Ali Jaafar, 63, and his two sons were the luckiest lottery players in all of Massachusetts. Over almost a decade, the trio cashed in 14,000 lottery tickets netting them prizes totalling US$20 million.
But their luck finally ran out because on Monday, May 22, Ali and his son Yousef, 29, were sentenced to prison in Boston’s federal court for “orchestrating an elaborate ‘ten-percenting’ scheme involving dozens of convenience stores across Massachusetts.”
“The defendants unlawfully claimed more than 14,000 winning lottery tickets, laundered over $20 million in proceeds, and then lied on their tax returns,” reads a statement issued on Monday by the US Attorney’s Office, District of Massachusetts.
Ali was sentenced to five years in prison, while Yousef was sentenced to 50 months in prison. The father and son from the city of Watertown have been ordered to pay back US $6,082,578 and any profits from the scheme. Another son named Mohamed has pled guilty to conspiracy to defraud the Internal Revenue Service (IRS) and will be sentenced on July 25.
The defendants allegedly bought winning tickets from Massachusetts lottery winners between 2011 to 2020 because, for some winners who’d rather lay low, winning a prize isn’t that straightforward.
By law, lottery winners must be identified by the Massachusetts State Lottery Commission. Once the winner is identified, the Commission is legally required to withhold outstanding taxes, back taxes, and child support payments before paying the prize.
Rather than coming forward and reporting their winnings, some lottery players opted to sell their winning tickets to the Jaafars “for a cash discount.”
“This scheme — referred to as ‘ten-percent’ because the ticket purchasers typically keep between ten to 20 percent of each ticket’s value — allows the real gamblers to avoid reporting the winnings on their tax returns,” stated a release.
As a result, Ali became the highest ticket casher in the entire state in 2019. His sons weren’t far behind: Mohamed was the third, and Yousef was the fourth top individual lottery ticket casher in Massachusetts.
“The scheme also resulted in federal tax losses of over $6 million, more than $1.2 million of which went directly to the defendants in the form of fraudulent tax refunds,” reads the statement.
And the Jaafars didn’t do it alone — convenience store owners helped facilitate these transactions.
“These defendants worked together to recruit a wide network of co-conspirators and spread their lottery scam across Massachusetts, avoiding detection by repeatedly lying to government officials,” said Acting United States Attorney Joshua S. Levy.
As a result, 40 lottery agents will have their licenses suspended or revoked.
Joleen Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, stated, “Instead of using business savvy and skill to build a legitimate multi-generational family business, the Jaafars carried out a complex decade-long tax and lottery scam, building a vast network of co-conspirators to further their illegal activities.”
Levy added, “This case should serve as a warning to those who think they can cheat the system for their own financial gain: you will be identified, prosecuted and held accountable.”
Elsewhere in Massachusetts, two former liquor store employees were charged after allegedly stealing a customer’s winning lottery ticket and trying to cash in the $3 million prize.
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