Cortlandt Man Pleads Guilty to Decade-Long Tax Fraud

A Cortlandt man could face up to five years in prison after pleading guilty last week to orchestrating a decade-long, $145 million tax fraud scheme.

According to Edward Kim, Acting United States Attorney for the Southern District of New York, Rafael Alvarez, 61, filed tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the client’s tax burden.

“Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear,” Kim stated. “But, as today’s guilty plea shows, there was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue.”

Kim said from 2010 to about 2020, Alvarez was the CEO, owner, and manager of ATAX New York, LLC, also doing business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation. ATAX was a high-volume tax preparation company located in the Bronx, which prepared approximately 90,000 federal income tax returns for its customers during this period.

According to Kim, Alvarez both prepared tax returns for ATAX customers and recruited, supervised, and directed other ATAX personnel, who in turn prepared tax returns for customers. During this period, Alvarez allegedly oversaw a sweeping fraudulent scheme, whereby he and his employees submitted false information to the IRS in ATAX customers’ tax returns. This false information, which included, among other things, bogus itemized tax deductions, made-up capital losses, phony business expenses, and fraudulent tax credits, served to fraudulently reduce the customers’ tax liability and increase the customers’ tax refunds from the IRS.

Kim maintained Alvarez was so consistent at falsifying ATAX customer tax returns that he became known to ATAX’s customers as “the Magician.” In addition, Alvarez agreed as part of his plea agreement that he was a leader of the scheme and attempted to obstruct or impede the administration of justice with respect to the investigation of the tax fraud scheme when he and an ATAX employee made false statements to an IRS Revenue Agent.

Alvarez’s operation of ATAX helped the company allegedly generate approximately $12 million in fraudulent proceeds over the duration of the fraud.

Alvarez pled guilty before U.S. District Judge J. Paul Oetken to one count of conspiracy to defraud the U.S. and steal government funds, which carries a maximum sentence of five years in prison, and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return, which carries a maximum sentence of three years in prison.

He is scheduled to be sentenced by Judge Oetken on April 11, 2025.

Rick Pezzullo

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