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Rafael Alvarez, 61, of Cortlandt Manor, was sentenced on Thursday, May 29 in Manhattan federal court to four years in prison for orchestrating a decade-long scheme that cost the IRS $145 million in lost tax revenue, the US Attorney's Office for the Southern District of New York announced.
In addition to prison, Alvarez was sentenced to three years of supervised release, ordered to pay $145 million in restitution, and forfeit over $11.8 million in illegal proceeds.
Alvarez, the former CEO and owner of ATAX, a Bronx-based tax preparation company, earned the nickname “The Magician” from clients for his uncanny ability to make tax burdens disappear. But prosecutors say it was all part of a massive criminal enterprise in which he directed employees to file tens of thousands of fraudulent returns from 2010 to 2020.
The scam involved fake deductions, bogus business expenses, fabricated capital losses, and fraudulent tax credits—all designed to illegally increase refunds and reduce clients’ tax liabilities.
ATAX prepared approximately 90,000 federal income tax returns during the scheme. According to prosecutors, Alvarez personally trained employees to carry out the fraud and threatened those who raised concerns.
In December 2024, Alvarez pleaded guilty to conspiracy to defraud the US and aiding in the preparation of false returns, as Daily Voice reported at the time. Prosecutors said he even tried to obstruct the investigation by lying to IRS agents.
"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," US Attorney Jay Clayton said in a statement on Thursday.
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