Bitcoin billionaire Michael Saylor and company settle tax fraud lawsuit in Washington

Billionaire Bitcoin Investor Michael Saylor and the Software Company He Founded agreed to pay $40 million to settle a lawsuit filed by Washington’s attorney general alleging he defrauded the city of millions of dollars in taxes by falsely claiming he lived in Virginia or Florida, said officials in Washington.

Attorney General Brian L. Schwalb said the resolution marked the largest income tax recovery in the city’s history and should serve as a message to District residents who try to avoid tax bills by pretending to live elsewhere.

“No one in the District of Columbia, no matter how rich or powerful they are, is above the law,” Schwalb said in a statement.

Under the terms of the agreement, Saylor and MicroStrategy, the enterprise software company which he founded in 1989, denies violating district law and admits no wrongdoing.

In a statement released Monday, Saylor said he moved to Florida in 2012 and made Miami Beach his home. “I continue to dispute the allegation that I have always resided in the District of Columbia. I agreed to settle this matter to avoid the continued burden of litigation on my friends, family and myself,” Saylor said.

In legal filings, lawyers for 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 to 2021, he paid no income taxes to the city.

According to Forbes, Saylor has a net worth of $4.6 billion, thanks to significant investments in Bitcoin.

Saylor first misrepresented himself as a resident of Virginia, where taxes are lower, and then of Florida, where there is no personal income tax, the district alleged in filings. court records. DC said MicroStrategy knowingly submitted false records as part of this effort. In total, Saylor avoided paying more than $25 million in district taxes, the city argued.

“Saylor openly bragged about his tax avoidance scheme, encouraging his friends to follow his example and claiming that anyone who paid taxes to the district was stupid,” Schwalb said in Monday’s statement.

The city’s complaint included a 2012 Facebook post from Saylor discussing another billionaire inventor — albeit a fictional one from the “Iron Man” films. Saylor’s post was accompanied by a snapshot of his apartment building in Georgetown, where he combined three penthouse apartments into one. He said he was “looking wistfully at my future house” while waiting for its architect to “crack the whip on the contractors and herd the cats”. I wonder if Tony Stark would be so patient…”

The district said Saylor’s location Excel logs kept by his company showed he met the threshold required to have 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 — labor secretary in the Trump administration and son of former Supreme Court Justice Antonin Scalia — argued in legal papers last year that the city’s case was a “speculative tale of collusion” filled with fatal legal flaws.

In a 2023 filing in Washington Superior Court, Saylor’s lawyers argued that he “suffered reputational harm” because of the fraud allegations filed by the attorney general’s office. They said the claims were “made with remarkable nonchalance given their seriousness” and Saylor’s leading role within MicroStrategy, a public company headquartered in the Tysons County area of ​​Texas. Fairfax, Virginia.

His lawyers argued that the district’s complaints against Saylor should have been dismissed on procedural and legal grounds. “The District’s tax claims may be dismissed because there was no tax assessment, which is a necessary prerequisite,” they wrote in a filing.

The district joined the case after whistleblowers sued Saylor under the city’s false claims law. This law allows people to file complaints about suspected tax fraud – and then receive a large payment from what the city ends up collecting.

Saylor’s lawyers said that underscores another legal problem in the city’s approach. The change in law allowing “vindictive” individuals “to sue in tax matters…fundamentally changed district government” and thus violates the Home Rule Act that governs its affairs, they argued in legal documents.

But rather than arguing over the merits of the False Claims Act provisions, the parties reached an agreement.

How much money what whistleblowers will receive is subject to negotiation with the city. If they cannot reach an agreement, a judge will decide. The money will come from the total $40 million that Saylor agreed to pay within 14 days. He also agreed to comply with the District’s tax laws.

Settlement prohibits future action against Saylor or MicroStrategy on this topic.

The agreement indicates that Saylor, executive chairman of MicroStrategy, would file a return and pay income taxes in the city “during 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.

Gn headline
News Source :

Back to top button