United States v. Rafael Alvarez, Southern District of New York (Apr. 15, 2024) — Indictment

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT 
OF NEW YORK 
24 CIIM 
UNITED STATES OF AMERICA 
V. 
RAFAEL ALVAREZ, 
a/k/a "the Magician," 
Defendant. 
SEALED INDICTMENT 
24Cr._( ) 
COUNT ONE 
(Conspir~cy to Defraud the United States) 
The Grand Jury charges: 
OVERVIEW 
221 
1. From at least in or about 2010 through at least in or about 2020, RAFAEL 
ALVAREZ, a/k/a "the Magician," the defendant, was the. Chief Executive Officer 
of ATAX New 
York, LLC, also doing business as ATAX 
New York-Marble Hill, ATAX Marble Hill, ATAX 
Marble Hill NY, and ATAX Corporation (together, "ATAX"). At all times relevant to this 
Indictment, ATAX was a high-volume tax preparation company located in the Bronx, New York, 
which prepared approximately 90,000 federal income tax returns for its customers, and ALVAREZ 
was the owner and manager 
of AT AX. ALVAREZ has been preparing tax returns since at least 
in or about 1990. ALVAREZ prepared tax returns for AT AX customers and recruited, supervised, 
and directed other AT AX personnel who in tum prepared tax returns for customers. 
2. From at least in 
or about 2010 through at least in or about 2020, RAFAEL 
ALVAREZ, a/k/a "the Magician," the defendant, oversaw a sweeping fraudulent scheme, whereby 
ALVAREZ and his employees submitted false information to the Internal Revenue Service 
("IRS") in tens 
of thousands of ATAX customers' tax returns. Ibis 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. In total, the scheme deprived the 
IRS 
of substantially more than $100 million in tax revenue. 
3. At all  times relevant to this Indictment, customers interested in filing their tax 
returns at 
AT AX would meet with AT AX personnel in the Bronx, New York, and would provide 
ATAX employees with supporting documents in order to complete their tax returns. During the 
process, many customers met directly with RAFAEL ALVAREZ, a/k/ a  "the Magician," the 
defendant. In numerous instances, ALVAREZ falsified these customers' tax returns 
in order to 
greatly reduce the customers' tax liability. Many 
of the numbers that ALVAREZ entered were 
completely fictitious, and were not supported by any evidence 
or documentation. 
4. RAFAEL ALVAREZ, a/k/a "the Magician," the defendant, created this reduced tax 
liability for ATAX customers through, among other means, fraudulent: Schedule A tax 
deductions-itemized tax deductions involving medical expenses, .charitable contributions, and 
job-related expenses; Schedule C business expenses; Schedule D capital gains and losses; 
Schedule E expenses-income from rental real properties and S  Corporations (pass-through 
entities); Form 3903 moving expenses; Form 8917 higher education tuition and fees; head 
of 
household filing status; and residential energy credits . . Examples include: 
a. including fraudulent Schedule Es for customers that never maintained a  rental 
property; 
b. fraudulently overstating and/or making up expenses for repairs, supplies, cleaning 
and maintenance, and utilities, and understating income on the Schedule Es; 
c. fraudulently overstating and making 
up Schedule D capital losses; 
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d. including fraudulent claims for residential energy credits by fraudulently inventing 
qualifying expenses for, among other costs, solar electric, solar water, and geothermal heat pump 
property costs; 
e. fraudulently overstating and making up moving expenses, including expenses for 
transportation and storage 
of household goods and personal effects; 
f. fraudulently overstating and inventing tuition expenses; and 
g. fraudulently electing the head of household filing status for married and single 
customers, and fraudulently including non-qualifying individuals as qualifying relatives. 
5. The practice of RAFAEL ALVAREZ, a/k/a "the Magician,"  the defendant, of 
falsifying AT AX customers' tax returns was so pre".'alent that he came to be known among AT AX 
customers 
as "the Magician" due to his ability to make deductions, expenses, gains, and losses 
appear and/or disappear 
in order to reduce the customers' tax liability. 
6. By filing fraudulent tax returns on behalf of thousands of AT AX customers, AT AX 
generated significant profits. For example, from in or about 2016 to in or about 2019, ATAX 
generated at least approximately $15 million in gross revenues. 
