Rafael Alvarez, known as "the Magician," has been sentenced to four years in prison for orchestrating a tax fraud scheme that caused $145 million in losses to the IRS. U.S. District Judge J. Paul Oetken handed down the sentence following Alvarez's guilty plea to charges of conspiracy to defraud the United States and aiding in the preparation of false tax returns.
U.S. Attorney Jay Clayton stated, “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.” Clayton emphasized that such fraudulent activities impact all taxpayers and underscored the importance of bringing offenders to justice.
Alvarez operated ATAX New York, LLC, a Bronx-based high-volume tax preparation company that submitted approximately 90,000 federal income tax returns from 2010 to 2020. During this period, Alvarez and his team filed returns with false information such as bogus deductions and fraudulent credits to reduce clients' tax liabilities unlawfully.
To sustain his operation, Alvarez recruited easily intimidated workers whom he personally trained in fraudulent practices. When questioned by employees about these practices, Alvarez reportedly used intimidation tactics to prevent them from reporting his actions.
In total, Alvarez's scheme deprived the IRS of $145 million and generated around $12 million in proceeds for ATAX. He also attempted to obstruct justice by making false statements during the investigation.
Alongside his prison term, Alvarez will serve three years of supervised release and must pay $145 million in restitution while forfeiting over $11.84 million gained through fraud.
The case was investigated by the IRS Criminal Investigation unit, the FBI, and the Treasury Inspector General for Tax Administration. Assistant U.S. Attorney David R. Felton is leading the prosecution under the Office’s Illicit Finance and Money Laundering Unit.
