Billionaire bitcoin investor Michael Saylor and his company, MicroStrategy, have agreed to pay $40 million to settle a lawsuit brought by the Washington, D.C., attorney general. The lawsuit alleged that Saylor evaded over $25 million in District of Columbia income taxes by falsely claiming residency in lower-tax states like Florida and Virginia.
Key Takeaways
- Michael Saylor and MicroStrategy will pay $40 million to settle the tax fraud lawsuit.
- The lawsuit alleged Saylor evaded over $25 million in D.C. income taxes.
- Saylor and MicroStrategy deny any wrongdoing but agreed to the settlement to avoid prolonged litigation.
- The settlement marks the largest income tax recovery in D.C. history.
Background of the Case
The lawsuit, filed by former D.C. Attorney General Karl Racine in August 2022, accused Saylor of avoiding income taxes in the District for more than a decade. Saylor allegedly claimed residency in lower-tax states such as Florida and Virginia while actually living in a luxury penthouse in Washington, D.C. The attorney general’s office also accused MicroStrategy of conspiring to facilitate Saylor’s tax evasion.
Details of the Settlement
Under the agreement, Saylor and MicroStrategy deny violating District law and admit no wrongdoing. However, they have agreed to pay $40 million to settle the case. The settlement includes a provision that bars any future action against Saylor or MicroStrategy on this matter. Saylor also agreed to comply with the District’s tax laws in the future.
Statements from the Parties
Attorney General Brian L. Schwalb stated that the resolution marked the largest income tax recovery in city history and should serve as a message for District residents trying to dodge tax bills. “No one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law,” Schwalb said.
In a statement, Saylor said he moved to Florida in 2012 and continues to dispute the allegation that he was ever a resident of the District of Columbia. “I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family, and myself,” Saylor said.
MicroStrategy emphasized that this was a personal tax matter involving Saylor and that the company was not responsible for his day-to-day affairs or individual tax responsibilities. Under a separate agreement, Saylor will pay the District the full amount.
Legal Arguments and Proceedings
In legal filings, 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. From 2005 through 2021, he allegedly paid no income tax to the city. The District claimed that Saylor avoided paying more than $25 million in taxes.
Saylor’s lawyers argued that the city’s case was a “speculative tale of connivance” filled with legal flaws. They contended that the District’s tax claims should have been dismissed for procedural and legal reasons.
Impact on Saylor and MicroStrategy
As a consequence of the lawsuit, Saylor resigned from his position as CEO of MicroStrategy in August 2022 but retained roles as executive chairman and chairman of the board of directors. Despite the legal challenges, Saylor has continued to promote MicroStrategy as a Bitcoin-friendly company, regularly announcing new Bitcoin purchases on social media.
Conclusion
The settlement of the tax fraud lawsuit against Michael Saylor and MicroStrategy marks a significant milestone in the ongoing legal saga. While Saylor and MicroStrategy deny any wrongdoing, the $40 million settlement aims to put an end to the legal dispute and serves as a reminder that no one is above the law.
Sources
- Bitcoin billionaire Michael Saylor, firm settle D.C. tax fraud suit – The Washington Post, Washington Post.
- Billionaire Bitcoin Advocate Michael Saylor Agrees to $40 Million Settlement in Tax Evasion Case – Featured Bitcoin News, Bitcoin.com News.
- Michael Saylor settles $40M tax fraud lawsuit while promoting Bitcoin, Coinpedia.
