Tax Clients Called Him the 'Magician.' Now, a Guilty Plea

A DOJ press release identifies him by the nickname many of his clients knew him as: the "Magician," a tax preparer who could seemingly make their tax burdens vanish. But "there was no magic to what" Rafael Alvarez was doing. The 61-year-old on Tuesday pleaded guilty to one count of conspiracy to defraud and steal government funds and one count of assisting in the preparation of a false and fraudulent US individual income-tax return. The DOJ calls it one of the largest tax frauds ever committed by a return preparer, saying Alvarez cheated the government out of $145 million in tax revenue. More:

• The scope: The DOJ describes it as a decade-long scheme that started in 2010. Per the press release, Alvarez was CEO of the Bronx tax company ATAX, which prepared about 90,000 federal income-tax returns over the 10-year period in question; Alvarez both prepared returns himself and oversaw staffers as they prepared returns. In what the DOJ calls a "sweeping fraudulent scheme," Alvarez and his staff submitted returns containing false info intended to pare down the filers' tax burden.
• The tweaks: The New York Times reports the false info he submitted ranged from made-up deductions and business expenses to bogus capital losses and tax credits. They allegedly forged medical expenses, charitable contributions, residential energy credits, and more.

• Internal dissent: The Times reports that after some ATAX employees voiced concern about what was happening, Alvarez reportedly threatened them and instituted a company policy that barred employees from making any corrections to bogus entries.
• Consequences: Alvarez faces up to eight years in prison and will be sentenced on April 11. As part of the deal, he'll pay the IRS $145 million in restitution and forfeit $11.84 million in ill-gotten proceeds.

(More tax fraud stories.)