The lawsuit, which Racine filed Aug. 22 in DC Superior Court, alleges that Saylor for years fraudulently claimed 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 Saylor was a DC resident, conspired in the scheme “rather than accurately reporting his address to local and federal tax authorities and properly withholding district taxes.” Both Saylor and MicroStrategy issued statements Wednesday denying the allegations in the case.
The complaint alleges that Saylor purchased 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. Beginning in 2012, according to the complaint, Saylor bought a home in Miami Beach, obtained a Florida driver’s license and registered to vote there despite living primarily in DC. The suit alleges that he did not pay income taxes in DC 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 scheme to create the illusion of living in Florida to avoid the District’s personal income tax,” the complaint states. The lawsuit alleges that MicroStrategy contributed to the fraud through an agreement to list Saylor’s residence on federal tax forms as his house in Florida, despite knowing that he lived in DC, “actively helping Saylor avoid his obligation to pay taxes to the district.” (Florida has no state individual income tax).
Saylor said in his statement that he bought the Miami Beach home a decade ago after moving from Virginia.
“Although MicroStrategy is based in Virginia, Florida is where I live, vote and have registered for jury service, and it is at the center of 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 the courts.”
Saylor founded MicroStrategy in 1998 and served as 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 news release announcing the leadership change, MicroStrategy said Saylor will also remain chairman.
In its own statement, MicroStrategy denied the allegations and vowed to “aggressively defend itself against this transfer.”
“The matter is a personal tax matter involving Mr. Saylor,” the statement said. “The Company was not responsible for his day-to-day affairs and did not monitor his individual tax liability. Nor did the Company conspire with Mr. Saylor in the performance of his personal tax obligations.”
Racine’s office said the lawsuit was brought under the city’s recently expanded False Claims Act, which the D.C. Council amended last year to include tax-related issues and encourages whistleblowers to identify tax fraud. Racine said the law also allows the court to impose a penalty of up to three times the amount for tax evasion, and that between the unpaid income taxes and other penalties his office is seeking to recover from Saylor and MicroStrategy, damages in the case could total more than 100 million dollars.
The lawsuit builds on a similar complaint filed against Saylor by whistleblowers in DC Superior Court last year, which was opened Wednesday. Racine’s office said it independently investigated the tax fraud allegations and intervened in the whistleblower’s complaint, and filed its own lawsuit against Saylor and MicroStrategy.