A U.S. tax adviser involved in a sweeping income tax evasion scheme has been sentenced to prison and ordered to pay US$145 million in restitution to the U.S. Internal Revenue Service (IRS).
Rafael Alvarez — known to clients as “the Magician” — pleaded guilty to conspiracy to defraud the U.S. and aiding in the filing of fraudulent tax returns. He was sentenced to four years in prison by a U.S. district court judge.
According to court filings, between 2010 and 2020, Alvarez, CEO of New York-based tax preparer ATAX New York, LLC, oversaw a broad scheme to submit false tax returns with bogus deductions, phony business losses and expenses, and unwarranted tax credits.
The company prepared about 90,000 federal income tax returns during that period, U.S. authorities alleged. The fraudulent returns deprived the IRS of US$145 million in tax revenue.
“Rafael Alvarez was touted as ‘the Magician’ when, in reality, he was an elaborate fraudster,” said Jay Clayton, U.S. attorney for the Southern District of New York.
In addition to the prison term, Alvarez was ordered to pay US$145 million in restitution to the IRS and to disgorge US$11.8 million generated by the scheme.