Shares of MicroStrategy (MSTR) are down $16.32, or 7%, to $223.91 in Wednesday afternoon trading after Washington D.C. Attorney General Karl Racine announced a lawsuit against Michael Saylor, who he calls “a billionaire tech executive who has lived in the District for more than a decade but has never paid any DC income taxes,” for tax fraud. The office is also suing his company, MicroStrategy, for “conspiring to help him evade taxes he legally owes on hundreds of millions of dollars he’s earned while living in DC,” said the Attorney General, who noted this as the first lawsuit brought under the district’s recently amended False Claims Act encouraging whistleblowers to report residents who evade tax laws by misrepresenting their residence. In the lawsuit filing, which seeks a jury trial, the District of Columbia, through its Office of the Attorney General, claims that Saylor “knowingly avoided income taxes he owed to the District by fraudulently claiming to be a resident of other, lower-tax jurisdictions while maintaining his domicile and place of abode in the District, including living in a luxury penthouse on the Georgetown waterfront and docking multiple yachts on the District’s Potomac riverfront from 2005 to present.” In addition, the suit claims that “on information and belief, from 2005 to the present, Saylor has avoided more than $25 million in District taxes owed.” Also, the suit claims defendant MicroStrategy “knew that Saylor was in fact a District resident, but instead of accurately reporting his address to local and federal tax authorities and correctly withholding District taxes, the company conspired with Defendant Saylor to facilitate his tax avoidance scheme.” Saylor, who previously served as MicroStrategy’s Chairman and Chief Executive Officer, assumed the new role of Executive Chairman as of August 8.
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