The attorney general of the District of Columbia reached a $40 million settlement with Michael Saylor and the software company he founded, MicroStrategy, in what the attorney general’s office said was the largest tax fraud recovery in the history of Washington, The New York Times has learned.
The settlement, which is expected to be announced Monday, arises from lawsuits filed in 2021 and 2022 that accuse Saylor of evading more than $25 million in Washington income taxes. Saylor sought MicroStrategy’s help in filing fraudulent forms from 2005 through 2020 by claiming that he lived in Virginia or Florida, states with significantly lower income tax rates, and that he did not pay any income tax to the district during that period, according to the attorney general. the office said.
MicroStrategy and Mr. Saylor deny any wrongdoing. They agreed to the $40 million settlement, which included interest and penalties, to avoid the expense and time of future legal action, according to the agreement, which The Times reviewed. Saylor, CEO of MicroStrategy, will step down as CEO in 2022.
“Michael Saylor and his company, MicroStrategy, defrauded the district and all of its residents for years,” Attorney General Brian L. Schwalb said in a statement. “In fact, Saylor openly bragged about his tax evasion scheme, encouraged his friends to follow his lead, and maintained that anyone who paid taxes to the district was stupid.”
“As I said when 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,” Saylor said in a statement. “I have agreed to resolve this matter to avoid the continued burdens of litigation for my friends, family and me.”
The lawsuit said that in 2012, “Mr. Saylor embarked on a scheme to fraudulently pose as a resident of Florida,” which has no personal income tax, and purchased a home in Miami Beach, obtained a driver’s license from Florida and registered to vote in the state.
Saylor founded MicroStrategy in 1989 and helped the company become one of the largest corporate buyers of Bitcoin. That bet has paid off: Bitcoin’s price has skyrocketed and MicroStrategy shares are up more than 100 percent this year, giving it a market value of $27 billion.
This is not the first time Saylor or MicroStrategy have been accused of committing fraud: in 2000, Saylor and two other MicroStratgy executives settled accounting fraud charges with the Securities and Exchange Commission for approximately $11 million. Dollars.
The Washington tax lawsuit, brought by former attorney general Karl Racine, was the first of its kind after a 2021 amendment to the federal anti-fraud law, the False Claims Act, gave whistleblowers the power to report tax fraud. in Washington. . That year, a whistleblower filed a lawsuit against Saylor, and Racine followed up with the district’s own lawsuit in 2022.
The Biden administration has made combating tax evasion by corporations and the wealthy a central part of its economic agenda, which includes billions to reform the Internal Revenue Service.
The lawsuit details Mr. Saylor’s life in the district, where he had purchased three luxury condominiums atop a waterfront building in the Georgetown neighborhood from 2006 to 2008. While Mr. Saylor spent millions on renovations to properties, he would later coin the name “Trigate,” He spent time on one of his yachts anchored in the Potomac River, as well as an additional penthouse in the Adams Morgan neighborhood, according to the lawsuit.
To support its allegations, the lawsuit cited Mr. Saylor’s social media posts. In one, apparently from the yacht where he stayed while his house was being renovated, Saylor tagged his architect, James Van Wynen, and wrote: “Looking longingly at my future home as 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 he wrote: “View from my Georgetown balcony this morning. Now I just need to finish renovating the apartment so I can live there again. For now I might set up a tent outside on the terrace.”
MicroStrategy knew where Mr. Saylor spent his time, as the company provided him with security personnel and drivers, according to the lawsuit. In response to the investigations, MicroStrategy produced spreadsheets recording Mr. Saylor’s daily physical location from 2015 to 2020. They showed that Mr. Saylor “spent most or most of each year physically present in the district.” .