A New York tax preparer was arrested Monday on charges related to causing “substantially” more than $100 million in tax losses through the filing of false returns — one of the largest tax frauds ever by a preparer, federal prosecutors said.
The preparer, Rafael Alvarez, orchestrated a “wide-ranging scheme” at his Bronx firm ATAX New York “to file tens of thousands of federal individual income tax returns” that included false information to reduce the tax liability of their filers, according to prosecutors.
The false information allegedly included bogus itemized deductions, fake capital losses, and phony business expenses and tax credits.
“Many of the numbers that Alvarez entered were completely fictitious, and were not supported by any evidence or documentation,” an indictment against him alleges.
The 60-year-old Alvarez became known to customers as “The Magician” for his “ability to make customers’ tax burden disappear,” said Manhattan U.S. Attorney Damian Williams on Monday, the deadline for most Americans to file their income tax returns.
ATAX New York grossed more than $15 million from 2016 through 2019, according to Thomas Fattorusso, the IRS special agent in charge of criminal investigations.
Alvarez was the CEO, owner and manager of ATAX from 2010 through 2020, and the firm during that time prepared more than 90,000 income tax returns, according to prosecutors.
In 2021, a Manhattan federal court judge permanently barred Alvarez and ATAX from preparing federal tax returns for others, after the Manhattan U.S. Attorney’s Office alleged in a civil complaint that he and the company had prepared and filed fraudulent returns for others.
Alvarez and ATAX agreed to pay $159,600 to the United States in disgorgement in that case.
Alvarez, who lives in Cortlandt Manor, New York, is charged in the new criminal case with one count of conspiracy to defraud the United States and making false statements, which has a maximum five-year prison sentence if he is convicted, along with four counts of aiding and assisting preparation of false and fraudulent U.S. individual income tax returns and attempting to interfere with the administration of the internal revenue laws.
He also is charged with aggravated identity theft, which carries a mandatory minimum sentence of two years in prison if he is convicted.
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