Bitcoin billionaire Michael Saylor, firm settle D.C. tax fraud suit
![](https://investmoneyuk.com/wp-content/uploads/2024/06/RWSFUVY6CBGG3KRRHOXQJX3QHA.JPGw1440-780x470.jpeg)
“No one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law,” Schwalb said in a statement.
Under the agreement, Saylor and MicroStrategy, the business software firm he founded in 1989, deny they violated District law and admitted no wrongdoing.
In a statement Monday, Saylor said he moved to Florida in 2012 and made Miami Beach his home. “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,” Saylor said.
MicroStrategy said this was a personal tax matter involving Saylor and that the company “was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities.” The company said under a separate agreement between MicroStrategy and Saylor, he will pay the District the full amount.
In legal filings, attorneys with the attorney general’s office argued that Saylor lived in a 7,000-square-foot penthouse on the Georgetown waterfront or on yachts anchored in the Potomac River. But they said that from 2005 through 2021, he paid no income tax to the city.
According to Forbes, Saylor has a net worth of $4.6 billion, driven by major bitcoin investments.
Saylor first misrepresented himself as a resident of Virginia, where taxes are lower, then of Florida, where there is no personal income tax, the District alleged in court filings. D.C. said MicroStrategy knowingly submitted false records as part of the effort. In all, Saylor avoided paying more than $25 million in District taxes, the city argued.
“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,” Schwalb said in Monday’s statement.
The city’s suit included a Facebook post from Saylor in 2012 evoking another billionaire inventor — albeit a fictional one from the “Iron Man” movies. Saylor’s post came with a snapshot of his building in Georgetown, where he was combining three penthouse apartments into one. It said he was “gazing wistfully at my future home” while waiting for his architect “to crack the whip on the contractors and herd the cats. I wonder if Tony Stark would be so patient …”
The District said Excel logs of Saylor’s location kept by his company showed that he met the threshold for needing to pay income taxes to the city. For example, he was present for 313 days in 2015, they said. The threshold is 183 days.
Saylor’s lawyers, led by Eugene Scalia — a secretary of labor in the Trump administration and son of former Supreme Court justice Antonin Scalia — argued in legal filings last year that the city’s case was a “speculative tale of connivance” filled with fatal legal flaws.
In one 2023 filing with D.C.’s Superior Court, Saylor’s attorneys argued that he “has suffered reputational harm” from the fraud allegations lodged by the attorney general’s office. They said the claims have been “bandied about with remarkable nonchalance given their seriousness” and Saylor’s prominent role with MicroStrategy, a public company headquartered in the Tysons area of Fairfax County, Va.
His lawyers argued that the District’s claims against Saylor should have been thrown out for procedural and legal reasons. “The District’s tax claims are subject to dismissal because there has been no tax assessment, which is a necessary prerequisite,” they wrote in one filing.
The District joined the case after whistleblowers sued Saylor under the city’s False Claims Act. That law allows people to file suit in cases of alleged tax fraud — and then receive a major payout from whatever the city eventually collects.
Saylor’s lawyers said that pointed to another legal problem in the city’s approach. The change in law allowing “vindictive” private individuals “to prosecute tax-related actions … fundamentally changed District government” and thus violates the Home Rule Act that governs its affairs, they argued in legal filings.
But rather than fight over the propriety of provisions in the False Claims Act, the sides reached a deal.
How much money the whistleblowers will receive is subject to negotiation with the city. If they can’t reach an agreement, a judge will decide. The money will come out of the $40 million total Saylor has agreed to pay within 14 days. He also agreed to comply with the District’s tax laws.
The settlement bars any future action against Saylor or MicroStrategy on this matter.
The agreement said Saylor, MicroStrategy’s executive chairman, would file a return and pay income taxes in the city “in any current or future tax year” where he owns or rents a residence and is physically present in the city for at least 183 days.
This story has been updated with comment from MicroStrategy.
Source link