September 23, 2022. The D.C. attorney general announced he is intervening in a whistleblower’s lawsuit against billionaire Michael J. Saylor, who allegedly evaded paying D.C. income taxes for 15 years under the guise of claiming to be a Florida resident. While the federal False Claims Act does not encompass tax fraud, the D.C. False Claims Act was amended in 2021 to empower whistleblowers to file qui tam lawsuits regarding tax fraud in the District of Columbia. The whistleblower, Tributum LLC, “possesses personal knowledge to support and establish the claims asserted” in the complaint. As a historical note, “tributum” was the name of the tax Roman citizens paid to fund the Roman Empire’s military efforts.
According to the complaint, both Saylor and MicroStrategy (a Northern Virginia-based software company Saylor co-founded) allegedly conspired to help Saylor avoid paying more than $25 million in income taxes to D.C over the course of nine years. Saylor’s scheme revolved around creating the appearance of Florida residency, by purchasing a house in Miami, getting a driver’s license, and registering to vote in that state, as Florida residents do not pay personal income tax. The complaint asserts that Saylor “bragged to his confidants about his plan to create the illusion of residing in Florida to evade the District’s personal income taxes.” Not only did Saylor talk about his scheme, his social media posts and flight records belie his claim to Florida residency, according to the complaint. The District of Columbia considers someone a statutory resident when they spend 183 days out of the year in D.C. Besides a vacation home “villa” in Miami, Saylor’s residence in D.C. is a 7,000-square-foot penthouse on the Georgetown waterfront, and the complaint notes “local newspaper articles chronicl[ed] parties he hosted in the District.”
States, or in this case, the District of Columbia, levy taxes on their residents to pay for services and infrastructure that everyone in the city, resident or no, uses or benefits from. The complaint summarizes this tax fraud scheme as “depriv[ing] the District of tens of millions of dollars or more in tax revenue it was lawfully owed, all while Saylor continued to enjoy the full range of services, infrastructure, and other fruits of living in the District.” The federal False Claims Act contains a “tax bar,” meaning that individuals cannot file qui tam lawsuits on behalf of the government about companies or other entities avoiding paying taxes. Potential whistleblowers can turn to the IRS Whistleblower Program to report fraud.
States and jurisdictions whose False Claims Acts allow for private citizens to report tax fraud under those statutes include the District of Columbia, Delaware, Florida, Illinois, Indiana, Nevada, New York, and Rhode Island.
If you would like to report tax fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at https://www.fraudfighters.net/.