Dayton Man Sentenced for Sophisticated Tax Fraud and Aggravated Identity Theft Scheme Involving the Online Purchase of Hundreds of Stolen Identities

DAYTON – Lance Ealy, 29, of Dayton, was sentenced in U.S. District Court to 124 months in prison, three years of supervised release and ordered to pay approximately $61,000 in restitution following convictions for access device fraud, wire fraud, aggravated identity theft and related charges arising from a sophisticated scheme in which he purchased hundreds of stolen identities online (including specifically targeting identities of the elderly and disabled) and used the identities to file more than 150 fraudulent federal income tax returns seeking refunds to which he was not entitled. 

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Mark Porter, Special Agent in Charge, U.S. Secret Service announced the sentenced handed down last Friday by U.S. District Judge Michael Barrett.

After an initial investigation by the United States Secret Service determined that Ealy had purchased stolen identities from an illicit online source, he was arrested on a federal complaint in October 2013. A federal grand jury subsequently indicted Ealy in November 2013, charging him with one count of knowingly possessing 15 or more access devices with intent to defraud.

A further investigation by both Secret Service and the IRS determined that Ealy was using stolen identities that he had purchased online to file fraudulent federal tax returns and open fraudulent bank accounts in which to deposit the fraudulent tax refunds.

The investigation also determined that Ealy continued to engage in fraudulent activities while on bond, including, but not limited to using stolen personal identifying information to open fraudulent bank accounts, conduct fraudulent purchases using the victim's personal accounts, and opened financial accounts at numerous institutions.

As a result of Ealy’s conduct, Judge Barrett revoked Ealy’s bond in July 2014. The Secret Service’s and IRS’ additional investigation also resulted in a federal grand jury returning a Second Superseding Indictment against Ealy in September 2014.

Following a nearly two-week trial, a jury in the Southern District of Ohio convicted Ealy of all 46 charges in the Second Superseding Indictment in November 2014, including on one count of illegally possessing 15 or more unauthorized access devices, 11 counts of filing false claims for income tax refunds 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 to obtain $1,000 or more in a one-year period. An access device includes things such as payment cards and bank account numbers used to access financial accounts.

According to the testimony and evidence presented at trial, between approximately January 2013 and October 2013, Ealy engaged in a sophisticated scheme in which he electronically filed at least 150 fraudulent federal income tax returns, including returns filed using the personal information of others that he had unlawfully acquired from an illicit online source.

Ealy opened dozens of bank accounts at multiple financial institutions using the names and social security numbers of other individuals – without their knowledge or permission – in order to electronically deposit the fraudulent tax refunds. The evidence at trial also showed Ealy specifically targeted vulnerable individuals, including the elderly and disabled, who were less likely to realize that their identities had been stolen to file fraudulent tax returns or open fraudulent bank accounts. Ealy was also convicted on the charges (wire fraud and aggravated identity theft) arising from his fraudulent conduct while on bond.

During the course of the trial, Ealy became a fugitive after failing to appear on November 17, 18 and 19, 2014 (Ealy had been placed back on bond in October 2014). It was later determined that Ealy had removed his electronic monitoring device on November 15, 2014 and fled while under bond conditions. He was ultimately recaptured in late March 2015 in the Atlanta, Georgia area by the United States Marshal’s Service.

In June 2015, Ealy was indicted by a grand jury in the Southern District of Ohio on three counts of failure to appear in violation of 18 U.S.C. § 3146. He was subsequently convicted on all three counts following a bench trial before U.S. District Court Judge Thomas M. Rose that took place on October 22, 2015. Judge Rose issued a written verdict on November 4, 2015.

Ealy faces a sentence of up to 10 years in prison for his failure to appear convictions, which must run consecutive to the 124 month sentence that has been imposed by Judge Barrett. Judge Rose has scheduled sentencing in Ealy’s failure to appear case for February 6, 2016.

"Today’s announcement exemplifies IRS Special Agents' intense focus on the rigorous pursuit of identity theft and refund fraud," said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "Lance Ealy perpetuated an elaborate scheme driven by insatiable greed and a blatant disregard for the tremendous damage inflicted on innocent victims. Be assured that IRS Criminal Investigation, together with our partners at the U.S. Attorney's Office and the United States Secret Service, will hold those who engage in similar behavior fully accountable."

U.S. Attorney Stewart commended the investigation of this case by the Secret Service and IRS-Criminal Investigation and Assistant U.S. Attorneys Alex R. Sistla and Andrew J. Hunt, who prosecuted the case.