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washingtonpost OP t1_iwbi39q wrote

From reporter Justin Jouvenal: Michael Saylor lived large while allegedly paying no D.C. income tax. Here’s how whistleblowers unraveled what could be one of the largest tax scams in city history.

Michael Saylor amassed a multibillion dollar fortune, splurging to combine three Georgetown penthouses into a palatial 7,000 square-foot residence, snapping up an 154-foot yacht dubbed “Mr. Terrible” and throwing lavish soirees including one where he was draped with an albino python.

All the while, the tech titan did not pay income tax in the District for years and bragged about it to friends, anonymous whistleblowers allege. They said he told people they were “fools” if they did not buy a home in Florida like he did and claim to live there. The state has no income tax.

The whistleblowers’ allegations come in a lawsuit filed in D.C. Superior Court that provides a stunning inside look at the lavish lifestyle of what it calls “arguably the wealthiest person in the District” and an allegedly brazen scheme to defraud the city of tens of millions. It is one of the largest income tax cases in D.C. history.

The whistleblowers, whose legal efforts were joined by District officials in August, stand to earn a staggering payday — possibly $25 million or more — and to return as much as $150 million to city coffers if their case against the Saylor is successful.

Saylor, who denies any wrongdoing, is the first target of a little-noticed revamp of a District law, which now allows citizens to file complaints against alleged tax cheats on behalf of the city and collect a bounty if they win their case.

Such statutes are quickly becoming a powerful tool to hold tax scofflaws among the ultrawealthy and powerful corporations accountable in an era of rising concern about wealth disparity and tax dodges among the wealthiest 1 percent. A similar law in New York has recovered a whopping $467 million in back taxes, according to an analysis noted by D.C. officials. Other states are taking notice.

Saylor, who contends in court papers he has never been a D.C. resident, said in a statement he lives in Florida and it is “the center of my personal and family life.” He is seeking to have the case dismissed.

Read more: https://www.washingtonpost.com/dc-md-va/2022/11/14/bitcoin-billionaire-saylor-tax-lawsuit/?utm_campaign=wp_main&utm_medium=social&utm_source=reddit.com

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SummerhouseLater t1_iwbrjp0 wrote

Does the reporter know if his wealth has tanked with the current crypto crash…? I’ve never heard of this person before so am unaware why he would be the “crypto king” from this article other than the first sentence.

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brock_h t1_iwbtsre wrote

Michael Saylor's initial wealth comes from Microstrategy. A very successful (though if you ask me now becoming more and more irrelevant) technology company based in the Tysons area. To be clear, Microstrategy still exists and has products used by the federal government and other industries. So, he is not rich because he's a crypto bro, he is a rich guy who became a crypto bro after he was already very rich. It's an important distinction. He is more of a corporate executive and business owner who went a little loopy over it, and he uses his Microstrategy company as a vessel for his Bitcoin holdings.

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TrueBirch t1_iwc8ta2 wrote

Good explanation.

I have a related question. I've been a data science manager for years and Microstrategy has never been mentioned in a single meeting. We've hired lots of vendors for different reporting and analytics applications. What is their current niche?

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TheDeHymenizer t1_iwcc9fw wrote

> Microstrategy has never been mentioned in a single meeting. We've hired lots of vendors for different reporting and analytics applications. What is their current niche?

They're an ERP solution that stopped growing by 2010 lol they compete with things like Cognos and SAP

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brock_h t1_iwcjhe6 wrote

Microstrategy is in use at some large three letter agencies. Just a year or so ago I was almost on a project using it (thankfully I dodged that). I don't claim to really know much about it but from what I saw it was more of a reporting/BI use case for that specific project. It is absolutely not a data science tool and you're not going to see it mentioned alongside things like Databricks, Snowflake, etc. It is very old hat. Frankly, however, I think if Saylor had put half the energy he put into BTC into his company it may still have been relevant (or at least sold to someone relevant) at some point.

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Gr8WallofChinatown t1_iwbxd44 wrote

He has a "secret" LLC where he is dumping BTC. He used his company to pump his BTC where he could dump.

Microstrategy's executives also mass sell stock prior to them announcing BTC buys.

Basically, Saylor and executives are raiding Microstrategy. Everyone knows that company is dying hence why it is now an unofficial "trading" firm / index for BTC when it's supposed to be a tech product company.

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Lalalama t1_iwigm1r wrote

You see his company logo when you go to Tysons.

