Plaintiff,
Defendants.
20 Civ. 8281 (JGK)
FINAL JUDGMENT AS TO DEFENDANT JIMMY GALE WATSON, JR.
The Securities and Exchange Commission having filed a Complaint and Defendant
Jimmy Gale Watson, Jr., having entered a general appearance; consented to the Court' s
jurisdiction over Defendant and the subject matter
of this action; consented to entry of this Final
Judgment; waived findings
of fact and conclusions of law; and waived any right to appeal from
this Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is
permanently restrained and enjoined from violating, directly or indirectly, Section l 0(b)
of the
Securities Exchange Act
of 1934 (the "Exchange Act") [15 U .S.C. § 78j(b)] and Rule l0b-5
promulgated thereunder [17 C.F.R.
§ 240. l0b-5], by using any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national securities exchange, in
connection with the purchase or sale
of any security:
(a) to employ any device, scheme, or artifice to defraud;

(b) to make any untrue statement
of a material fact or to omit to state a material fact
necessary
in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or
(
c) to engage in any act, practice, or course of business which operates or would
operate
as a fraud or deceit upon any person.
IT
IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule
of Civil Procedure 65( d)(2), the foregoing paragraph also binds the following who
receive actual notice
of this Final Judgment by personal service or otherwise: (a) Defendant's
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933
(the "Securities Act") [15 U.S.C. § 77q(a)] in the offer or sale
of any security by the use of any
means or instruments
of transportation or communication in interstate commerce or by use of the
mails, directly or indirectly:
(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means
of any untrue statement of a material fact
or any omission
of a material fact necessary in order to make the statements
made,
in light of the circumstances under which they were made, not misleading;
or
(
c) to engage in any transaction, practice, or course of business which operates or
would operate as a fraud or deceit upon the purchaser.
2

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule
of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice
of this Final Judgment by personal service or otherwise: (a) Defendant's
officers, agents, servants, employees, and attorneys; and (b ) other persons in active concert or
participation with Defendant or with anyone described in (a).
III.
IT IS
HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant
is  permanently restrained and enjoined from v iolating Section 17(b)
of the Securities Act [15
U.S.C. § 77q(b)] by using any means or instruments
of transportation or communication in
interstate commerce, or by  using he mails, to publish, give publicity to, or circulate any notice,
circular, advertisement, newspaper, article, letter, investment service,
or communication which,
though not purporting to offer a security  for sale, describes such security for consideration
received or to be received, directly
or indirectly, from an issuer, underwrite, or dealer, without
fully disclosing the receipt, whether past or prospective,
of such consideration and the amount
thereof.
IT IS
FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal
Rule of Civil Procedure 65( d)(2), the foregoing paragraph also binds the following who
receive actual notice
of this Final Judgment by personal service or otherwise:  (a) Defendant's
officers, agents, s  ervants, employees, and attorneys; and (b) other persons in active concert or
participation with Defendant or with anyone described in (a).
IV.
IT IS
FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Section
21(d)(5)
of the Exchange Act [15 U.S.C. § 78u(d)(5)], Defendant is  permanently restrained and
3

enjoined from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any
digital asset security, provided, however, that such injunction shall not prevent Defendant from
purchasing or selling securities for his own personal accounts.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule
of Civil Procedure 65( d)(2), the foregoing paragraph also binds the following who
receive actual notice
of this Final Judgment by personal service or otherwise: (a) Defendant's
officers, agents, servants, employees, and attorneys; and (b) other persons in active concert
or
participation with Defendant or with anyone described in (a).
V.
IT IS
FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is  liable
for disgorgement
of $316,401.48, representing net profits gained as a result of the conduct
alleged in the Complaint, together with prejudgment interest thereon in the amount
of
$59,533.38. The Court finds that sending the disgorged funds to the United States Treasury, as
ordered below, is consistent with equitable principles. Defendant shall satisfy this obligation by
paying $375,934.86 to the Securities and Exchange Commission within 30 days after entry
of
this Final Judgment.
Based on Defendant's sworn representations in his Statement
of Financial Condition
dated February 22, 2022, and other documents and information submitted to the Commission,
however, the Court is not ordering Defendant to pay a civil penalty. The determination not to
impose a civil penalty is  contingent upon the accuracy and completeness
of Defendant' s
Statement
of Financial Condition. If at any time following-the entry of this Final Judgment the
Commission obtains information indicating that Defendant's representations to the Commission
concerning his assets, income, liabilities,
or net worth were fraudulent, misleading, inaccurate, or
4

