"The Tax Magician" Exposed: Rafael Alvarez Faces Sentencing for $145M Tax Fraud Scheme

Rafael Alvarez, a 61-year-old resident of Cortlandt Manor, New York, and CEO of ATAX New York, LLC, has pleaded guilty to orchestrating a decade-long tax fraud scheme that resulted in a $145 million loss to the U.S. government. Known to his clients as "The Magician" for his ability to reduce their tax liabilities, Alvarez's fraudulent activities have led to significant legal repercussions.

The Fraudulent Operations

Between 2010 and 2020, Alvarez's company, ATAX, prepared approximately 90,000 federal income tax returns. Alvarez and his employees systematically included false information in these returns, such as:

• Bogus itemized deductions

• Fabricated capital losses

• Phony business expenses

• Fraudulent tax credits

  
  

These falsifications were designed to unlawfully reduce clients' tax liabilities and inflate refunds, depriving the Internal Revenue Service (IRS) of substantial revenue.

Legal Proceedings and Consequences

In December 2024, Alvarez pleaded guilty to:

• Conspiracy to defraud the United States and steal government funds, carrying a maximum sentence of five years in prison.

• Aiding and assisting in preparing a false and fraudulent U.S. individual income tax return, carrying a maximum sentence of three years in prison.

As part of his plea agreement, Alvarez has committed to:

• Paying $145 million in restitution to the IRS.

• Forfeiting over $11.84 million in proceeds obtained from his criminal activities.

Sentencing is scheduled for April 11, 2025, before U.S. District Judge J. Paul Oetken in Manhattan, New York.

Official Statements

Acting U.S. Attorney Edward Y. Kim emphasized the gravity of Alvarez's actions, stating, "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."

Ongoing Coverage

Our team will continue to monitor this case closely, providing updates on Alvarez's sentencing and any further developments. This situation is a stark reminder for tax professionals and taxpayers to ensure compliance with tax laws to avoid similar repercussions.

Stay tuned for more updates from Tax Court TV!