Austin Man Sentenced to Prison for Falsifying Bitcoin Gains on Tax Returns
Frank Richard Ahlgren III, of Austin, Texas, was sentenced on December 13, 2024, to two years in federal prison for filing false tax returns that underreported significant capital gains from bitcoin transactions.
Between 2017 and 2019, Ahlgren failed to report the sale of $4 million worth of bitcoins, resulting in a tax loss of over $1 million. According to court documents, Ahlgren, an early investor in bitcoin, purchased approximately 1,366 bitcoins in 2015 through his Coinbase account when prices were under $500 per coin. In October 2017, he sold 640 bitcoins for $3.7 million, using much of the proceeds to purchase a house in Park City, Utah.
To hide his true capital gains, Ahlgren lied to his accountant, claiming inflated purchase prices for the bitcoins. His 2017 tax return included a false cost basis, significantly reducing his reported taxable gain. In 2018 and 2019, Ahlgren sold additional bitcoins worth over $650,000 but did not report these transactions at all.
Ahlgren used sophisticated methods to obscure his cryptocurrency activities, including transferring funds through multiple wallets, meeting individuals to exchange bitcoins for cash, and using mixers to add anonymity to transactions. Ahlgren had previously blogged about his knowledge of mixers in 2014.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division stated, “Instead of paying the taxes he knew were due, Ahlgren lied to his accountant and sought to conceal his profits through sophisticated techniques designed to obscure his transactions.”
In addition to his prison sentence, U.S. District Court Judge Robert Pitman ordered Ahlgren to serve one year of supervised release and to pay $1,095,031 in restitution to the United States.
The case, investigated by IRS Criminal Investigation and the Texas Office of Attorney General, marks the first criminal tax evasion prosecution focused solely on cryptocurrency. Acting Special Agent in Charge Lucy Tan of IRS-CI’s Houston Field Office emphasized, “This case demonstrates that no one is above the law. We have the expertise and tools to track financial activity, whether it involves dollars or cryptocurrency.”
Assistant Chief Michael C. Boteler and Trial Attorney Mary Frances Richardson of the Tax Division, along with Assistant U.S. Attorney William R. Harris, prosecuted the case.
