The lawsuit, which Racine filed in DC Superior Court on Aug. 22, alleges Saylor fraudulently claimed for years to be a resident of lower-tax jurisdictions, despite living in a 7,000-square-foot penthouse on the Georgetown waterfront. The complaint further alleges that MicroStrategy, despite knowing that Saylor was a resident of DC, conspired in the settlement “rather than accurately reporting his address to the local and federal tax authorities and properly withholding district taxes.” Both Saylor and MicroStrategy issued statements Wednesday denying the allegations in the lawsuit.
The complaint alleges that Saylor bought the Georgetown property in 2005 before purchasing two adjacent penthouse units, combining them into a single residence that Saylor calls “Trigate,” and also purchasing a penthouse unit in Adams Morgan. According to the complaint, Saylor bought a house in Miami Beach in 2012, obtained a driver’s license in Florida, and registered to vote there, despite living primarily in DC. According to the lawsuit, he never paid DC income tax at any time between 2005 and 2021, despite social media posts over the years indicating that he lived in DC and considered it home.
“Since at least 2012, Saylor has bragged to his confidants about his successful plan to create the illusion of living in Florida to evade the district’s personal income taxes,” the indictment reads. The lawsuit alleges that MicroStrategy was complicit in the fraud through an agreement to list Saylor’s residence on federal tax forms as his Florida home, despite knowing he lived in D.C., “Actively assisting Salor to fulfill his obligation to evade paying taxes to the district.” (Florida has no individual income tax).
Saylor said in his statement that he bought the Miami Beach house ten years ago after moving from Virginia.
“Although MicroStrategy is based in Virginia, Florida is where I live, vote and report for jury duty, and it is central to my personal and family life,” he wrote. “I respectfully disagree with the District of Columbia’s stance, and look forward to a fair resolution in the courts.”
Saylor founded MicroStrategy in 1998 and served as CEO until earlier this month, when the publicly traded company announced that he would assume a new role as executive chairman. In an August 2 press release announcing the change of leadership, MicroStrategy said Saylor would also remain chairman of the board.
MicroStrategy in its own statement denied the allegations and pledged to “defend aggressively against this overshoot”.
“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 has the company colluded with Mr. Saylor in meeting his personal tax obligations.”
Racine’s office said the lawsuit was filed under the city’s recently expanded False Claims Act, which the DC Council amended last year to include tax-related issues, encouraging whistleblowers to identify tax fraud. Racine said the law also allows the court to impose a penalty of up to three times the amount in evaded taxes, and that between the unpaid income taxes and other fines his office is trying to recover from Saylor and MicroStrategy, the damages in the case. can reach over $100 million.
The lawsuit builds on a similar complaint filed by whistleblowers against Saylor in the DC Superior Court last year, which was unsealed on Wednesday. Racine’s office said it was independently investigating the tax fraud allegations and intervened in the whistleblower complaint and filed its own lawsuit against Saylor and MicroStrategy.