Billionaire Michael J. Saylor has agreed to pay the District $40 million to settle the city’s claims that the founder of software company MicroStrategy cheated on his taxes by falsely claiming he was not a resident.
Under the agreement announced by Attorney General Brian Schwalb, Mr. Saylor and his Virginia-based company deny any wrongdoing. The lawsuit filed in 2022 charged the bitcoin billionaire with evading $25 million in taxes by falsely claiming residency in Florida and Virginia for years while Mr. Saylor lived in a Georgetown penthouse and other luxury accommodations in the city, including yachts anchored in the Potomac River.
Florida has no state income tax, and Virginia has lower income taxes than the District.
Officials said MicroStrategy facilitated the scheme by falsely reporting the entrepreneur’s residency on tax forms.
Mr. Schwalb said the multimillion-dollar settlement is the largest income tax recovery in D.C. history.
“Tax cheats are freeloading off the backs of hardworking, law-abiding, taxpaying District residents while depriving our city of resources needed for critical programs, including public safety, infrastructure and education,” Mr. Schwalb said in a statement. “Michael Saylor and his company, MicroStrategy, defrauded the District and all of its residents for years. Indeed, 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.”
In a statement, Mr. Saylor denied the lawsuit’s allegations and said the settlement was intended to put the legal battle to rest.
“Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia,” he said. “I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family, and myself.”
The attorney general’s office said it opened an investigation into Mr. Saylor after whistleblowers sued the billionaire in 2021 and claimed he was committing tax fraud.
The attorney general said the lawsuit was the first filed under the recently amended D.C. False Claims Act. The law lets whistleblowers report suspected tax evaders who lie about their place of residence.
The investigation pointed to Federal Aviation Administration flight records for Mr. Saylor’s private jet and social media posts to tie the cryptocurrency advocate to D.C., according to the settlement.
Mr. Saylor, who is worth over $4 billion, denied ever living in the city.
Mr. Saylor launched MicroStrategy with friend and co-founder Sanju Bansal in 1989 as a software consultancy service.
The company got its big break in 1992 when it landed a $10 million contract with McDonald’s to evaluate the effectiveness of the fast food chain’s marketing campaigns.
MicroStrategy saw a meteoric rise throughout the rest of the decade as Mr. Saylor earned multiple accolades for his entrepreneurial success. The firm eventually went public in 1998 and Mr. Saylor became a stock-market billionaire in 2000.
However, the tech executive’s bank account took a major hit soon after when MicroStrategy announced it suffered an accounting error. The company’s stock fell 62% in one day and wiped out $6 billion in Mr. Saylor’s net worth.
Some analysts at the time pointed to MicroStrategy’s woes for accelerating the dot-com bubble burst. The Securities and Exchange Commission charged Mr. Saylor and other company executives with fraud in 2000, which they later settled.
Mr. Saylor became a proponent of cryptocurrency in 2020.
He amassed billions of dollars in wealth by investing MicroStrategy’s cash into Bitcoin. Mr. Saylor has argued the popular cryptocurrency is a hedge against rising inflation.
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