A Crypto Bull’s Big Tax Settlement

The attorney general for the District of Columbia had accused Michael Saylor, the founder of MicroStrategy, of evading $25 million in taxes.Credit…Rebecca Blackwell/Associated Press

MicroStrategy and its founder settle tax case for $40 million

The attorney general for the District of Columbia has reached a $40 million settlement with the billionaire Bitcoin investor Michael Saylor and MicroStrategy, the software company he founded, over tax fraud, DealBook’s Lauren Hirsch is first to report.

Officials say the agreement is the biggest-ever income tax fraud recovery in the district. It’s also the first lawsuit under the district’s amended False Claims Act, which encourages whistle-blowers to file claims of tax evasion against residents who they say are concealing where they actually live.

The lawsuit accused Saylor of evading more than $25 million in income taxes. The attorney general sued the tech executive and MicroStrategy in 2022, saying he enlisted the company’s help to file fraudulent tax forms from 2005 through 2020.

The lawsuit said Saylor and the company claimed that he lived in Virginia or Florida, states with significantly lower income tax rates.

The attorney general said MicroStrategy was aware of where Saylor spent his time, as the company provided him with a security detail and drivers. “Michael Saylor and his company, MicroStrategy, defrauded the district and all of its residents for years,” said Brian L. Schwalb, the attorney general, in a statement.

Details referenced in the lawsuit to show Saylor resided in Washington included:

• Luxury properties: Saylor bought three condominiums in Georgetown between 2006 and 2008 and spent millions on renovations.

• Yacht moorings: During renovations, he spent time on one of his yachts anchored in the Potomac River and another penthouse apartment.

• Social media posts: “View from my Georgetown balcony this morning. Now I just need to finish renovating the apartment so I can move back in,” Saylor wrote in one post.

MicroStrategy and Saylor deny any wrongdoing. “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 DealBook. “I have agreed to settle this matter to avoid the continued burdens of the litigation on friends, family, and myself.”