Washington, DC is suing a tech billionaire for allegedly evading $25 million in taxes by pretending to live in Florida

Washington, DC is suing a billionaire for allegedly faking his life in Florida to avoid $25 million in taxes

On Wednesday, District of Columbia Attorney General Karl A. Racine announced that his office is suing Michael Saylor, executive chairman of MicroStrategy and billionaire propellant of Bitcoin, for alleged tax evasion. The district is also suing MicroStrategy for allegedly helping Saylor evade taxes on money earned while residing in DC.

Saylor co-founded the Virginia-based software company in 1989, but in recent years he’s turned to bitcoin. Saylor is one of the biggest cryptocurrency boosters and has essentially turned MicroStrategy into a vehicle for investing in the price of Bitcoin. He claims to personally own nearly 18,000 bitcoins while MicroStrategy sits on another 129,699, according to an August SEC filing.

The DC AG alleges Saylor has paid “no” income tax to the district since he began living there in 2005, avoiding at least $25 million in taxes.

The lawsuit is taking place because of a recently passed law called the False Claims Act, which allows whistleblowers to report alleged fraud against the government, and a whistleblower real estate agent who came forward to claim that Saylor failed to pay d ‘income taxes. Under the law, whistleblowers can receive up to 30 percent of funds raised by the district.

“Arguably the wealthiest person in the district – Forbes estimates his net worth at $2.3 billion – he’s never paid a penny in district income tax,” the whistleblower’s complaint states. , filed by real estate agent Tributum in April but unsealed on Wednesday.

After independently investigating allegations in the whistleblower’s lawsuit — for example, that Saylor is actually a longtime DC resident — the AG’s office filed its own lawsuit against Saylor and MicroStrategy, alleging that the company had helped him evade taxes.

“The lawsuit alleges that Saylor engaged in an elaborate scheme to create the illusion that he was living in Florida, a state with no personal income tax, when he actually resided in the district,” said AG Racine in a press release. The complaint alleges that Saylor not only bragged to his friends about this scheme, but that there is a sufficient digital trail to prove that he spent most of his time living in a DC residence or in the one of his many luxury yachts in DC.

“Defendant Saylor’s contemporary social media posts confirm that he lived in the district and considered it his home before and during renovations to 3030 K Street NW,” a residence Saylor refers to as “Trigate,” reads- one in the district complaint.

He offers several examples of posts in which he clearly talks about the DC penthouse as his home: In a 2012 Facebook post, he contemplates setting up a tent in his Georgetown penthouse while he waits for the renovations to be completed and lets him move in. In another post, he writes how he “looks wistfully at my future home while I wait for James to crack the whip on the contractors and round up the cats” along with a photo of the view. Another post reads, “At work. It’s a perfect October morning on the Potomac making it hard to leave the house,” along with a picture of a yacht.

“Beyond Saylor’s regular and open discussion of living in the District of Columbia, MicroStrategy was aware that Saylor lived in the District more than half the year because he had access to multiple data streams. real-time information about Saylor’s whereabouts,” the district suit claims. Not only did MicroStrategy pay Saylor’s private driver, who transported him between his DC home and MicroStrategy’s office, according to the suit , but he kept records of his location, movements, expenses, and paid for a security detail at his Trigate penthouse.

The District lawsuit also claims that in 2014, MicroStrategy’s then-CFO was concerned about Saylor’s alleged residency regime, believing that “because Saylor has spent the majority of each year in the District, MicroStrategy could not justify misreporting Saylor’s residency to federal tax authorities.” When the CFO raised these concerns with Saylor as a possible liability for MicroStrategy, Saylor and the executive agreed to cut his salary to $1, according to the lawsuit.

The AG’s complaint alleges Saylor took steps to hide the alleged fraud, including registering to vote in Miami-Dade County in December 2012 and obtaining a Florida driver’s license and registering vehicles with Florida license plates despite “almost exclusive use of a professional driver”. However, Saylor never physically voted in Florida, instead he cast absentee ballots which were mailed to MicroStrategy’s headquarters in suburban DC as well as its headquarters in Virginia or at his home in DC.

As Jacob Silverman wrote for The New Republic, Saylor has a history of fraud charges. He was charged with fraud in 2000 along with other MicroStrategy executives and helped pay $10 million to settle, without admitting wrongdoing.

In an interview about the virtues of Bitcoin, Saylor explained how access to tokens can be held by a single person who holds the passphrase. “At the end of the day, if you push me too far, I lost it, it’s gone, sorry. Impose that.

MicroStrategy did not respond to Motherboard’s request for comment.

“DC residents and their employers are now advised that attempts to evade District tax laws by falsely claiming that they reside in another jurisdiction will be investigated and, if true, will be held accountable,” AG Racine said in a press release.

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