Cincinnati Tax Fraud Lawyers

Last Updated on: 13th December 2025, 01:34 pm

Cincinnati Tax Fraud Lawyers: When IRS Employees Become Ghost Preparers

Frederick Louis was an IRS employee. A Tax Examiner. The person whose job was to catch tax fraud. He filed over 100 fraudulent tax returns as a “ghost preparer” – preparing returns for compensation but never signing them, never identifying himself as the preparer. The insider who knew exactly how the system caught fraudsters used that knowledge to avoid detection. His sentence: 30 months in federal prison. The IRS employee who thought his insider knowledge would protect him discovered that federal investigators catch everyone eventually – even their own.

The Southern District of Ohio has seen tax fraud at every level of sophistication. An IRS insider running a ghost preparer scheme. A Dayton man who purchased hundreds of stolen identities online to file false returns. A tax preparation company called “Raining Cash” that delivered federal prison instead of refunds. A restaurant owner who gambled away over $1 million in withheld payroll taxes. When federal prosecutors in Cincinnati bring tax charges, the defendants often thought they had found a system that wouldn’t catch them. They were wrong.

The IRS Employee Who Became A Fraudster

Frederick Louis of Cincinnati worked as a Tax Examiner for the IRS. His job was to review tax returns. To identify discrepancies. To catch fraud. He understood the system from the inside – what triggered audits, what patterns attracted attention, how returns flowed through the processing system.

He used that knowledge to commit fraud.

Louis operated as a “ghost preparer.” He prepared tax returns for compensation, but he never signed them. He never identified himself as the preparer. The returns appeared to be self-prepared by the taxpayers themselves. The ghost preparer scheme allowed him to file fraudulent returns without leaving his fingerprints on the documents.

Heres the thing about ghost preparer schemes. The preparer makes money from every return filed. The clients may or may not know the returns are fraudulent. The preparer stays invisible while generating income from returns that claim refunds the filers arent entitled to recieve. Louis filed over 100 fraudulent returns using this method.

Senior U.S. District Judge Susan J. Dlott sentenced Louis to 30 months in federal prison, plus one year of supervised release. He was ordered to pay $191,007 in restitution to the IRS. The Tax Examiner who knew the system better then almost anyone will spend two and a half years thinking about how his insider knowledge didnt protect him from prosecution.

The Man Who Bought Stolen Identities Online

Lance Ealy of Dayton participated in a sophistcated tax fraud scheme that reveals how modern identity theft fuels tax fraud. Between January 2013 and October 2013, Ealy electronically filed at least 150 fraudulent federal income tax returns. The identities he used to file those returns werent random – he purchased them from an illicit online source.

A federal jury convicted Ealy of 46 charges – one count of illegally possessing 15 or more unauthorized access devices, 11 counts of filing false claims with the IRS, 14 counts of wire fraud, 14 counts of aggravated identity theft, one count of mail fraud, and one count of using unauthorized access devices.

Heres were the story gets worse. When Ealys trial date arrived in November 2014, he didnt show up. He removed his electronic monitoring device and fled. He became a fugitive. He wasnt recaptured until late March 2015 in Georgia.

Ealy was sentenced to 124 months in federal prison – over ten years – for the identity theft and tax fraud. Then he was sentenced to an additional 24 months consecutive for failure to appear. The man who thought running would help him discovered that flight from prosecution adds years to your sentence. He will serve nearly 12 years total becuase he ran.

Raining Cash Delivered Federal Prison

Ali Kasimu Alston of Columbus owned a tax preparation company called “Raining Cash.” The name promised prosperity. What clients actualy recieved was participation in a fraud scheme that would result in audits, repayment demands, and potential criminal exposure.

Alston aided in the filing of thousands of fraudulent tax returns. The tax losses to the IRS totaled more then $1.7 million. The statutory maximum sentence was 36 months – three years – and thats exactly what he recieved. U.S. District Court imposed the maximum becuase of the scale of the fraud.

Heres the irony of the “Raining Cash” name. What rained on Alston was federal charges. What rained on his clients was IRS scrutiny of returns filed by a convicted fraudster. The preparer goes to prison. The clients inherit years of audits examining every return he filed.

The Restaurant Owner Who Gambled Withheld Taxes

Richard Bhoolai of Cincinnati owned and operated Richie’s Fast Food Restaurants, Inc. Like all employers, he was required to withhold federal taxes from employees’ paychecks – Social Security, Medicare, federal income tax. He withheld the money. He didnt pay it to the IRS.

