United States of America v. Rafael Alvarez a/k/a “the Magician”

New York, New York criminal defense lawyer represented the Defendant charged with tax fraud

Bronx Tax Preparer Sentenced To Prison For Filing Tens Of Thousands Of False Tax Returns Causing $145 Million In Fraudulent Tax Loss

Jay Clayton, the United States Attorney for the Southern District of New York, announced that RAFAEL ALVAREZ, a/k/a "the Magician,” was sentenced today by U.S. District Judge J. Paul Oetken to four years in prison in connection with his orchestration of a decade-long, $145 million tax fraud scheme. As part of the scheme, ALVAREZ oversaw the filing of tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce his clients' tax burden. ALVAREZ previously pled guilty to conspiracy to defraud the U.S. and steal government funds and aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return before Judge Oetken on December 17, 2024.



"Rafael Alvarez was touted as 'the Magician' when, in reality, he was an elaborate fraudster, depriving the IRS of $145 million in tax revenue and penalizing many honest taxpayers,” said U.S. Attorney Jay Clayton. "All Americans bear the burden of tax fraud and want scamsters of this type brought to justice.”



As alleged in the Indictment and Superseding Information and statements made in public filings and court proceedings:



From at least in or about 2010, up to and including in or about 2020, ALVAREZ was the CEO, owner, and manager of ATAX New York, LLC, also doing business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation (together, "ATAX”). ATAX was a high-volume tax preparation company located in the Bronx, New York, which prepared approximately 90,000 federal income tax returns for its customers during this period. ALVAREZ both prepared tax returns for ATAX customers and recruited, supervised, and directed other ATAX personnel who in turn prepared tax returns for customers. During this period, ALVAREZ oversaw a sweeping fraudulent scheme, whereby he and his employees submitted false information to the Internal Revenue Service ("IRS”) in ATAX customers' tax returns. This false information, which included, among other things, bogus itemized tax deductions, made-up capital losses, phony business expenses, and fraudulent tax credits, served to fraudulently reduce the customers' tax liability and increase the customers' tax refunds from the IRS.



In order to further his scheme and limit scrutiny, ALVAREZ specifically recruited to ATAX and personally trained as tax preparers impressionable, easily intimidated workers. When certain ATAX employees questioned ALVAREZ about his fraudulent preparation of returns, ALVAREZ intimidated and threatened these employees to dissuade them from reporting his fraud scheme to authorities.



In total, ALVAREZ oversaw ATAX's fraudulent submission of tax returns on behalf of customers that deprived the IRS of $145 million in tax revenue. ALVAREZ was so consistent at falsifying ATAX customer tax returns that he became known to ATAX's customers as "the Magician.” Additionally, ALVAREZ was a leader of the scheme and attempted to obstruct or impede the administration of justice with respect to the investigation of the tax fraud scheme when he and an ATAX employee made false statements to an IRS Revenue Agent. ALVAREZ's operation of ATAX helped the company generate approximately $12 million in fraudulent proceeds over the duration of the fraud.