MicroStrategy and Co-Founder Saylor to Pay $40 Million in DC Tax Fraud Settlement

The attorney general for the District of Columbia has reached a historic $40 million settlement with Michael Saylor and the software company he founded, MicroStrategy, marking the largest income tax fraud recovery in Washington’s history. This settlement, set to be announced on Monday, addresses lawsuits filed in 2021 and 2022 that accused Saylor of evading more than $25 million in income taxes in Washington. According to the attorney general’s office, Saylor, with the assistance of MicroStrategy, filed fraudulent forms from 2005 through 2020, claiming residency in Virginia or Florida to avoid paying higher income taxes in the district.

image
ReasonTV, CC BY 3.0 https://creativecommons.org/licenses/by/3.0, via Wikimedia Commons

MicroStrategy and Saylor deny any wrongdoing but agreed to the $40 million settlement to avoid further legal expenses and time-consuming litigation. The Times reviewed the settlement, which includes interest and penalties. Saylor, who stepped down as CEO of MicroStrategy in 2022 and now serves as executive chairman, has agreed to pay the full settlement amount as part of a separate agreement with the company, according to a regulatory filing on Monday.

“Michael Saylor and his company, MicroStrategy, defrauded the district and all of its residents for years,” stated Attorney General Brian L. Schwalb. “Indeed, Saylor openly bragged about his tax-evasion scheme, encouraging his friends to follow his example and contending that anyone who paid taxes to the district was stupid.”

In response to the allegations, Saylor maintained, “As I stated at the time this case began, in 2012 I moved to Florida and made Miami Beach my home. Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia. I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family and myself.”

The lawsuit alleges that in 2012, Saylor began a scheme to falsely claim residency in Florida, which has no personal income tax. He purchased a house in Miami Beach, obtained a Florida driver’s license, and registered to vote in the state. However, during this period, he continued to live a significant part of his life in Washington, D.C.

Saylor founded MicroStrategy in 1989 and played a pivotal role in transforming the firm into one of the largest corporate buyers of Bitcoin. This strategic bet has paid off significantly, with the price of Bitcoin soaring and MicroStrategy’s shares more than doubling this year, resulting in a market value of $27 billion.

This is not Saylor’s first encounter with fraud accusations. In 2000, he and two other MicroStrategy executives settled accounting fraud charges with the Securities and Exchange Commission for approximately $11 million.

“As we said at the time this suit was filed, this was a personal tax matter involving Mr. Saylor. MicroStrategy was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities,” stated Shirish Jajodia, the company’s head of treasury and investor relations. “MicroStrategy has not made, and will not be obligated to make, a financial contribution to the settlement.”

The Washington tax lawsuit, initiated by former Attorney General Karl Racine, was a pioneering case following a 2021 amendment to the federal antifraud law, the False Claims Act, which empowered whistle-blowers to report tax fraud in Washington. A whistle-blower lawsuit against Saylor in 2021 prompted the district’s lawsuit in 2022.

The Biden administration has emphasized cracking down on tax evasion by corporations and the wealthy, dedicating billions to revamp the Internal Revenue Service as part of its economic agenda.

The lawsuit details Saylor’s life in Washington, where he purchased three luxury condominiums in Georgetown between 2006 and 2008. While spending millions on renovations, he lived on one of his yachts anchored in the Potomac River and owned a penthouse in Adams Morgan. The lawsuit used Saylor’s social media posts to support its claims. In one post from his yacht, Saylor wrote, “Gazing wistfully at my future home while I wait for James to crack the whip on the contractors and herd the cats. I wonder if Tony Stark would be so patient.” In another post, he mentioned his Georgetown balcony, indicating he spent considerable time in the district.

MicroStrategy was aware of Saylor’s time spent in Washington, as the company provided him with security details and drivers. Spreadsheets produced by MicroStrategy recorded Saylor’s daily location from 2015 to 2020, showing he spent the majority or plurality of each year in the district.

Written by Influencer Editorial Team

Managed By Influencer Team - United Kingdom

image

Leonardo DiCaprio and Maya Jama’s Late-Night Party Sparks Noise Complaint at London Hotel

image

Lawyers for UK Tech Founder Mike Lynch Seek Acquittal in US Fraud Trial