incomplete in any material respect as of the time such representations were made, the
Commission may, at its sole discretion and without prior notice to Defendant, petition the Court
for an order requiring Defendant to pay the maximum civil penalty allowable under the law.
In
connection with any such petition, the only issue shall be whether the financial information
provided by Defendant was fraudulent, misleading, inaccurate, or incomplete in any material
respect
as of the time such representations were made. In its petition, the Commission may
move this Court to consider all available remedies, including, but not limited to, ordering
Defendant to pay funds or assets, directing the forfeiture
of any assets, or sanctions for contempt
of this Final Judgment.  The Commission may also request additional discovery.  Defendant may
not, by way of defense to such petition: (1) challenge the validity of the Consent or this Final
Judgment; (2) contest the allegations
in the Complaint filed by the Commission; (3) assert that
payment of disgorgement, pre-judgment and post-judgment interest or a civil penalty should not
be ordered; (4) contest the amount of disgorgement and pre-judgment and post-judgment
interest; (5) contest the imposition
of the maximum civil penalty allowable under the law; or (6)
assert any defense to liability or remedy, including, but not limited to, any statute
of limitations
defense. Defendant shall also pay post-judgment interest on any delinquent amounts pursuant to
28 U.S.C.
§ 1961.
Defendant may transmit payment electronically to the Commission, which will provide
detailed ACH transfer/Fedwire instructions upon request. Payment may also
be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, bank
cashier' s check, or United States postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
5

Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name
of
this Court; Jimmy Gale Watson, Jr., as a defendant in this action; and specifying that payment is
made pursuant to this Final Judgment.
Defendant shall simultaneously transmit photocopies
of evidence of payment and case
identifying information to the Commission's counsel in this action.
By making this payment,
Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part
of the funds shall be returned to Defendant. The Commission shall send the funds paid pursuant
to this Final Judgment to the United States Treasury.
The Commission may enforce the
Court's judgment for disgorgement and prejudgment
interest by using all collection procedures authorized by law, including, but not limited to ,
moving for civil contempt at any time after 30 days following entry
of this Final Judgment.
Defendant shall pay post judgment interest on any amounts due after 30 days
of the entry
of this Final Judgment pursuant to 28 U.S.C. § 1961.
VI.
IT IS
FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is
incorporated herein with the same force and effect as
if fully set forth herein, and that Defendant
shall comply with all
of the undertakings and agreements set forth therein.
VII.
IT
IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of
exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the
allegations in the complaint are true and admitted by Defendant, and further, any debt for
6

disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this
Final Judgment or any other judgment, order, consent order, decree or settlement agreement
entered in connection with this proceeding, is  a debt for the violation by Defendant
of the federal
securities laws or any regulation or order issued under such laws, as set forth in Section
523(a)(l9)
of the Bankruptcy Code, 11 U.S.C. § 523(a)(19).
VIII.
IT IS
FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain
jurisdiction
of this matter for the purposes of enforcing the terms of this Final Judgment.
IX.
There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure, the Clerk is  ordered to enter this Final Judgment forthwith and without further notice.
Dated:
ATES DISTRICT JUDGE
7

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UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE 
COMMISSION, 

V. 

JOHN DAVID MCAFEE and 
JIMMY GALE WATSON, JR., 

Plaintiff, 

Defendants. 

20 Civ. 8281 (JGK) 

FINAL JUDGMENT AS TO DEFENDANT JIMMY GALE WATSON, JR. 

The Securities and Exchange Commission having filed a Complaint and Defendant 

Jimmy Gale Watson, Jr. , having entered a general appearance; consented to the Court' s 

jurisdiction over Defendant and the subject matter of this action; consented to entry of this Final 

Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from 

this Final Judgment: 

I. 

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is 

permanently restrained and enjoined from violating, directly or indirectly, Section l 0(b) of the 

Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b)] and Rule l0b-5 

promulgated thereunder [17 C.F.R. § 240. l0b-5] , by using any means or instrumentality of 

interstate commerce, or of the mails, or of any facility of any national securities exchange, in 

connection with the purchase or sale of any security: 

(a) to employ any device, scheme, or artifice to defraud; 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 3 of 8 

(b) to make any untrue statement of a material fact or to omit to state a material fact 

necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; or 

( c) to engage in any act, practice, or course of business which operates or would 

operate as a fraud or deceit upon any person. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65( d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant's 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

II. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 

(the "Securities Act") [15 U.S.C. § 77q(a)] in the offer or sale of any security by the use of any 

means or instruments of transportation or communication in interstate commerce or by use of the 

mails, directly or indirectly: 

(a) to employ any device, scheme, or artifice to defraud; 

(b) to obtain money or property by means of any untrue statement of a material fact 

or any omission of a material fact necessary in order to make the statements 

made, in light of the circumstances under which they were made, not misleading; 

or 

( c) to engage in any transaction, practice, or course of business which operates or 

would operate as a fraud or deceit upon the purchaser. 

2 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 4 of 8 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant's 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

III. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from violating Section 17(b) of the Securities Act [15 

U.S.C. § 77q(b)] by using any means or instruments of transportation or communication in 

interstate commerce, or by using he mails, to publish, give publicity to, or circulate any notice, 

circular, advertisement, newspaper, article, letter, investment service, or communication which, 

though not purporting to offer a security for sale, describes such security for consideration 

received or to be received, directly or indirectly, from an issuer, underwrite, or dealer, without 

fully disclosing the receipt, whether past or prospective, of such consideration and the amount 

thereof. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65( d)(2) , the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant's 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

IV. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to Section 

21(d)(5) of the Exchange Act [15 U. S.C. § 78u(d)(5)] , Defendant is permanently restrained and 

3 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 5 of 8 

enjoined from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any 

digital asset security, provided, however, that such injunction shall not prevent Defendant from 

purchasing or selling securities for his own personal accounts. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in 

Federal Rule of Civil Procedure 65( d)(2), the foregoing paragraph also binds the following who 

receive actual notice of this Final Judgment by personal service or otherwise: (a) Defendant's 

officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or 

participation with Defendant or with anyone described in (a). 

V. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable 

for disgorgement of $316,401.48, representing net profits gained as a result of the conduct 

alleged in the Complaint, together with prejudgment interest thereon in the amount of 

$59,533.38. The Court finds that sending the disgorged funds to the United States Treasury, as 

ordered below, is consistent with equitable principles. Defendant shall satisfy this obligation by 

paying $375,934.86 to the Securities and Exchange Commission within 30 days after entry of 

this Final Judgment. 

Based on Defendant's sworn representations in his Statement of Financial Condition 

dated February 22, 2022, and other documents and information submitted to the Commission, 

however, the Court is not ordering Defendant to pay a civil penalty. The determination not to 

impose a civil penalty is contingent upon the accuracy and completeness of Defendant ' s 

Statement of Financial Condition. If at any time following-the entry of this Final Judgment the 

Commission obtains information indicating that Defendant's representations to the Commission 

concerning his assets, income, liabilities, or net worth were fraudulent, misleading, inaccurate, or 

4 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 6 of 8 

incomplete in any material respect as of the time such representations were made, the 

Commission may, at its sole discretion and without prior notice to Defendant, petition the Court 

for an order requiring Defendant to pay the maximum civil penalty allowable under the law. In 

connection with any such petition, the only issue shall be whether the financial information 

provided by Defendant was fraudulent, misleading, inaccurate, or incomplete in any material 

respect as of the time such representations were made. In its petition, the Commission may 

move this Court to consider all available remedies, including, but not limited to, ordering 

Defendant to pay funds or assets, directing the forfeiture of any assets, or sanctions for contempt 

of this Final Judgment. The Commission may also request additional discovery. Defendant may 

not, by way of defense to such petition: (1) challenge the validity of the Consent or this Final 

Judgment; (2) contest the allegations in the Complaint filed by the Commission; (3) assert that 

payment of disgorgement, pre-judgment and post-judgment interest or a civil penalty should not 

be ordered; (4) contest the amount of disgorgement and pre-judgment and post-judgment 

interest; (5) contest the imposition of the maximum civil penalty allowable under the law; or (6) 

assert any defense to liability or remedy, including, but not limited to, any statute of limitations 

defense. Defendant shall also pay post-judgment interest on any delinquent amounts pursuant to 

28 U.S.C. § 1961. 

Defendant may transmit payment electronically to the Commission, which will provide 

detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly 

from a bank account via Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified check, bank 

cashier' s check, or United States postal money order payable to the Securities and Exchange 

Commission, which shall be delivered or mailed to 

5 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 7 of 8 

Enterprise Services Center 
Accounts Receivable Branch 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

and shall be accompanied by a letter identifying the case title, civil action number, and name of 

this Court; Jimmy Gale Watson, Jr., as a defendant in this action; and specifying that payment is 

made pursuant to this Final Judgment. 

Defendant shall simultaneously transmit photocopies of evidence of payment and case 

identifying information to the Commission's counsel in this action. By making this payment, 

Defendant relinquishes all legal and equitable right, title, and interest in such funds and no part 

of the funds shall be returned to Defendant. The Commission shall send the funds paid pursuant 

to this Final Judgment to the United States Treasury. 

The Commission may enforce the Court's judgment for disgorgement and prejudgment 

interest by using all collection procedures authorized by law, including, but not limited to, 

moving for civil contempt at any time after 30 days following entry of this Final Judgment. 

Defendant shall pay post judgment interest on any amounts due after 30 days of the entry 

of this Final Judgment pursuant to 28 U.S.C. § 1961. 

VI. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is 

incorporated herein with the same force and effect as if fully set forth herein, and that Defendant 

shall comply with all of the undertakings and agreements set forth therein. 

VII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, for purposes of 

exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the 

allegations in the complaint are true and admitted by Defendant, and further, any debt for 

6 

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Case 1:20-cv-08281-JGK Document 33-3 Filed 07/13/22 Page 8 of 8 

disgorgement, prejudgment interest, civil penalty or other amounts due by Defendant under this 

Final Judgment or any other judgment, order, consent order, decree or settlement agreement 

entered in connection with this proceeding, is a debt for the violation by Defendant of the federal 

securities laws or any regulation or order issued under such laws, as set forth in Section 

523(a)(l9) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 

VIII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain 

jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment. 

IX. 

There being no just reason for delay, pursuant to Rule 54(b) of the Federal Rules of Civil 

Procedure, the Clerk is ordered to enter this Final Judgment forthwith and without further notice. 

Dated: 

ATES DISTRICT JUDGE 

7 

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