An early Texas Bitcoin investor was ordered to surrender his crypto and other wallet private keys and access codes as part of a restraining order after being sentenced in December to two years in prison for tax fraud.
Frank Richard Ahlgren III, who falsely underreported capital gains on over $3.7 million in Bitcoin (BTC) sales between 2017 and 2019, owes the US government about $1.1 million in restitution.
Austin Federal Court Judge Robert Pitman on Jan. 6 ordered Ahlgren and any of his family, friends or representatives to identify and provide any physical devices used to store his cryptocurrency, along with any public keys, private keys, seed phrases or passphrases.
Frank Richard Ahlgren III and any associates have been ordered to surrender all physical devices, keys or access codes to his cryptocurrency. Source: PACER
Pitman also ordered the parties to identify all crypto accounts relating to Bitcoin, Bitcoin Cash (BCH), Bitcoin Gold (BTG), Ether (ETH) or Litecoin (LTC) and banned them from shifting any of Ahlgren’s cryptocurrency without prior approval from the court. This includes any action that could conceal, depreciate or diminish their value unless it is used for “normal monthly living expenses.”
The order will be in full force until Ahlgren satisfies any restitution obligation ordered by the court or until further order from the court.
Ahlgren pleaded guilty to filing a false tax return in September 2024 and was sentenced in December.
In 2015, when Bitcoin peaked at around $465, he purchased about 1,366 Bitcoin using Coinbase. He then sold around half of it two years later at $5,800 per Bitcoin for $3.7 million but “substantially inflated” the cost basis of the Bitcoin in his 2017 tax return, thereby making the capital gain appear less than it actually was.
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Ahlgren then sold Bitcoin for more than $650,000 between 2018 and 2019 but did not report the sales on his tax returns. Prosecutors said he used multiple wallets, in-person transfers and mixers in an attempt to conceal details about the transaction.
The total tax losses from all his actions exceeded $1 million.
He was also ordered to serve one year of supervised release after his 24-month prison sentence.
Ahlgren’s case marked the first criminal tax evasion prosecution centered solely on cryptocurrency, according to the acting special agent in charge of IRS-Criminal Investigation’s Houston Field Office, Lucy Tan.