Bitcoin billionaire Saylor settles D.C. tax fraud suit for $40M

After close to two years of litigation, bitcoin billonaire Michael Saylor and MicroStrategy, the Tysons-based business software company he co-founded and remains executive chairman of, have agreed to pay $40 million to resolve a tax fraud lawsuit filed by the city of Washington, D.C., according to an announcement Monday morning by the office of the attorney general for the District of Columbia.

It’s the largest income tax fraud recovery in Washington, D.C., history, according to a news release.

The lawsuit, filed in the Superior Court of the District of Columbia, alleged Saylor claimed to live in Virginia, a state with a lower income tax, and Florida, a state with no personal income tax, to avoid paying more than $25 million in taxes to the District of Columbia. From 2005 to present, according to the 2023 amended complaint, Saylor has lived in a luxury penthouse on the Georgetown waterfront and docked multiple yachts on the Potomac riverfront.

In 2009, according to the initial complaint, Saylor combined three penthouses in Georgetown into a single unit, which he dubbed “Trigate.” MicroStrategy employees falsely reported Saylor’s address information, according to D.C.’s office of the attorney general.

“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,” D.C. Attorney General Brian L. Schwalb stated in the release. “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.”

Saylor, for his part, maintains that his home has been Miami Beach since 2012.

“Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia,” Saylor said in a statement distributed by his attorney, Eugene Scalia, a former U.S. secretary of labor and a son of the late U.S. Supreme Court Associate Justice Antonin Scalia.

The statement goes on to say that Saylor settled the case “to avoid the continued burdens of the litigation on friends, family and myself.”

Shirish Jajodia, vice president of treasury and investor relations at MicroStrategy, issued a statement calling the lawsuit “a personal tax matter involving Mr. Saylor. MicroStrategy was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities. We are pleased this matter is now being resolved. MicroStrategy has not made, and will not be obligated to make, a financial contribution to the settlement.”

The D.C. attorney general’s office sought to collect back taxes, as well as interest and penalties with the suit.

Saylor and MicroStrategy deny violating D.C.’s tax laws and admitted no wrongdoing with the agreement.

D.C.’s False Claims Amendment Act of 2020 allows private individuals to bring actions based on violations of D.C. tax laws against top-earning businesses and individuals over tax fraud. If successful, whistleblowers can receive up to 25% of the funds collected by the district, according to the release.

Tributum, a company registered in Wyoming, initially alleged Saylor failed to pay taxes in 2014 to 2020. After independently investigating the allegations, D.C.’s attorney general’s office also sought to recover taxes that it stated Saylor failed to pay for the tax years 2005 to 2013.

Saylor stepped down as CEO of MicroStrategy in 2022 following an earnings report tallying a $1.98 billion impairment loss on its bitcoin holdings. He remains the company’s executive chairman.

MicroStrategy, widely reported to be the largest corporate holder of bitcoin, reported total revenues of $115.2 million for the first quarter of 2024, a 5.5% decrease compared with the first quarter of the previous year. In April, the company reported owning 214,400 bitcoins, worth about $13.7 billion. With an estimated personal net worth of $4 billion, according to Fortune, Saylor owned more than 17,000 bitcoins personally as of April, in addition to his interest in MicroStrategy.