U.S. Attorney Damian Williams | U.S. Department of Justice
Edward Y. Kim, Acting United States Attorney for the Southern District of New York, announced the guilty plea of Rafael Alvarez to charges related to a significant tax fraud scheme. Alvarez, also known as "the Magician," admitted to orchestrating a $145 million fraud by filing false federal income tax returns over a decade.
Alvarez faced two counts: conspiracy to defraud the U.S. and steal government funds, and aiding in preparing false tax returns. As part of his plea agreement, Alvarez agreed to pay $145 million in restitution to the Internal Revenue Service (IRS) and forfeit over $11.84 million gained from his criminal activities. The guilty plea was entered before U.S. District Judge J. Paul Oetken.
Acting U.S. Attorney Kim remarked on Alvarez's reputation among clients as "the Magician" for reducing their tax liabilities, stating that it was achieved through fraudulent means rather than any magic trick. Kim emphasized that this case serves as a warning to tax professionals about the consequences of committing tax offenses.
The charges stem from Alvarez's role as CEO and owner of ATAX New York, LLC, which operated under various names including ATAX New York-Marble Hill and ATAX Corporation in the Bronx, New York. From 2010 to 2020, Alvarez and his employees at ATAX submitted false information on approximately 90,000 federal income tax returns for customers. These falsifications included fake deductions and credits aimed at reducing customer tax liabilities and increasing refunds.
The fraudulent activity resulted in a $145 million loss to the IRS. Additionally, Alvarez admitted he attempted to obstruct justice during the investigation by making false statements with an employee to an IRS agent.
Alvarez, aged 61 from Cortland Manor, New York, pled guilty to charges carrying maximum sentences of five years for conspiracy and three years for aiding in fraudulent tax preparation. His sentencing is set for April 11, 2025.
Kim commended the investigative efforts of several agencies involved in this case: IRS Criminal Investigation, FBI, and Treasury Inspector General for Tax Administration. The prosecution is managed by Assistant U.S. Attorney David R. Felton from the Illicit Finance and Money Laundering Unit.
