$100M Scheme: Northern Westchester Man Known As 'Magician' Nabbed In One Of Largest Ever Frauds

Northern Westchester County resident Rafael Alvarez, of Cortlandt Manor, has been charged in connection with a $100 million tax fraud scheme involving tens of thousands of federal individual income tax returns with false information, the US Attorney's Office for the Southern District of New York announced on Monday, April 15. 

According to federal officials, from 2010 to 2020, Alvarez, also known as "the Magician," was the CEO, owner, and manager of Bronx-based high-volume tax preparation company ATAX New York, LLC, which also did business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation. Over this decade, the company prepared around 90,000 federal income tax returns for customers.

In his role with ATAX, Alvarez would prepare customers' tax returns and oversee other ATAX personnel who did the same. 

Over the course of a decade, Alvarez allegedly led a fraudulent scheme that would involve him and his employees submitting false information to the Internal Revenue Service in customers' tax returns. 

This would include bogus itemized tax deductions; false capital losses; and fake tax credits meant to increase customers' tax refunds. In total, the scheme resulted in the deprivation of more than $100 million in tax revenue from the IRS, federal officials said.

Alvarez became so good at submitting false tax returns that he earned his "Magician" nickname from customers of ATAX, officials added. 

Alvarez's indictment charges him with: 

• Conspiracy to defraud the United States;
• Aiding and abetting the filing of false federal tax returns;
• Attempting to interfere with the administration of the internal revenue laws;
• Making false statements;
• Aggravated identity theft.

US Attorney Damian Williams condemned Alvarez's alleged scheme: 

"Rafael Alvarez was allegedly so prolific in falsifying his customers’ tax returns that he came to be known as ‘the Magician’ for his ability to make customers’ tax burden disappear. But, Alvarez’s sleight of hand was criminal tax fraud, a serious federal tax crime he was allegedly committing for over a decade, depriving the IRS of more than $100 million in tax revenue," Williams said.

He continued, "Today’s charges, on Tax Day, should serve as an important reminder to tax professionals that when they try to cheat the public fisc they will face grave consequences.” 

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