As the sole owner of AT AX during 
this period, RAFAEL ALVAREZ, a/k/a "the Magician," the defendant, received a large portion 
of 
ATAX's net revenues. 
7. RAFAEL ALVAREZ, a/k/a "the Magician," the defendant, operated this fraudulent 
tax scheme for years, together with certain other ATAX employees. These ATAX employees 
understood that ALVAREZ added false information to the tax returns  and, at AL V AREZ's 
direction, these AT AX employees, among other things, copied over false information from 
previous years' tax returns and did not change AL V AREZ's fraudulent entries in the tax returns 
when filing those returns with the IRS. In order to further his scheme and limit scrutiny, 
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ALVAREZ recruited employees without legal status in the United States. When certain AT AX 
employees questioned ALVAREZ  about his  fraudulent preparation 
of returns, ALVAREZ 
intimidated and threatened these employees to dissuade them from reporting his fraud scheme to 
authorities. When AT AX employees failed to carry out ALVAREZ' s  fraudulent scheme by 
removing schedules and other deductions that the customers did not qualify for, ALVAREZ 
scolded these employees and made it a policy that ATAX employees could not change 
AL V AREZ's :fraudulent entries on the customers' tax returns. 
8. The schemes operated by RAFAEL ALVAREZ, a/k/a ''the Magician," the 
defendant, did not stop at preparing false tax returns. ALVAREZ recruited 
to AT AX an employee 
("Employee-I") who had been working at a  supermarket and lacked legal status in the United 
States, which ALVAREZ knew. In order to file tax returns with the IRS, a  tax preparer must 
obtain an identification number from the IRS ( called a  Preparer Tax Identification Number 
-0r 
"PTIN"). At AL V AREZ's direction and with his knowledge, beginning in or about 2015, 
Employee-I used the identity 
of an associate who had lawful status in the United States 
("Associate-I''), and impersonated Associate-I, with Associate-1 
's consent, in order to obtain a 
PTIN. Employee-I thereafter filed :fraudulent tax returns on behalf 
of ATAX customers using this 
.fraudulently obtained PTIN. 
9. On or about September 26, 2017, an IRS Revenue Agent ("Revenue Agent-I") se~t 
a letter to Associate-
I, requesting an interview. Revenue Agent-!'' s letter was ultimately, however, 
received 
by Employee-I, who had been impersonating Associate-I. When alerted by Employee-
1 that Revenue Agent-I was requesting an interview with Associate-I, RAFAEL ALVAREZ, a/k/a 
''the Magician," the defendant, insisted on joining the interview. During the interview, which 
occurred on or about October 24, 2017, Employee-I and ALVAREZ pretended that Employee-I 
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was Associate-I. ALVAREZ also provided Revenue Agent-I with a  power-of-attorney form 
purportedly signed by Associate-
I, stating that ALVAREZ was acting with power of attorney for 
Associate-I .  During the interview and at ALVAREZ' s direction, Employee-I repeatedly lied and 
pretended that he was Associate-I  in order to conceal from Revenue Agent-I that ALVAREZ, 
Employee-I, and ATAX had been submitting fraudulent tax returns using a fraudulently obtained 
PTIN in the name 
of Associate-I , even though, in truth and in fact, Associate-I  played no role in 
preparing these tax returns.  Revenue Agent-1 did not learn the truth for years, which impacted her 
ongoing investigation into Employee-1. 
STATUTORY ALLEGATIONS 
10. The allegations contained in paragraphs 1 through 9 of this Indictment are repeated 
and realleged as 
if fully set forth herein. 
11. From at least in or about 2010 through at least in or about 2020, in the Southern 
District 
of New York and elsewhere, RAFAEL ALVAREZ, a/k/a "the Magician," the defendant, 
and others known and unknown, willfully and knowingly combined, conspired, confederated, and 
agreed together and with each other to defraud the United States and an agency thereof, to wit, the 
IRS. 
