• In a lawsuit filed on Wednesday, D.C. Attorney General Karl Racine charged tech billionaire Michael Saylor with avoiding $25 million in district taxes.
  • In addition, MicroStrategy, the data-tracking business Saylor co-founded, is named as a defendant in the lawsuit on the grounds that it colluded with Saylor to cheat taxes.
  • The lawsuit claims that Saylor falsely claimed to live in Florida, a state without a personal income tax, while in fact, she was residing in numerous separate properties all throughout Washington, D.C.

In a lawsuit filed on Wednesday, District of Columbia Attorney General Karl Racine charged MicroStrategy co-founder and Executive Chairman Michael Saylor with avoiding $25 million in local taxes.

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MicroStrategy is also named as a defendant in the complaint. Racine claims that the business planned to assist Saylor in evading taxes. The AG’s office stated that it is attempting to recover unpaid taxes and penalties totaling more than $100 million.

Following the news, 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 under his direction, the company spent close to $4 billion buying bitcoin at an average price of $30,700.

The lawsuit claims that Saylor falsely claimed to live in Virginia or Florida, states with lower or no personal income tax rates, when in fact he was living in a number of different residences around Washington, D.C., including a penthouse apartment in the Georgetown neighborhood or on 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 “house,” 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 extensive evidence verifying that Saylor was in fact a DC resident,” but nevertheless choose to withhold such information.

MicroStrategy stated in a statement that the lawsuit included Mr. Saylor’s personal tax matter. The Company was not in charge of his daily business and was not in charge of his personal tax obligations. Additionally, the Company did not work together with Mr. Saylor to help him fulfill his personal tax obligations. The allegations made against the Company by the District of Columbia are untrue, and we will vigorously resist this overreach.

The AG’s office asserts in the lawsuit that Saylor was questioned by MicroStrategy’s then-chief financial officer in 2014 about his alleged tax fraud as a potential issue for the business. According to the lawsuit, Saylor and MicroStrategy ultimately decided to reduce Saylor’s income to a meager $1 in order to lower the likelihood that law enforcement would learn about the alleged scam. However, according to the AG, Saylor kept receiving “fringe advantages” with a “high cash value,” like the usage of the company plane.

Saylor stated in a statement that she moved her residence from Virginia to Miami Beach ten years ago after purchasing a historic home there. “Even though MicroStrategy is headquartered in Virginia, my personal and family lives in Florida, where I also vote, have served on juries, and where I also reside. I respectfully disagree with the District of Columbia’s stance and look forward to a just legal outcome.

According to Racine’s office, the lawsuit is the first to be filed under the False Claims Act, a recently established law. According to the AG’s office, the district law encourages whistleblowers to disclose tax fraud and permits the court to impose fines up to three times the amount of the taxes 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. Although the lawsuit was filed behind a seal, it became visible 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 owed to the district. According to the latest lawsuit, Saylor began failing to pay the district the income tax he owed beginning in 2005.

FAQs

What is the role of the attorney general?

The chief legal representatives of each state or territory are the attorneys general. They serve as the “People’s Lawyer” for the populace, advising and representing the legislature as well as state agencies. Although some are appointed by the governor, most are elected.

Who brings criminal charges in DC?

Both federal and municipal prosecution is handled by the U.S. Attorney’s Office for the District of Columbia in Washington, D.C. The Superior Court Division, which prosecutes local adult felonies and misdemeanor crimes in Washington, D.C.’s Superior Court, is where nearly two-thirds of the Office’s 300+ attorneys practice.

Why would the Office of the Attorney General send me a letter?

In order to inform you that you are the subject of a criminal investigation, the federal government frequently uses target letters in white-collar cases. The United States Attorney’s Office defines a target as someone against whom there is strong evidence.

Do the courts in Washington, DC, exist independently?

The DC Courts are made up of the DC Court of Appeals, the DC Superior Court, and the Court System, which supports both courts administratively. The District of Columbia’s courts makes up its third department of government.

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Since 2014, Eliza Grace has worked as a reporter covering movies and other forms of media. She is particularly well-known for the humorous way in which she analyses film. On a regular basis, she contributes articles to The Current that are movie reviews as well as articles about the newest movies, video games, and entertainment news. Words from Eliza Grace: "There's a standard formula for success in the entertainment medium and that's: Beat it to death if it succeeds."