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TheDeHymenizer t1_iwcbw9o wrote

> “arguably the wealthiest person in the District”

Jeff Bezos would like a word with this author lol

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LeoMarius t1_iwbpnhb wrote

Cryptobros: we love crypto because the government can't touch it.

Also Cryptobros: why isn't crypto better regulated???

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mistersmiley318 t1_iwbv63k wrote

Seeing all the people salty over FTX's collapse and Crypto.com's liquidity crunch (and also imminent collapse) is hilarious. These entities deal in something that has no inherent value and is marketed on its lack of regulation. What the hell did you think was going to happen?

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LeoMarius t1_iwbwqe5 wrote

The more I understand crypto, the less I understand how anyone would invest in it.

Cryptocurrency makes NFTs look like blue chip stocks.

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imTony t1_iwcftnk wrote

> These entities deal in something that has no inherent value

The US dollar has no inherent value either

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IcyWillow1193 t1_iwcmf1t wrote

>The US dollar has no inherent value either

Utter nonsense. The US dollar represents the backing of the United States Government, a multi-trillion dollar economy, and its status as a global reserve currency. That's pretty much as inherently valuable as it's possible to get.

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imTony t1_iwdfjtj wrote

That doesn’t mean it’s inherently or instrinsically valuable. The USD is backed by public faith but fiat currency doesn’t have intrinsic value.

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acdha t1_iwds666 wrote

Cryptocurrencies are also fiat currencies: the random hashes have no intrinsic value, even less than the paper in a dollar bill. The difference you should be learning about is that in the case of, say, Bitcoin there is no power behind that fiat - nobody is required to use it, pay taxes in it, or receives it without alternatives. That’s why the price is so volatile because at any point a user has to decide whether it’s better to use a different currency (betting that the price will go up).

In contrast, the USD is the default currency in one of the largest economies in the world and millions of people are required to use it to pay taxes, receive payments, or get paychecks from the government, and strong pressure to use it from all of the contracts specifying dollars. That’s a huge amount of inertia and there’s no plausible mechanism where that changes quickly but there’s still a global economy.

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imTony t1_iwekxbt wrote

I’m not talking about Bitcoin or crypto. I know Bitcoin is fiat. I’m talking about USD and the fact that it’s not intrinsically valuable. What you wrote doesn’t change that.

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WealthyMarmot t1_iwck597 wrote

Depending on the definition of value that we're using (and there are a whole bunch of definitions), technically no currency does. But given that the dollar is required to pay taxes and to conduct 99.99% of trade in this country, for all intents and purposes that distinction is irrelevant.

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Dukester1007 t1_iwcfxyg wrote

what crypto people want it to be better regulated? isnt the whole point of crypto decentralization

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acdha t1_iwdsfy2 wrote

They want decentralization when it comes to cheating on their taxes or being able to buy illegal products.

They want the government to step in when they get ripped off by someone who better understands what “no regulations” means.

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LeoMarius t1_iwea03w wrote

They want it regulated when they lose their shirts.

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nostradx t1_iwbz5zt wrote

Michael Saylor is an all-around bad dude, not just a tax dodge. His parties are infamous for luring in vulnerable young women, plying them with drugs, and ending in stories of rape/assault and STIs.

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Loki-Don t1_iwbt5xs wrote

I will never understand such profligate tax fraud. I mean, as a legitimate billionaire, he could have paid his taxes without one scintilla of an effect on his standard of living. Meh could have still bought all the houses and yachts, still lived the lifestyle he was living and he wouldn’t have noticed.

But you go to all that trouble. You implicate your company and it’s employees who you forced to cover for you, all the while bragging about it to your rich buddies.

Well, This is the easiest money the District treasury has ever made. The fines alone will be multiples of the cost for DC to pursue, let alone all the back taxes.

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LeoMarius t1_iwbwmnc wrote

The Koch Bros spent more money trying to control Congress than they would have paid in taxes in the harshest tax scheme proposed in the last 30 years.

