Former billionaire Michael Saylor and his company MicroStrategy (MSTR) are in the spotlight again and this time it's for allegations on skipping out on paying taxes for a decade.
Saylor, the former CEO and founder of the software company and infamous Bitcoin evangelist, is being sued by the District of Columbia Attorney General Karl Racine for allegedly evading paying income taxes - he owes over $25 million in DC taxes by "pretending to be a resident of other jurisdictions with lower personal income taxes," Racine said in a statement.
The Office of Attorney General is seeking to recover unpaid income taxes and penalties from both Saylor and MicroStrategy that could total more than $100 million.
The Office of the Attorney General also said Saylor has lived in Georgetown since 2005 in a 7,000 square foot penthouse on the waterfront and docked at least two of his luxury yachts in the district for long periods of time.
Saylor No Longer Worth $1 Billion
Saylor’s net worth is estimated to be just under $1 billion and he earned hundreds of millions of dollars in ordinary income and capital gains since 2005, the AG's office said.
Racine tweeted that Saylor has not paid incomes taxes to D.C. and has committed tax fraud.
Racine said the lawsuit also extends to MicroStrategy "for conspiring to help him evade taxes he legally owes on hundreds of millions of dollars he’s earned while living in DC." in a tweet.
The lawsuit against Saylor and his company is the first one filed under D.C. amended False Claims Act that encourages whistleblowers to report residents who evade tax laws "by misrepresenting their residence," Racine wrote in a tweet.
The lawsuit is a warning to other taxpayers who live in D.C. but fail to pay their share of income taxes, Racine warned in another tweet.
"With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable," he wrote.
Saylor never hid the location of his home, according to a copy of the lawsuit that TheStreet received.
The lawsuit stated "Saylor’s contemporaneous social media posts confirm that he lived in the District and considered it home both before and during the renovations to 3030 K Street NW. 20."
Saylor even posted several photos of his home on Facebook, the social media website.
"For example, on March 15, 2012, Defendant Saylor posted to Facebook a photograph taken from his balcony looking out over the Potomac," the lawsuit said. "The caption to the post read, 'View from my Georgetown balcony this morning. Now I just need to finish renovating the apartment so I can move back in. For now maybe I pitch a tent outside on the terrace.'"
Saylor instead "fraudulently purported to be a resident of either Virginia or Florida, jurisdictions that have materially lower income tax rates," the lawsuit alleged.
Whistleblowers filed a lawsuit against Saylor in April 2021 and are represented by Cadwalader, Wickersham & Taft. The whistleblowers allege that Saylor failed to pay income taxes from 2014 through 2020.
The suit also alleges in detail that the former CEO engaged in an elaborate scheme to create the illusion that he lived in Florida, a state that does not have a personal income tax, while he lived in the District.
The complaint provides detailed allegations that Saylor lived in D.C. for most of every year, such as flight logs from MicroStrategy’s corporate jet and location-tagged social media posts.
"For some individuals, it would be difficult to reconstruct their past day-to-day locations and establish that they spent the majority of their time in the District," the whistleblower complaint said. "Saylor, on the other hand, left a trail of information to reconstruct his movements to and from the District. This trail includes, among other things: location-specific social media posts; local newspaper articles chronicling parties he hosted in the District; witness accounts from Saylor’s inner circle; and Federal Aviation Administration (“FAA”) flight information for his company’s private jet, each showing exactly when he left the District and when he returned."
The whistleblower complaint was unsealed on Aug. 31.
Saylor only tweeted about bitcoin after news about the AG's lawsuit. Shares of Microstrategy closed down by 3.61% on Aug. 31.
Saylor's Bitcoin Problems
Saylor is not immune to the limelight and was at the center of attention when bitcoin's valuation dropped. He was worth over $2 billion in 2020, but when bitcoin's value plummeted in May, his billionaire status was eliminated.
Forbes estimates that his net worth falls under $1 billion.
Saylor continues to praise the merits of cryptocurrencies almost daily on his Twitter account followed by more than 2.6 million people.
While the exact amount of money Saylor has lost since the cryptocurrency market crashed remains unknown, it is likely that he and the company are among the biggest losers in bitcoin's valuation.
