A Bronx tax preparer known as "the Magician" has been handed a four-year prison sentence for concocting a tax fraud scheme estimated at $145 million. The U.S. Attorney's Office for the Southern District of New York announced that Rafael Alvarez, CEO of ATAX, pled guilty to charges including conspiracy to defraud the U.S. and was sentenced by U.S. District Judge J. Paul Oetken.
Alvarez's operation, spanning from 2010 to 2020, filed tens of thousands of fraudulent federal individual income tax returns to falsely diminish his clients' tax liabilities and unjustly inflate their refunds. He managed to unlawfully reduce the Internal Revenue Service's (IRS) intake by $145 million during this time. U.S. Attorney Jay Clayton described Alvarez as "an elaborate fraudster," emphasizing the tax burden all Americans bear due to such schemes. "All Americans bear the burden of tax fraud and want scamsters of this type brought to justice," Clayton stated in the press release.
During his tenure at ATAX, Alvarez recruited and personally trained employees, choosing individuals who were impressionable and easily intimidated to carry out his deceptive tax preparation practices. According to court documents, he intimidated and threatened any employee who dared to question his methods to prevent them from going to the authorities with information about his fraudulent activities.
In addition to his prison sentence, the 61-year-old from Cortland Manor, New York, is to also serve three years of supervised release. He was ordered to pay back $145 million in restitution and to forfeit over $11.84 million of his illicitly obtained gains. The success of the investigation was lauded by Mr. Clayton, who praised the efforts of IRS, Criminal Investigation, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration. The case was managed by the Office’s Illicit Finance and Money Laundering Unit with Assistant U.S. Attorney David R. Felton in charge of the prosecution.