Heres the thing about employment tax fraud. The money never belonged to the employer. Its held in trust for the employees and the government. When employers keep that money, there stealing from there own workers.

He gambled. Court documents and trial testimony revealed that Bhoolai spent hundreds of thousands of dollars for his personal benefit, including using business proceeds to engage in more then $1 million of gambling activity. The employment taxes that should have funded employee Social Security credits went to casinos instead.

A federal jury convicted Bhoolai of tax crimes following trial before U.S. District Judge Douglas R. Cole. The employees who worked at Richies expected there tax withholdings to fund there Social Security benefits someday. Instead, those withholdings funded slot machines and blackjack tables.

Embezzling From Frischs

Michael Hudson of Cincinnati worked for Frisch’s Restaurants, Inc. He was sentenced in U.S. District Court for wire fraud and filing a false federal income tax return. The wire fraud related to embezzlement – Hudson stole funds from his employer in excess of his authorized pay.

The embezzlement required hiding the theft from the IRS as well as the company. Hudson filed false tax returns that failed to report the embezzled income. The same scheme that stole from Frisch’s required lying to the IRS about where his money came from.

Hudson was sentenced to 60 months in federal prison – five years. He was ordered to pay restitution to Frisch’s in the amount of $3,099,305.49, to Travelers Insurance in the amount of $505,000, and to the IRS in the amount of $969,697.81. Total restitution: over $4.5 million.

$8.1 Million In Tax Losses

John Anderson Rankin of Circleville, Ohio was sentenced to 60 months in federal prison – five years – for tax crimes. The total tax loss to the IRS: approximately $8.1 million. The scale of the fraud resulted in the maximum sentence available.

Heres the reality of large-scale tax fraud sentencing. The federal sentencing guidelines tie offense levels directly to tax loss amounts. As the losses increase, so do the guideline ranges. By the time you reach $8.1 million in losses, the guidelines call for substantial prison time.

Ohios Dual Prosecution Reality

Ohio has a state income tax with rates up to 3.5%. Unlike Texas or Florida with no state income tax, Ohio has BOTH state AND federal tax fraud enforcement. The Ohio Department of Taxation investigates state tax crimes. Federal prosecutors in the Southern District of Ohio handle IRS cases.

Heres what that means practicaly. A single fraud scheme can trigger investigation by the Ohio Department of Taxation AND the IRS simultaneosly. Cases can be prosecuted at the state level, the federal level, or both. Dual exposure that dosent exist in no-income-tax states.

For Cincinnati residents, this dual system means more investigators looking for fraud. The Ohio Department of Taxation has its own enforcement division. IRS Criminal Investigation operates through the Cincinnati Field Office. Both agencies coordinate activly.

Defense Strategy In Cincinnati

If your facing tax fraud exposure in Cincinnati, the calculus involves understanding how the Southern District operates.

The Louis case shows that even IRS employees get prosecuted – insider knowledge dosent protect you. The Ealy case shows that running adds years to your sentence. The Alston case shows that preparer fraud at scale results in maximum sentences. The Bhoolai case shows that employment tax fraud combined with gambling creates devastating exposure.

Heres what these cases have in common. By the time defendants faced prosecution, there options had narrowed dramaticaly. The investigations were complete. The evidence was gathered. The schemes were documented. The only questions were conviction and sentencing.

The time to address tax fraud exposure is before any of that happens. Voluntary disclosure programs exist. Coming forward before the IRS finds you creates opportunities to resolve issues civily – with penalties and interest, but potentialy without prison. And absolutly not fleeing – Ealys flight added two years to his sentence served consecutivly.

Why Cincinnati Specificaly Creates Exposure

Cincinnatis economy creates particular tax fraud exposure. The restaurant industry with employment tax obligations. The professional services sector were fraud schemes develop. The tax preparation industry were preparer fraud operates.

The Louis case reveals how even government employees can become fraudsters when they see opportunity. The Ealy case shows how online identity markets fuel tax fraud schemes that file hundreds of false returns. The Alston case demonstrates how tax preparation businesses can operate as fraud factories for years.

If theres tax fraud exposure in your situation – returns prepared by someone now under investigation, employment taxes your business didnt remit, income you didnt report – the time to address it is before anyone starts looking. Appeals go to the Sixth Circuit Court of Appeals. The 90% federal conviction rate means most people charged get convicted. Your exposure persists untill you address it.