DC Sues Bitcoin Whale Michael Saylor for Tax Fraud

Published

29 September 2022

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Courtney Mabeus / Robyn Sidersky

MicroStrategy Inc. founder Michael Saylor was sued in August by the city of Washington, DC, which claims he defrauded the nation’s capital of more than $25 million in income taxes. The lawsuit alleges that Saylor falsely claimed to be a resident of Virginia or Florida when he was instead living in a luxury penthouse in Georgetown.

The civil suit, filed Aug. 22 by DC Attorney General Karl Racine in the District of Columbia Superior Court, also names MicroStrategy as a defendant.

MicroStrategy’s executive chairman, Saylor, stepped down as CEO following the Tysons-based technology company’s August earnings report, which showed a $1.98 billion loss on its bitcoin holdings. Saylor is a major bitcoin influencer on Twitter, and MicroStrategy is the largest corporate holder of the cryptocurrency.

According to the lawsuit, since 2005 Saylor has lived in “Trigate,” his 7,000-square-foot waterfront penthouse. In 2012, he bought a house in Miami Beach, got a Florida driver’s license and registered to vote there.

Around 2013, the suit alleges, Saylor asked MicroStrategy to begin using his Florida address on tax forms, while MicroStrategy provided him with a security detail and transportation in DC and was aware of his residence there.

About a year later, according to the lawsuit, MicroStrategy’s then-CFO became concerned after learning that Saylor spent most of each year in DC. Saylor agreed to reduce his salary to $1, but his compensation remained high because of fringe benefits, the lawsuit says.

MicroStrategy continued to report Saylor’s Florida address on his W-2s from 2014 to 2021 and failed to withhold DC income taxes, the lawsuit says, adding, “This was not just a clerical error.”

Saylor and MicroStrategy deny the allegations.

“Although MicroStrategy is based in Virginia, Florida is where I live, vote and have registered for jury service, and it is at the center of my personal and family life,” Saylor said in a statement.

MicroStrategy accused DC of “overreach,” calling the case a “personal tax case” involving Saylor.

Under the city’s new False Claims Act, Saylor, who has a reported net worth of $1.6 billion, could be found personally liable for more than $75 million in unpaid taxes and penalties.

The law encourages whistleblowers to report cases of city residents evading tax laws by misrepresenting where they live. In this case, whistleblowers filed a lawsuit in April 2021 against Saylor alleging tax fraud.