Billionaire Bitcoin Investor Michael Saylor Settle DC Tax Fraud Lawsuit for $40M

News | June 12, 2024 By:

On Monday, June 3, 2024, Attorney General Brian L. Schwalb announced that billionaire bitcoin investor Michael Saylor and his company MicroStrategy agreed to pay $40 million to settle a tax fraud lawsuit.

The lawsuit, originally filed in 2022 by former D.C. attorney general Karl Racine, alleged that between 2005 and 2021 Saylor lived in Washington D.C. but filed tax returns claiming residency in other lower-tax states such as Florida and Virginia. This allowed him to allegedly avoid paying over $25 million in income taxes he owed to the District.

According to findings from the attorney general’s investigation, Saylor’s primary residence during this time appeared to be a penthouse apartment in the Georgetown area of Washington overlooking the Potomac River, where he also kept luxury yachts. MicroStrategy was also accused of failing to pay all corporate taxes owed as Saylor and other employees worked in D.C.

The settlement brings an end to a case that began with a 2021 whistleblower complaint against Saylor, claiming he openly boasted about cheating on his taxes. This prompted the attorney general’s office to launch its own probe.

Saylor has seen his wealth multiply in recent years since making MicroStrategy a pioneer in cryptocurrency investing in 2020. The company holds billions of dollars worth of bitcoin in its portfolio.

However, he continued denying the allegations as part of the settlement. In a statement, Saylor maintained his primary residence is in Florida and pushed back on the idea he was ever a D.C. resident.

The lawsuit was the first of its kind brought under recent updates to D.C.’s False Claims Act, expanding the attorney general’s tax enforcement authority. It also aims to incentivize more whistleblowers to come forward with rewards of up to 25% of money recovered from successful cases.

For Saylor and MicroStrategy, the $40 million settlement represents an end to costly litigation but does not require an admission of wrongdoing. The high-profile case shone a light on how some wealthy individuals may go to lengths to lessen their tax burdens by manipulating residency rules.