A New York tax preparer known as “The Magician” has pleaded guilty to filing tens of thousands of false tax returns, costing the government $145 million in taxes.
Rafael Alvarez orchestrated and oversaw the largest tax evasion in history by a return preparer, according to the Southern District of New York.
Prosecutors say the decade-long scheme involved tens of thousands of individual federal income tax returns containing false information designed to fraudulently reduce individuals' tax burdens.
“Rafael Alvarez became known as 'The Magician' to his clients for his purported ability to eliminate their tax burdens,” said Edward Kim, acting U.S. attorney.
“There was no magic in what Alvarez was doing. He committed a serious federal crime by falsifying tens of thousands of tax returns and depriving the IRS of $145 million in tax revenue in the process. ” he added.
Alvarez pleaded guilty to one count of conspiracy to deceive the United States and steal government funds and one count of aiding and abetting the preparation of false and fraudulent U.S. personal income tax returns.
As part of Alvarez's guilty plea, he agreed to pay $145 million in restitution to the Internal Revenue Service and forfeit more than $11.84 million in fraudulent proceeds. He is scheduled to be sentenced in April to up to eight years in prison under federal sentencing guidelines.
The company he owned and operated, ATAX New York, was a high-volume tax preparation firm in the Bronx that prepared about 90,000 federal income tax returns for clients over a 10-year period beginning in 2010.
The false information he provided to the government included bogus itemized tax credits, fabricated capital losses, bogus business expenses, and fraudulent claims intended to reduce customers' tax liability and maximize tax refunds. This included tax credits.
Alvarez became known as “The Magician” because of his consistency in falsifying his clients' tax returns.
But the government has not come to view his activities that way.
When Alvarez was indicted on April 15 (Tax Day) of this year, Thomas Fatrusso, the special agent in charge of the IRS, said that although Alvarez was known as a magician, “he did not pursue these charges by saying abracadabra.'' You can't erase it,'' he said, adding that he was arrested. It wasn't some magical fantasy. ”
