Billionaire Bitcoin Investor Michael Saylor and the Software Company He Founded have agreed to pay $40 million to settle a lawsuit filed by the D.C. attorney general alleging he defrauded the city of millions in taxes by falsely claiming to live in Virginia or Florida, D.C. officials said.

Attorney General Brian L. Schwalb said the resolution marked the largest income tax recovery in the city’s history and should serve as a message to district residents trying to dodge tax bills by pretending to live elsewhere.

“No one in the District of Columbia, no matter how rich or powerful, is above the law,” Schwalb said in a statement.

Under the agreement, Saylor and MicroStrategy, an enterprise software company he founded in 1989, deny violating district law and have not admitted any wrongdoing.

In a statement released Monday, Saylor said he moved to Florida in 2012 and has made Miami Beach his home. “I continue to dispute the claim that I was ever a resident of the District of Columbia. I agreed to resolve this matter to avoid the continued burden of litigation on friends, family and myself,” Saylor said.

In court filings, lawyers from the attorney general’s office argued that Saylor lived in a 7,000-square-foot penthouse on the Georgetown waterfront or on yachts docked in the Potomac River. But they said that from 2005 to 2021 he paid no income taxes to the city.

According to Forbes, Saylor has a net worth of $4.6 billion, driven by large investments in bitcoin.

Saylor first misrepresented himself as a resident of Virginia, where taxes are lower, and then Florida, where there is no personal income tax, the District alleged in court filings. DC said MicroStrategy knowingly submitted false records as part of the effort. In all, Saylor avoided paying more than $25 million in district taxes, the city argued.

“Saylor openly boasted about his tax evasion scheme, encouraging his friends to follow his example and arguing that anyone who paid taxes to the District was stupid,” Schwalb said in Monday’s statement.

The city’s lawsuit included a 2012 Facebook post by Saylor evoking another billionaire inventor — albeit a fictional inventor from the “Iron Man” films. Saylor’s post came with a photo of his Georgetown apartment building, where he combined three penthouse apartments into one. It said he was “looking wistfully at my future home” as he waited for his architect to “crack the whip at the contractors and herd the cats. I wonder if Tony Stark would be so patient…”

The district said Excel records of Saylor’s location maintained by his company showed he met the threshold for needing to pay income taxes to the city. For example, he was present for 313 days in 2015, they said. The limit is 183 days.

Saylor’s lawyers, led by Eugene Scalia — Secretary of Labor in the Trump administration and son of former Supreme Court Justice Antonin Scalia — argued in court filings last year that the city’s case was a “speculative story of collusion” riddled with flaws. fatal legalities.

In a 2023 filing in D.C. Superior Court, Saylor’s lawyers argued that he “suffered reputational harm” due to fraud allegations brought by the attorney general’s office. They said the allegations were “considered with remarkable indifference given their seriousness” and Saylor’s prominent role at MicroStrategy, a public company based in the Tysons area of ​​Fairfax County, Virginia.

His attorneys argued that the district’s claims against Saylor should have been dismissed for procedural and legal reasons. “The District’s tax claims are subject to rejection because there has been no tax assessment, which is a necessary prerequisite,” they wrote in a filing.

The district joined the case after whistleblowers sued Saylor under the city’s False Claims Act. This law allows people to sue in cases of alleged tax fraud – and then receive a large payout from whatever the city eventually collects.

Saylor’s lawyers said this pointed to another legal problem in the city’s approach. The change in the law that allows “vindictive” private individuals to “prosecute tax-related actions… has fundamentally changed district government” and, therefore, violates the Home Rule Act that governs their affairs, they argued in court filings.

But rather than fight over the adequacy of the provisions of the False Claims Act, the sides reached a settlement.

How much money What whistleblowers will receive is subject to negotiation with the city hall. If they can’t reach an agreement, a judge will decide. The money will come out of the $40 million total Saylor agreed to pay over 14 days. He also agreed to comply with the district’s tax laws.

The agreement prohibits any future action against Saylor or MicroStrategy On this matter.

The agreement said Saylor, executive chairman of MicroStrategy, would file a return and pay income taxes in the city “in any current or future tax year” where he owned or rented a residence and was physically present in the city for at least 183 days.

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