MicroStrategy Chair Michael Saylor accused of tax evasion by DC AG

District of Columbia Attorney General Karl Racine accused MicroStrategy co-founder and Executive Chairman Michael Saylor of evading $25 million in district taxes in a lawsuit filed Wednesday.

The lawsuit additionally names MicroStrategy as a defendant. Racine alleges the corporate conspired to assist Saylor evade the taxes. The AG’s workplace mentioned it is searching for to get better a complete sum of over $100 million in unpaid taxes and penalties.

Shares of MicroStrategy had been down greater than 6% Wednesday afternoon on the information. Saylor, who oversaw the corporate’s push into bitcoin, stepped down as CEO earlier this month. Under his management, MicroStrategy spent near $4 billion buying bitcoin at a median value of $30,700, and he has mentioned he considers the corporate’s inventory a form of bitcoin ETF.

Saylor allegedly claimed to reside in Virginia or Florida, which have decrease or no private earnings tax charges, whereas really dwelling in a number of totally different properties round D.C., together with a penthouse residence within the Georgetown neighborhood or on his yacht on the Georgetown waterfront or Potomac River when the residence was present process renovations, in accordance with the lawsuit. The go well with contains a number of screenshots of posts that look like from Saylor’s Facebook web page relationship again a number of years and referencing the view from his “Georgetown balcony” and discussing his “home” whereas tagging Washington, D.C.

Michael Saylor, chairman and chief government officer of MicroStrategy, first obtained into bitcoin in 2020, when he determined to start out including the cryptocurrency to MicroStrategy’s stability sheet as half of an unorthodox treasury administration technique.

Eva Marie Uzcategui | Bloomberg | Getty Images

MicroStrategy allegedly “had detailed information confirming that Saylor was in fact a DC resident,” in accordance with a press launch, but it surely selected to withhold that info.

In a press release, MicroStrategy mentioned, “The case is a personal tax matter involving Mr. Saylor. The Company was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities. Nor did the Company conspire with Mr. Saylor in the discharge of his personal tax responsibilities. The District of Columbia’s claims against the Company are false and we will defend aggressively against this overreach.”

Around 2014, the AG’s workplace claims within the lawsuit, MicroStrategy’s then-chief monetary officer confronted Saylor about his alleged tax evasion being a possible legal responsibility for the corporate. Saylor and MicroStrategy ended up reaching an settlement the place Saylor’s wage can be lowered to a nominal $1, the lawsuit claims, to be able to cut back the danger authorities would uncover the alleged scheme. Still, the AG alleges, Saylor continued to profit from “fringe benefits” with a “high cash value,” resembling use of the corporate airplane.

“A decade ago, I bought an historic house in Miami Beach and moved my home there from Virginia,” Saylor mentioned in a press release. “Although MicroStrategy is based in Virginia, Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life. I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts.”

The go well with is the primary to be introduced beneath a not too long ago handed legislation known as the False Claims Act, in accordance with Racine’s workplace. The district legislation incentivizes whistleblowers to report tax fraud and permits the courtroom to impose penalties as much as 3 times the quantity of the evaded taxes, in accordance with the AG’s workplace.

The district go well with follows a separate criticism filed by whistleblowers in opposition to Saylor in April 2021, accusing him of failing to pay earnings taxes from 2014 by 2020. The criticism was filed beneath seal however made public on Wednesday.

The AG’s workplace mentioned it independently investigated the whistleblower case and located MicroStrategy had filed inaccurate W-2s along with his Florida-based tackle and had didn’t withhold taxes allegedly owed to the district. The new lawsuit alleges Saylor didn’t pay earnings tax he owed to the district beginning in 2005.

— MacKenzie Sigalos contributed to this story.

WATCH: Watch CNBC’s full interview with MicroStrategy CEO Michael Saylor at Bitcoin 2022

Watch CNBC's full interview with MicroStrategy CEO Michael Saylor at Bitcoin 2022

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