Michael Saylor, founder of MicroStrategy, agrees to a $40 million settlement with the District of Columbia to conclude allegations of evading income taxes for over a decade.
In a landmark settlement, Michael Saylor, the founder and Executive Chairman of MicroStrategy, has agreed to pay $40 million to the District of Columbia. This agreement concludes a lawsuit in which Saylor was accused of evading income taxes for over a decade, marking the district's largest-ever income tax fraud recovery.
The District of Columbia filed a lawsuit against Saylor and MicroStrategy in August 2022, alleging that the executive had failed to pay income taxes in the district while claiming to live elsewhere, thus avoiding over $25 million in taxes. The attorney general’s office asserted that MicroStrategy conspired to assist Saylor in this evasion. The New York Times was the first to report the news of the settlement.
Michael Saylor has consistently disputed the allegations, maintaining that he was not a resident of the District of Columbia. "Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia," Saylor told the New York Times. He indicated that the decision to settle was made in order to alleviate the personal and familial stress caused by ongoing litigation.
The case against Saylor and MicroStrategy was significant as it was the first of its kind under the district's amended False Claims Act, which allows whistle-blowers to report cases of tax fraud. In this instance, a whistle-blower's lawsuit filed in 2021 led to the district pursuing its own case against the executive and his company. Under the act, a whistle-blower may receive up to 25 percent of the recovered amount.
Throughout the investigation, evidence presented in the lawsuit included Saylor's purchase and renovation of luxury properties in Georgetown, his social media posts indicating residency in the district, as well as the provision of a security detail and drivers by MicroStrategy, which suggested the company's knowledge of Saylor's true domicile.
Despite the settlement, both Saylor and MicroStrategy deny any wrongdoing. Shares of MicroStrategy, a major corporate buyer of Bitcoin, rose 3% in pre-market trading following the announcement of the settlement.
The settlement with the District of Columbia closes a chapter on this tax fraud case, but it also underscores the potential future implications for other high-net-worth individuals and corporations.
