New York tax preparer 'the Magician' pleads guilty to filing thousands of false reports

Federal officials announced Tuesday that a New York tax preparer known as "the Magician" pleaded guilty to filing tens of thousands of false tax returns, which officials say has cost the government $145 million in lost tax payments.

In a press release from the U.S. Attorney’s Office for the Southern District of New York, Rafael Alvarez is said to have committed one of the largest ever tax frauds by a return preparer.

Prosecutors say the scheme run by Alvarez consisted of false information that was designed to fraudulently reduce people's tax burden.

“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,” Acting U.S. Attorney Edward Y. Kim said in the statement.

Officials say Alvarez pleaded guilty to one count of conspiracy to defraud the U.S. government and steal government funds as well as one count of aiding and assisting in the preparation of a false tax return.

These counts carry a maximum sentence of five and three years in prison, respectively.

A decade of 'the Magician'

Prosecutors say Alvarez owned and ran the Bronx-based company ATAX New York, which they described as a “high-volume tax preparation company.” The company prepared about 90,000 federal income tax returns between 2010 and 2020.

False information provided to the government included bogus itemized tax deductions, made-up capital losses, phony business expenses and fraudulent tax credits, according to prosecutors.

“Alvarez was so consistent at falsifying ATAX customer tax returns that he became known to ATAX’s customers as ‘the Magician.’” the release said. “Alvarez's operation of ATAX helped the company generate approximately $12 million in fraudulent proceeds over the duration of the fraud.”

As part of his plea agreement, officials say Alvarez has agreed to pay the IRS $145 million in restitution as well as forfeit more than $11 million in fraudulent proceeds.

His sentencing is scheduled for April of next year.

When reached by USA TODAY, Alvarez's attorney Michael Bachrach had no comment on the matter.

Fernando Cervantes Jr. is a trending news reporter for USA TODAY. Reach him at [email protected] and follow him on X @fern_cerv_.

This article originally appeared on USA TODAY: 'The Magician' Rafael Alvarez pleads guilty to filing false returns