12. It was a part and object of the conspiracy that RAFAEL ALVAREZ, a/k/a ''the 
Magician," the defendant, and others known and unknown, would and did willfully and knowingly 
defraud the United States 
of America and the IRS for the purpose of impeding, impairing, 
obstructing, and defeating the lawful governmental functions 
of the IRS in the ascertainment, 
computation, assessment, and collection 
of revenue, to wit, federal income taxes, in that 
ALVAREZ and AT AX tax preparers working for ALVAREZ met with taxpayers in order to 
prepare federal tax returns that ALVAREZ and his co-conspirators knew contained false 
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information in order to fraudulently reduce the taxpayers' tax liabilities and thereafter 
electronically filed those fraudulent federal tax returns with the IRS. 
Overt Acts 
13. In furtherance of the conspiracy and to effect the illegal object thereof, the 
following overt acts, among others, were committed in the Southern District 
of New York and 
elsewhere: 
a. On or about February 3, 2018, in the Bronx, New York, RAFAEL ALVAREZ, 
a/k/a ''the Magician," the defendant, and an ATAX tax preparer working for ALVAREZ met with 
taxpayer J.C. in order to prepare a  federal tax return for tax year 2017 that ALVAREZ knew 
contained false information, to fraudulently reduce taxpayer J.C.'s 
tax liability. 
b. On or about February 3, 2018, in the Bronx, New York, ALVAREZ caused to be 
prepared and electronically filed a  federal tax return for taxpayer J.C. for tax year 2017 that 
ALVAREZ knew contained false information, to fraudulently reduce taxpayer J.C.' s tax liability. 
c. On 
or about February 17, 2020, in the Bronx, New York, ALVAREZ and an ATAX 
tax preparer working for ALVAREZ met with taxpayer P .L. in order to prepare a federal tax return 
for tax year 2019 that ALVAREZ knew contained false information, 
to fraudulently reduce 
taxpayer P .L. 
's tax liability. 
d. On or about February 17, 2020, 
in the Bronx, New York, ALVAREZ caused to be 
prepared and electronically filed a  federal tax return for taxpayer P 
.L. for tax year 2019 that 
ALVAREZ knew contained false information, to fraudulently reduce taxpayer P .L.' s tax liability. 
e. On or about March 17, 2020, in the Bronx, New York, ALVAREZ and an AT AX 
tax preparer working for ALVAREZ met with taxpayer M.L. in order to prepare a  federal tax 
return for tax year 2019 that ALVAREZ knew contained false information, -to fraudulently reduce 
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taxpayer M.L.' s tax liability. 
f. On or about March 17, 2020, in the Bronx, New York, ALVAREZ caused to be 
prepared and electronically filed a  federal tax return for taxpayer M.L. for tax year 2019 that 
ALVAREZ knew contained false information, to fraudulently reduce taxpayer M.L.' s tax liability. 
g. On 
or about July 12, 2020, in the Bronx, New York, ALVAREZ and an AT AX tax 
preparer working for ALVAREZ met with taxpayer W.G. in order to prepare a federal tax return 
for tax year 2019 that ALVAREZ knew contained false information, to fraudulently reduce 
taxpayer W.G.'s tax liability. 
h. On or about July 12, · 2020, in the Bronx, New York, ALVAREZ caused to be 
prepared and electronically filed a  federal tax return for taxpayer W.G. for tax year 2019 that 
ALVAREZ knew contained false information, to fraudulently reduce taxpayer W.G
.'s tax liability. 
(Title 18, United States Code, Section 371.) 
COUNTS TWO THROUGH FIVE 
(Aiding and Assisting Prepa.ration 
of a False and Fraudulent U.S. Individual Income Tax 
Return) 
'The Grand Jury further charges: 
14. The allegations contained in paragraphs 1 through 9, and 13 of this Indictment are 
repeated and realleged as 
if fully set forth herein. 
