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District of Columbia Suing MicroStrategy Founder Michael Saylor for Tax Fraud

·3 min read

The District of Columbia is suing MicroStrategy (MSTR) founder and Executive Chairman Michael Saylor for allegedly never paying any income taxes in the district in the more than 10 years he has lived there, Attorney General Karl A. Racine announced in a tweet on Wednesday.

In addition, Racine tweeted that his office is suing MicroStrategy “for conspiring to help him evade taxes he legally owes on hundreds of millions of dollars he’s earned while living” in Washington.

In a follow-up tweet, Racine also wrote that the action is "the first lawsuit brought under [the district’s] recently amended False Claims Act encouraging whistleblowers to report residents who evade our tax laws by misrepresenting their residence."

MicroStrategy shares were down more than 4% following Racine’s tweets. In a statement, Saylor said that although MicroStrategy headquarters is in Virginia, he had moved to Miami Beach. "Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life," he said. "I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts."

According to a copy of the complaint shared with CoinDesk, Saylor lived in a penthouse in Washington while "masquerading" as a resident of Florida or Virginia, by purchasing property and registering to vote in these states. However, he still lived in the district for at least 183 days per year, which is the minimum to be a "statutory resident."

The district attorney general's office also alleged that Saylor had MicroStrategy report his residency as being in Florida in forms filed with the U.S. Internal Revenue Service.

"Concerned about MicroStrategy’s involvement in Defendant Saylor’s fraudulent scheme to avoid District taxes, in or about 2014, MicroStrategy’s then-Chief Financial Officer undertook a count of the number of days that Defendant Saylor spent in Florida as compared to the District and found that because Saylor spent the majority of each year in the District, MicroStrategy could not justify misreporting Saylor’s residency to federal tax official," the complaint said.

The attorney general's office alleged Saylor avoided paying more than $25 million in taxes to the district and is seeking back taxes, treble damages, civil penalties, expenses and fees.

Saylor is a bitcoin (BTC) maximalist who has bet the business software company’s future on bitcoin, amassing billions of dollars of worth of the cryptocurrency over the past few years.

Saylor recently stepped down as CEO of the company to focus on MicroStrategy’s bitcoin plans.

In a statement, MicroStrategy called the District of Columbia case "a personal tax matter involving Mr. Saylor."

"The Company was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities," MicroStrategy said. "Nor did the Company conspire with Mr. Saylor in the discharge of his personal tax responsibilities. The District of Columbia’s claims against the Company are false."

Read more: Michael Saylor Lost Big in the Dot-Com Bubble and Bitcoin's Crash. Now He Aims to Rebound Again

Nikhilesh De contributed reporting.

UPDATE (August 31, 2022 18:07 UTC): Adds information about response from Racine's office.

UPDATE (August 31, 18:30 UTC): Adds information from the complaint and additional tweet from Racine.

UPDATE (August 31, 22:51 UTC): Adds Saylor and MicroStrategy statements.