The lawsuit, which Racine filed Aug. 22 in DC Superior Court, alleges Saylor fraudulently claimed for years to be a resident of low-tax jurisdictions while living in a 7,000-square-foot penthouse on the Georgetown waterfront. The complaint further alleges that MicroStrategy, despite knowing Saylor was a DC resident, conspired in the scheme “instead of accurately reporting his address to local and federal tax authorities and properly withholding district taxes.” . Saylor and MicroStrategy released statements Wednesday denying the lawsuit’s allegations.
The complaint alleges that Saylor purchased the Georgetown property in 2005 before purchasing two adjoining penthouse units, combining them into a single residence that Saylor calls “Trigate”, and also purchasing a penthouse unit from Adams Morgan. Beginning in 2012, according to the complaint, Saylor bought a house in Miami Beach, obtained a Florida driver’s license and registered to vote there while living primarily in DC. The lawsuit alleges he paid no income tax in DC between 2005 and 2021, despite social media posts over the years that indicate he lived in DC and considered it his home.
“Since at least 2012, Saylor has bragged to his confidants about his successful plan to create the illusion of Florida residency in order to evade the district’s personal income taxes,” the lawsuit reads. The lawsuit alleges that MicroStrategy encouraged the fraud through an agreement to list Saylor’s residence on federal tax forms as his home in Florida, despite knowing he lived in Washington, “actively assisting Saylor to avoid its obligation to pay the taxes due to the district”. (Florida has no personal income tax).
Saylor said in his statement that he bought the Miami Beach home ten years ago after moving from Virginia.
“Although MicroStrategy is based in Virginia, Florida is where I live, vote, and serve as a juror, and it’s central to my personal and family life,” he wrote. “I respectfully disagree with the District of Columbia’s position, and look forward to a fair resolution in court.
Saylor founded MicroStrategy in 1998 and served as its CEO until earlier this month, when the publicly traded company announced he would take on a new role as executive chairman. In an Aug. 2 press release announcing the leadership change, MicroStrategy said Saylor would also remain chairman of its board.
MicroStrategy, in its own statement, denied the allegations and pledged to “aggressively defend against this overreach”.
“The case is a personal tax matter involving Mr. Saylor,” the statement said. “The company was not responsible for its day-to-day affairs and did not oversee its individual tax responsibilities. Nor did the company conspire with Mr. Saylor in the exercise of his personal tax responsibilities.
Racine’s office said the lawsuit was filed under the city’s recently expanded misrepresentation law, which the DC Council amended last year to include tax-related issues, and urges whistleblowers identify tax evasion. Racine said the law also allows the court to impose a penalty of up to three times the amount of taxes evaded, and that between unpaid income taxes and other penalties his office seeks to recover from Saylor and MicroStrategy, damages in the case could be more than $100 million.
The lawsuit builds on a similar lawsuit filed against Saylor by whistleblowers in DC Superior Court last year, which was unsealed on Wednesday. Racine’s office said it independently investigated the tax evasion allegations and intervened in the whistleblower’s complaint, filing its own lawsuit against Saylor and MicroStrategy.
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