Massachusetts father and son sentenced to prison for $20 million lottery scam
A father and son were sentenced to federal prison in connection with a massive "ten-percenting" operation that allegedly involved dozens of Massachusetts convenience stores, thousands of lottery tickets and more than $20 million in laundered profits, authorities said Monday.
Ali Jaafar and his son Yousef Jaafar, of Watertown, were sentenced to five and roughly four years respectively Monday in federal court. The term "ten-percenting" refers to a lottery scheme where winning tickets are resold illegally at a discount price, allowing winners to avoid properly reporting the money on their tax returns.
The Jaafars, along with another son, Mohamed Jaafar, were initially accused in 2021 of scamming the Massachusetts lottery by conspiring with legitimate winners to buy the winnings at 10-20% of their actual value and subsequently filing false tax returns, CBS Boston reported at the time.
The Jaafars cashed more than 14,000 lottery tickets between 2011 and 2019 as part of the scheme and ultimately claimed over $20.9 million in proceeds that were not reported on their tax returns, which resulted in about $6 million in federal tax losses, according to the U.S. Attorney's Office in Massachusetts. In 2019, Ali Jaafar was the top individual lottery ticket casher for the state, while Mohamed Jaafar was the third-highest and Yousef Jaafar was the fourth-highest, the office said.
Ali and Yousef Jaafar were convicted last December of conspiracy to defraud the IRS, conspiracy to commit money laundering and filing a false tax return. U.S. District Court Judge Nathaniel M. Gorton sentenced Ali Jaafar to five years and Yousef Jaafar to 50 months in prison, and ordered both to pay back the $6 million in restitution in addition to forfeiting their profits from the scheme. The Jaafars allegedly pocketed at least $1.2 million of the government's lost tax money. Mohamed Jaafar pleaded guilty in November to conspiracy to defraud the IRS and is scheduled to be sentenced at the end of July.
By purchasing lottery tickets from legitimate Massachusetts winners looking to sell theirs for a cash discount, instead of claiming the prizes from the state's lottery commission, the Jaafars' "ten-percenting" scheme allowed real winners to evade identification by commissioners, the U.S. Attorney's Office said. Normally, the commission identifies lottery winners and determines whether they have outstanding taxes, back taxes or child support payments before paying out their prizes.
"The outcome of this case sends a clear message that anyone complicit in the avoidance of financial obligations through fraudulent Lottery prize claims faces real and severe consequences," said Mark William Bracken, the interim executive director of the Massachusetts State Lottery Commission, in a statement.
A number of Massachusetts convenience stores are implicated in the Jaafars' scheme too. The U.S. Attorney's Office said the trio recruited and paid dozens of convenience stores to act as "go-betweens" and facilitate their discount ticket purchases. The Jaafars then falsely claimed the full lottery prize winnings as their own with the state lottery commission, and offset the reported the winnings on their tax returns by reporting fake gambling losses in equivalent amounts. This allowed them to receive fraudulent tax refunds while avoiding federal income taxes, according to Massachusetts authorities.
