Attorney General Karl Racine of the District of Columbia asserted in a lawsuit filed on Wednesday that Michael Saylor, the co-founder and executive chairman of MicroStrategy, had avoided paying $25 million in district taxes.
MicroStrategy is also named as a defendant in the complaint. Racine asserts that the business engaged in collusion to support Saylor’s tax evasion. According to the AG’s office, it is attempting to recover unpaid taxes and penalties totaling more than $100 million.
In response to the announcement, MicroStrategy stock fell more than 6% on Wednesday. Saylor, who was in charge of the business’s foray into bitcoin, resigned as CEO earlier this month. He has stated that he views MicroStrategy’s stock as a kind of bitcoin ETF and that the business spent close to $4 billion buying bitcoin at an average cost of $30,700 while he was in charge.
The lawsuit claims that Saylor falsely represented his residence as being in Virginia or Florida, states with lower or no personal income tax rates, when in fact he was residing in a number of various residences around Washington, D.C., including a penthouse apartment in the Georgetown neighborhood or aboard his yacht on the Georgetown waterfront or Potomac River when the apartment was under construction. The lawsuit contains multiple screenshots of what appear to be postings from Saylor’s Facebook profile from several years ago that mention his “Georgetown balcony,” talk about his “home,” and tag Washington, D.C. They also mention the view from his “home,” according to the posts.
According to a press release, MicroStrategy allegedly “had detailed information confirming that Saylor was in fact a DC resident,” but nevertheless choose to withhold such information.
The AG’s office asserts in the lawsuit that Saylor was questioned about his alleged tax fraud somewhere around 2014 by MicroStrategy’s then-chief financial officer, who warned him that it could be a risk for the business. In order to lessen the likelihood that the claimed scheme would be discovered by law enforcement, Saylor and MicroStrategy allegedly came to an agreement wherein Saylor’s income would be reduced to a meager $1, according to the lawsuit. In spite of this, the AG claims that Saylor continued to receive “fringe benefits” with a “high cash value,” such as usage of the corporate jet.
According to Racine’s office, the lawsuit is the first to be filed under a recently established law known as the False Claims Act. According to the AG’s office, the district law encourages people to come forward with tax fraud allegations and gives the court the power to levy fines of up to three times the amount of taxes that were avoided.
The district lawsuit was brought as a result of a second complaint made against Saylor by informants in April 2021, in which they charged him with failing to pay income taxes from 2014 through 2020. The complaint was submitted behind a seal, but it became open on Wednesday.
According to the AG’s office, it conducted its own independent investigation into the whistleblower case and discovered MicroStrategy had submitted false W-2s with his Florida address and had neglected to deduct taxes that were purportedly owing to the district. According to the latest lawsuit, Saylor allegedly started withholding income tax from the district in 2005 and never paid it.
Leave a Reply