One tax preparer came to be known as “The Magician” by his customers for making their taxes owed to the Internal Revenue Service vanish, but he was committing fraud the entire time.
On Tuesday, the United States Attorney’s Office for the Southern District of New York posted a news release about Rafael Alvarez, a tax preparer who pled guilty to one count of conspiracy to defraud the U.S. and steal government funds and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return.
Alvarez worked as the owner, manager, and CEO of ATAX New York, LLC where the USAO said he embarked on an “orchestration of a decade-long, $145 million tax fraud scheme to file tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden.”
He has agreed to pay the IRS $145 million in restitution and forfeit $11.84 million in fraudulent proceeds.
USAO gave an approximate number of 90,000 federal income tax returns that ATAX prepared over roughly a ten-year period starting around 2010 and ending in 2020.
Acting U.S. Attorney Edward Y. Kim said of Alvarez nickname and guilty plea, “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.”
According to the release, his crimes could see him face up to eight years in prison.
His sentencing is set for April 2025.
It seems the nickname makes sense. Only someone committing fraud could magically make your tax burden vanish.
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The New York Times in their coverage highlighted a lack of clarity in whether clients were actively participating alongside Alvarez’s fraud or if any were helping authorities in catching him.
The Times did spotlight that the illegality of Alvarez’s actions not going unnoticed in the workplace.
Several employees confronted him over fraudulent returns, only for him to threaten them and create a policy at ATAX that those returns could not be changed.
How exactly did he do it then? One man cannot manage a scheme of this magnitude alone.
The USAO stated, he “recruited, supervised, and directed other ATAX personnel” to help him.
The actual indictment defined these employees as people “without legal status in the United States.”
In one case, he found a man working in a supermarket who “lacked legal status in the United States” to impersonate a tax preparer to file returns.
The massive fraud is bad enough, but is it safe to say from that language Alvarez recruited illegal immigrants to help him do his dirty work?
Few would openly admit their adoration for the IRS, as that agency has its share of problems and mismanagement, but its harshest critics shouldn’t be cheering Alvarez’s behavior.
Fraud only lands you in prison; it doesn’t create substantial change to the system.
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