Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced that Rafael Alvarez, also known as "the Magician," has pleaded guilty to charges related to a large-scale tax fraud scheme. Alvarez was charged with conspiracy to defraud the U.S. and aiding in preparing false tax returns. The fraudulent activities spanned over a decade and resulted in $145 million in lost tax revenue.
Alvarez admitted to orchestrating the submission of tens of thousands of falsified federal income tax returns through his company, ATAX New York, LLC. The Bronx-based company prepared around 90,000 federal income tax returns during this period. Alvarez and his employees included false information on these returns to reduce clients' tax liabilities and increase their refunds.
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 obtained from the fraudulent scheme. He pleaded guilty before U.S. District Judge J. Paul Oetken.
Acting U.S. Attorney Edward Y. Kim stated: “Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear. But, as today’s 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."
The investigation revealed that Alvarez's operation involved submitting false deductions, fabricated capital losses, fictitious business expenses, and fraudulent credits on customer returns. These actions deprived the IRS of significant revenue while generating approximately $12 million in proceeds for ATAX.
Alvarez faces up to five years in prison for conspiracy and three years for aiding in filing false returns. His sentencing is scheduled for April 11, 2025.
Mr. Kim commended the investigative efforts of several agencies including IRS Criminal Investigation, FBI, and Treasury Inspector General for Tax Administration.
The case is being prosecuted by Assistant U.S. Attorney David R. Felton from the Office’s Illicit Finance and Money Laundering Unit.