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Most_kinds_of_Dirt t1_iwc3yat wrote

They've actually gotten a great ROI from their lobbying:

>Only the Kochs know precisely how much they have spent on politics. Public tax records show that between 1998 and 2008 the Charles G. Koch Charitable Foundation spent more than forty-eight million dollars. The Claude R. Lambe Charitable Foundation, which is controlled by Charles Koch and his wife, along with two company employees and an accountant, spent more than twenty-eight million. The David H. Koch Charitable Foundation spent more than a hundred and twenty million. Meanwhile, since 1998 Koch Industries has spent more than fifty million dollars on lobbying. Separately, the company’s political-action committee, KochPAC, has donated some eight million dollars to political campaigns, more than eighty per cent of it to Republicans. So far in 2010, Koch Industries leads all other energy companies in political contributions, as it has since 2006. In addition, during the past dozen years the Kochs and other family members have personally spent more than two million dollars on political contributions. In the second quarter of 2010, David Koch was the biggest individual contributor to the Republican Governors Association, with a million-dollar donation. Other gifts by the Kochs may be untraceable; federal tax law permits anonymous personal donations to politically active nonprofit groups.

https://www.newyorker.com/magazine/2010/08/30/covert-operations

So they'd spent about $250M in publicly traceable contributions by 2010. Let's double that for any contributions they've made since 2010, and multiply everything x 10 to make a guess at their untraceable contributions, so a ballpark of $5 billion total.

$5 billion is only about 4% of their $120B net worth. They've almost certainly saved that much from favorable taxes and delaying climate change legislation, so it's been a pretty good deal for them.

May they burn in hell.

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ekkidee t1_iwbu9x4 wrote

Greed is a cruel mistress. There have been plenty of small-scale studies on this, but once greed sets in, a lot of other personality traits are pushed aside.

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sol_in_vic_tus t1_iwbx99a wrote

Yeah as one friend put it, "the rich have a revealed preference for more money."

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Fit-Negotiation-2917 t1_iwewhes wrote

Disagree. A lot of facts will come out in discovery but proving residency is not an easy task, particularly for those with multiple houses.

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Loki-Don t1_iwexkor wrote

Reading comprehension is key. They are subpoenaing his corporate records and correspondence where he ordered his staff to claim his residency in FL despite him living here.

The whistler blowers have already compiled the info, and know to the minute when he was in the District based on his meeting scheduled, travel schedules etc.

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Fit-Negotiation-2917 t1_iwfb7th wrote

Yes hence why I said a lot of facts will come out in discovery. Did you read that part?

The whistle blowers have compiled a lot of info based on information and belief which is fine for a complaint but not too much for actually winning a lawsuit.

The complaint cited Facebook posts and private plane tracking for its accusations which, again, will get through the pleading but they will need to get a lot of stuff out of discovery to win this.

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ClusterFugazi t1_iwd45i0 wrote

I bet that Florida residency is exploited ALL THE TIME.

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NPRjunkieDC t1_iwc7pl7 wrote

Demonstrating his disdain for the rules that everyone else has to live by, Saylor publicly flaunted his billionaire lifestyle while bragging to his friends and associates about how he was evading District taxes,”

Sounds so much like Trump

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BoozAlien t1_iwc66ut wrote

There's a lot of talk about locking up criminals on this sub, but this guy is the type who should face a punishment more serious than being locked up.

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Heliordant t1_iwblff0 wrote

"Living" in Florida because no state income tax is a crime now? So like every uniformed servicemember?

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skitskat7 t1_iwbm176 wrote

I think it's a crime when you have to put quotation marks around 'living' for the statement to not be false.

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LeoMarius t1_iwbr5mf wrote

Fraudulently claiming residency is the crime.

Military have their own rules because of deployment. CryptoBro is not in the military.

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Most_kinds_of_Dirt t1_iwbz2vn wrote

The Servicemembers Civil Relief Act allows active duty military to maintain their residence when their orders require them to move overseas or out of state:

https://en.wikipedia.org/wiki/Servicemembers_Civil_Relief_Act#Provisions

If you're not in the military, you have to update your residency when you move.

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TrueBirch t1_iwc9l96 wrote

Great answer. It's not like service members in South Korea are eating up DC resources. Even people deployed in CONUS use fewer state resources than civilians due to all the stuff the federal government pays for on base. They deserve some slack on where to declare residency.

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TrueBirch t1_iwc9lyo wrote

Great answer. It's not like service members in South Korea are eating up DC resources. Even people deployed in CONUS use fewer state resources than civilians due to all the stuff the federal government pays for on base. They deserve some slack on where to declare residency.

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DestrosSilverHammer t1_iwbptec wrote

If he’s willing to accept vulnerability to deployment, I’d consider it. Hell, if he limits his income to the top of the military pay table, I’ll drive his cars down to FL and get them registered for him myself.

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