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WASHINGTON (CN) — Bitcoin billionaire Michael Saylor and MicroStrategy, the company he founded, will pay $40 million to settle a tax fraud lawsuit, D.C. Attorney General Brian Schwalb announced Monday.
The suit was brought in April 2021 against Saylor — one of the wealthiest people in Washington with a net worth of $4.6 billion according to Forbes — for engaging in a scheme to claim residency in Florida to avoid paying income tax since 2005.
“Saylor openly bragged about his tax-evasion scheme, encouraging his friends to follow his example, and contending that anyone who paid taxes to the District was stupid,” Schwalb said in a statement. “This precedent-setting settlement makes clear that no one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law.”
Under the agreement, Saylor and MicroStrategy deny they violated Washington law and admitted no wrongdoing.
The suit was brought in the D.C. Superior Court under Washington’s False Claims Act, which Schwalb lauded as the “first of its kind” under recent amendments expanding the attorney general’s enforcement authority.
The new law allows individuals to file lawsuits against high-paying companies and individuals underpaying or evading taxes, after which the attorney general can intervene.
Such whistleblowers can be awarded up to 25% of the funds in a successful suit. In Saylor’s case, the complaint was originally brought by Tributum LLC, a tax service in Washington, before the attorney general intervened. While a specific amount has yet to be decided, Tributum will receive a share of the $40 million.
According to the 2021 complaint, Saylor primarily resided in Washington, with a multi-million dollar, 7,000-square-foot waterfront penthouse in Georgetown and occasionally used his company’s private jet to visit his vacation home in Miami.
Choosing to vacation in Florida was intentional, as the state does not levy a personal income tax on its residents, while Washington levies a tax rate of 10.75% for an income higher than $1 million.
In a statement on Monday, Saylor said he moved to Florida in 2012 and the Miami Beach property was his home.
“I continue to dispute the allegation that I was ever a resident of the District of Columbia,” Saylor said. “I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family and myself.”
Since 2012, Saylor had made his scheme to “create the illusion” of residing in Florida known to his close confidants and left an extensive trail through social media posts, local newspaper articles covering parties he hosted in Washington and flight records that exposed the truth.
Saylor co-founded software company MicroStrategy with Sanju Bansal in 1989, where they specifically chose Tysons Corner, Va. to avoid Washington’s tax rates. In 1998, the company went public and Saylor became a billionaire.
Schwalb argued in court filings that Saylor used MicroStrategy to further the scheme and that his employees falsely reported address information on W-2s issued to Saylor and omitted his accurate information from withholding filings submitted in Washington.
Saylor became a public figure in Washington during the 90s and 2000s, being identified on local TV as “D.C.’s most eligible bachelor,” and receiving invitations to White House events, including a private dinner with John Kerry. He also employed a local radio personality, Mark Bisnow, to promote him in the media and social circles, according to the complaint.
In 2003, Saylor moved into the Georgetown neighborhood permanently, after which he became a regular at the nearby Café Milano and frequently hosted open-bar parties at Cities, Sequoia, L2, as well as at hotel ballrooms at the Four Seasons, the Ritz Carlton and the Mandarin Oriental.
Saylor has also owned at least five luxury yachts while residing in Washington, two of which he docked at the Georgetown waterfront directly in front of his penthouse.
In 2013, he purchased a $13.1 million mansion in Miami Beach, where he took steps to create the “illusion of living in Florida” by registering to vote in Miami-Dade County, obtaining a Florida driver’s license and license plates. However, according to voter-history records, Saylor never physically voted in the county, only voting via absentee ballots sent to MicroStrategy’s corporate offices in 2016, 2018 and 2020.
Recently, Saylor has become a key promoter and investor in the cryptocurrency Bitcoin, stepping down as MicroStrategy’s CEO in August 2022 to focus solely on the company’s Bitcoin investments as executive chairman. He reportedly holds over 17,000 Bitcoins as part of his vast wealth.
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