A Bronx-based tax preparer known to his clients as “the Magician” pleaded guilty last month to orchestrating a $145 million fraud scheme that spanned a decade, according to federal authorities.
Rafael Alvarez, 61, the owner of ATAX New York in Marble Hill, admitted to the scheme, which involved falsifying deductions, business expenses, and credits on behalf of customers. The operation involved filing tens of thousands of fraudulent tax returns to reduce clients’ tax liabilities and inflate refunds, costing the IRS millions in lost revenue.
According to court records, Alvarez’ firm filed approximately 90,000 tax returns between 2010 and 2020, and through his bogus filings he generated $12 million for his firm while providing his clients with oversized refunds.
Alvarez, who lives in Cortlandt Manor in Westchester County, pleaded guilty to conspiracy to defraud the United States and aiding in the preparation of false tax returns. As part of his plea agreement, he agreed to pay $145 million in restitution to the IRS and forfeit more than $11 million in illicit proceeds. The charges carry a maximum sentence of eight years in prison. Alvarez is scheduled to be sentenced on April 11 by U.S. District Judge J. Paul Oetken.
In addition to leading the scheme, Alvarez admitted to obstructing the investigation by making false statements to an IRS agent.
The IRS Criminal Investigation division, FBI, and Treasury Inspector General for Tax Administration uncovered the fraud after years of investigating ATAX’s practices. Federal prosecutors described the case as one of the largest tax fraud schemes ever involving a return preparer.
“Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear,” said U.S. Attorney Edward Y. Kim in a statement. “But, as [his] guilty plea shows, there was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue.”