15. On or about the dates set forth below, in the Southern District of New York and 
elsewhere, RAFAEL ALVAREZ, a/k/a "the Magician," the defendant, willfully and knowingly 
aided and assisted in, and procured, counseled, and advised the preparation and presentation under, 
and in connection with a  matter arising under, the internal revenue laws, 
of a  return, affidavit, 
claim, and other document, to wit, United States Individual Income Tax Returns (Forms 1040 and 
accompanying forms and schedules), for the taxpayers listed below, and for the  tax years listed 
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below, which returns were false and fraudulent as to material matters, in that, among other things, 
and as set forth below, the returns variously fraudulently claimed the head 
of household filing 
status, fraudulently overstated Schedule C business expenses, fraudulently overstated Schedule D 
capital losses, :fraudulently overstated Schedule E expenses, and :fraudulently claimed residential 
energy credits. 
Count Taxpayer Tax Approximate Fabricated Items 
Criminal 
Year Filing Date 
Tax 
Deficiency 
Two 
W.G. 
2019 July 12, 2020 Head of Household;· 
$7,935 
Schedules C and E 
Three M.L. 2019 
March 17, 2020 
Schedules C and E $10,847 
Four P.
L. 2019 February 17, 2020 Head of Household; $10,607 
Schedule 
E; 
Residential. 
Energy 
Exoenses 
Five 
J.C. 2017 February 3, 2018 
Schedules D and E $3,521 
(Title 26, United States Code, Section 7206(2), and Title 18, United States Code, Section 2.) 
COUNT SIX 
(Attempting to Interfere With Administration 
of Internal Revenue Laws) 
The Grand Jury further charges: 
16. The allegations contained in paragraphs 1 through 9, and 13 of this Indictment are 
repeated and realleged as 
if fully set forth herein. 
17. From at least in or about September 2017 through at least on or about October 24, 
2017, in the Southern District 
of New York and elsewhere, RAFAEL ALVAREZ, a/k/a "the 
Magician," the defendant, corruptly endeavored to intimidate and impede an officer and employee 
of the United States acting in an official capacity under Title 26 of the United States Code, and in 
another way corruptly obstructed and impeded, and endeavored to obstruct and impede, the due 
administration 
of Title 26 of the United States Code, to wit, ALVAREZ provided false information 
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about the identity of Employee-! to Revenue Agent-I  as part of a  pending IRS inquiry into 
Employee-
I's conduct. 
(Title 26, United States Code, Section 7212(a), and Title 18, United States Code, Section 2.) 
COUNTSEVEN 
(Making False Statements) 
The Grand Jury further charges: 
18. The allegations contained in paragraphs 1 through 9, and 
13 of this Indictment are 
repeated and realleged 
as if fully set forth herein. 
19. From at least 
in or about August 2017 through at least on or about October 24, 
2017, in the Southern District 
of New York and elsewhere, RAFAEL ALVAREZ, a/k/a "the 
Magician," the defendant, in a  matter within the jurisdiction 
of the executive branch of the 
Government 
of the United States, knowingly and willfully falsified, concealed, and covered up by 
a trick, scheme, and device a material fact, and made a materially false, fictitious, and :fraudulent 
statement and representation, and made and used a false writing and document knowing the same 
to contain a  materially false, :fictitious, and fraudulent statement and entry, to wit, during an 
interview with Revenue Agent-I, ALVAREZ provided false statements and documents containing 
false statements regarding the true identity 
of Employee-I. 
(Title 18, United States Code, Sections 
1001 and 2.) 
COUNT EIGHT 
(Aggravated Identity Theft) 
The Grand Jury further charges: 
20. The allegations contained in paragraphs 1 through 9, and 
13 of this Indictment are 
repeated and realleged as 
if fully set forth herein. 
21. From at least 
in or about August 2017 through at least on or about October 24, 
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2017, in the Southern District of New York and elsewhere, RAFAEL ALVAREZ, a/k/a ''the 
Magician," the defendant, knowingly transferred, possessed, and used, without lawful authority, a 
means 
of identification of another person, during and in relation to a felony violation enwnerated 
in Title 18, United States Code, Section I028A(c), and did aid and abet the same, to wit, 
ALVAREZ aided, abetted; counseled, commanded, induced, and procured the possession and use 
of a means of identification of Associate-I by Employee-I, including during and in relation to 
Employee-
I's false statements to Revenue Agent-I, as charged in Count Seven of this Indictment. 
(Title 18, United States Code, Sections 1028A and 2.) 
10 
DAMIAN WILLIAMS 
United States Attorney