Here’s an interesting tactic for destroying billionaires: sue them for cheating. You can’t get that rich without stealing the money somehow, so if you find evidence of tax fraud, sic a bunch of ravening lawyers on them. Michael Saylor is finding that out.
Michael Saylor amassed a multibillion-dollar fortune, splurging to combine three Georgetown penthouses into a palatial 7,000-square-foot residence, snapping up a 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 as he did and claim to live there. The state has no income tax.
He’s rich. He flaunts it. He owns 5 yachts and multiple mansions. He doesn’t pay any taxes because he’s found loopholes, such as by buying a mansion in Florida (no income tax in Florida!) and then claiming that’s his primary residence. By enforcing tax laws, people can claw back a fraction of his ill-gotten wealth, at least.
The key to forcing a billionaire to cough up is to enable citizens to hunt him down and cut a bounty out of his hide.
All told, Racine alleges Saylor failed to pay at least $25 million in income taxes, but he could owe much more. D.C. law allows the city to collect triple the owed amount in damages, along with assorted interest, fees and penalties. Racine said in the interview he hopes to recover more than $100 million from Saylor. The whistleblowers would keep 15 to 25 percent if and when any money is recovered.
It’s all down to a new law in Washington DC.
These False Claims Act laws are modeled on a Civil War-era federal statute that has helped return billions to federal coffers, but the federal law bars action on tax fraud, and most states have followed that lead in their statutes.
D.C. switched that up with its new False Claims Act, which went into effect in 2021 and allows whistleblowers to pursue cases in which the alleged fraudster has income of more than $1 million and damages collected will exceed $350,000. At first it was little known outside wonky tax circles.
They’re going to have to work fast, though, because Saylor’s wealth is built on cryptocurrency, and has repeatedly vaporized. Crypto is currently facing its own reckoning, and Saylor lost $1.4 billion just recently. They might end up dragging a pauper into court.
That’s the real crime, not only tax dodging but making all of his money with this venal Ponzi scheme called bitcoin. That’s the greater crime, that crypto is a tool for scraping money out of gullible investors — and PENSION FUNDS???? Jesus. I would hope my pension isn’t being thrown away on something like that.
In October 2021, one of Quebec’s largest pension funds — the Caisse de Depot et Placement du Québec — invested $150 million into the crypto-lending company called the Celsius Network — which may now be facing bankruptcy.
That same month, the Ontario Teachers’ Pension Plan (OTPP) announced its investment in FTX Trading Ltd, supplying at least $50 million into a meme-inspired fundraising round — raising $420.69 million from 69 investors. FTX hasn’t crashed like Celsius Network just yet, but the investment is putting teacher pensions in danger.
That quote is from July. FTX recently crashed, as expected. Sorry, Ontario teachers.
A primary residence in Florida isn’t entirely exempt from property taxes. There are various exemption tiers that reduce the amount subject to millage, but I imagine local taxing authorities are getting some money out of the residence. The exemptions I assume only apply for primary residences. I don’t know though how much would be saved by switching from taxed income to taxed residence.
While I do agree that pension plans probably shouldn’t be investing in crypto (and nor should anybody else), the sums involved are really pretty small – $50 million may sound like a lot of money to you or me, to a pension fund with over $242 billion in assets, it’s basically the change down the back of the couch cushions. (That’s for the OTPP. The CDPQ has $392 billion.)
One of the reasons cryptocurrency was attractive was because some people thought it was untraceable and therefore paid no taxes on it. It was fun while it lasted.
If I recall, the IRS division that audited rich people brought in a huge amount of revenue before it was massively cut due to ‘budget constraints’.
New Radicals – You Get What You Give
https://youtu.be/DL7-CKirWZE
“Every night I smash a Mercedes-Benz” :)
OTPP says that the total investment was no more than .05% of their net assets, so the fund remains secure.
Still a lot of money to throw away.
Back in the summer I was out for a run listening to a podcast about history or true crime or something when I heard a new ad – “roll your 401K into crypto!”.
“What?” I bellowed (out loud, on a public street at 6am, frightening several rabbits).
I could hardly think of a worse thing to do with your retirement savings, outside of Beanie Babies or tulip bulbs.
My spouse keeps telling me that the FTX thing will end up as rival documentaries on the streaming services, and many books will be written about the rise and spectacular fall.
One wonders if he also cheated on federal income tax. FL may not have state income tax but if you live anywhere in the 50 states you are most certainly subject to federal income tax. That’s where the real whistleblower prize money is.
Figures he got into trouble with funds listed in Wyoming. Wyoming, the inland offshore. Pandora papers anyone?
Jesus this guy is dumb. About the only thing he didn’t do is paint concentric rings on his chest and hire a skywriter to dare the feds and DC to come get him.
I just hope they preface the Miranda warning with “hello, Saylor.”
The good news is the pensions funds are huge – both investments going to $0 wouldn’t hurt them noticeably at all.
The bad news is that someone at OTPP and CDPQ are making decisions this dumb in the first place.
@10: I can see an argument in favour of having a small exposure to some very, very speculative stuff, on off chance that it does actually pay off… It’s probably not as bad as Neil Woodford investing in cold fusion.
To add some context to the OTPP investment: It was an investment from a sub-fund that specifically exists to do exploratory investments into emerging and developing technologies. Both to get real world information and to stake an early position if they do go big.
They know that all of these investments are extremely high risk and that some will end up going bust.
The Caisse and Ontario Teachers invested in obvious Ponzi schemes. It’s indefensible.
It’s not an important loss for the funds, but it still should have consequences for the staff responsible for making these decisions.
@ 8 silvrhalide
if you live anywhere in the 50 states you are most certainly subject to federal income tax.
A US citizen pays federal income tax no matter where in the world they live or who pays them. If you, as a US citizen, live in Moscow, RF and work for V.V. Putin you still must file a tax return.
@14 Let me clarify. If you live in any of the 50 states, you are certainly subject to federal income tax. (Whether or not you have to file and/or pay is a matter of income levels but you are still potentially subject to it.) If you live in US territories you might not be subject to US federal tax. If you are a US citizen living and working abroad, you may not be subject to US federal tax (depending on the length and nature of your work and financial compensation) but you might be subject to taxes (if any) in the foreign country in which you are living. (Because reciprocal tax treaties.) Basically, if you are an American citizen living and working in a foreign country, you file a form with the US federal government that functionally says that you are paying taxes on your income to the foreign country, rather than filing the full US federal tax return. I believe it’s Form 2555 that lets you off the hook.
I was curious because usually the federal income tax cheating is where the real money is rather than state income taxes (or municipality in the case of DC.). Although with a billionaire, it might not matter, in the sense that even a small percentage of a billionaire’s wealth can be a largish sum of money.