The Office of the Attorney General for the District of Columbia in the United States is moving forward on a lawsuit against business intelligence firm MicroStrategy executive chair Michael Saylor related to tax evasion.
According to a Feb. 28 filing with the U.S. Securities and Exchange Commission, MicroStrategy said the court had not dismissed a claim against Saylor for failing “to pay personal income taxes, interest and penalties due” following an October 2022 motion from the firm. However, the court granted a motion dismissing allegations that Saylor — on his own and acting in concert with MicroStrategy — violated the District of Columbia’s False Claims Act.
Former D.C. Attorney General Karl Racine announced a lawsuit against Saylor and MicroStrategy in August 2022, alleging the co-founder “never paid any DC income taxes” and the company “conspired” to assist him in tax evasion. At the time, authorities said Saylor owed more than $25 million in taxes for income earned while he was a D.C. resident, but penalties from both the former chief executive officer and MicroStrategy could total more than $100 million.
It’s the 1st lawsuit brought under DC’s recently amended False Claims Act encouraging whistleblowers to report residents who evade our tax laws by misrepresenting their residence. Led by @ChmnMendelson, @councilofdc unanimously updated the law & gave us enforcement authority.
— Archive: AG Karl A. Racine (@AGKarlRacine) August 31, 2022
Racine left the Attorney General’s office in January after announcing he would not seek re-election. According to the MicroStrategy filing, there will be a “status conference” on the lawsuit on March 10.
“The final outcome of this matter is not presently determinable,” said the filing.
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According to the Attorney General’s complaint, MicroStrategy had “detailed information” on Saylor’s residency in Washington D.C., but the company collaborated with the former CEO to “facilitate his tax evasion” rather than reporting it to authorities. Saylor stepped down as the CEO of MicroStrategy in August 2022, succeeded by then company president Phong Le.