Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
A DC attorney has brought a tax fraud case against MicroStrategy and its co-founder, which could amount to several million dollars.
District of Columbia Attorney General Karl Racine is accusing MicroStrategy co-founder and Executive Chairman Michael Saylor of tax fraud. According to a lawsuit filed on Wednesday by Racine, Saylor evaded $25 million in district taxes.
In the lawsuit, which also names MicroStrategy as a defendant, Racine alleges that the company is complicit in Saylor’s tax fraud accusations. According to the DC attorney, the business intelligence and cloud services corporation conspired to help its co-founder evade taxes. The lawsuit also alleges that Saylor was dubious about his primary place of residence in 10 years under review. The former MicroStrategy CEO allegedly claimed to reside in Florida, when he instead lived in a host of residences around the DC area. Florida does not collect personal income tax.
MicroStrategy shares were down by more than 4% following Racine’s tweet regarding the Saylor lawsuit.
Racine alleges that Saylor owes more than $25 million in taxes. According to the Attorney General, this is income earned to the District having lived there for ten years. Potential penalties extracted from the billionaire businessman and MicroStrategy could cost more than $100 million. Weighing in on the broader development, Racine said:
“With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable.”
Saylor and MicroStrategy Maintain Innocence in DC Tax Fraud Allegations
Saylor and MicroStrategy dispute the DC attorney’s claims. In a separate statement responding to the lawsuit, Saylor explained:
“A decade ago, I bought an historic house in Miami Beach and moved my home there from Virginia. 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.”
Furthermore, the MicroStrategy co-founder and Executive Chairman added that he “respectfully disagree[s] with the position of the District of Columbia, and look[s] forward to a fair resolution in the courts.”
Meanwhile, MicroStrategy also issued a response to Racine, saying that “the case is a personal tax matter involving Mr. Saylor”. The software company also revealed that it did not oversee Saylor’s individual tax responsibilities or handle his day-to-day affairs. Branding the DC attorney’s allegations as “false,” MicroStrategy denies conspiring with its co-founder in the “discharge of his personal tax responsibilities”. The software company describes Racine’s allegations as an “overreach” and promises to defend them.
As part of his case buildup against Saylor and MicroStrategy, Racine suggests there might be whistleblowers involved. The False Claims Act currently encourages whistleblowers to provide information for the prospect of receiving financial rewards. Upon successful prosecution of a tax fraud case, the court can impose penalties up to three times the evaded taxes.
Racine reasons that the Saylor/MicroStrategy fraud case would serve as a warning to other residents of the state and their employers.