Michael the Magic is a fictional magician character created by Michael Scott, who attends magic camp with other children after school. In "Cocktails", he comes to the office and attempts to escape from "extreme bondage" (a chained strait jacket, in reference to famous magician Harry Houdini). It is clear that he is hiding a key in his mouth that can be used to unlock the bondage. However, Jim knows this, and when the key comes out of Michael the Magic's mouth, he hides it under his shoe. Michael the Magic does not know this and keeps trying to escape from the chains, to no avail.
Michael the Magic also is mentioned in a deleted scene from Michael Scott's roast in "Stress Relief". Jim holds up a diagram of the body with a large question mark drawn on the stomach. He explains that the diagram represents Michael and that the question mark represents the five magician keys that he swallowed trying his magic act, implying that Michael the Magic existed once again. Michael's character Willy Wonka in "Golden Ticket" may or may not be a reference to Michael the Magic.
In the cold open for the season seven episode "Nepotism", Michael can be seen doing magic tricks involving a wand and a bird. This is probably a reference to Michael the Magic.
In season two episode "The Secret", Michael is scolded by Toby about his business expenses and how he spent money on magic props.