It wasn’t “miraculous luck” when a father and his two sons claimed $21 million in Massachusetts lottery winnings after cashing in thousands of tickets, federal prosecutors said.
In reality, the trio never won any prizes despite ranking among the top individual lottery ticket cashers in the state, according to the US Attorney’s Office for the District of Massachusetts.
Over the course of nine years, Ali Jaafar, 63, and his sons cashed more than 14,000 lottery tickets on behalf of actual winners as part of a fraud scheme to avoid paying taxes — and to receive tax refunds themselves, prosecutors said.
A jury found Ali Jaafar and Yousef Jaafar, 29, who are both from Watertown, guilty of conspiring to defraud the Internal Revenue Service, conspiring to commit money laundering and filing false tax returns, the office announced in a Dec. 10 news releases.
The older son, Mohamed Jaafar, 31, of Watertown and Waltham, pleaded guilty to one count of conspiracy to defraud the US on Nov. 4, according to an earlier release.
“By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars,” US Attorney Rachael S. Rollins said in a statement.
McClatchy News reached out to attorneys representing the men for comment on Dec. 12 and did not immediately receive a response.
“Any attempts to fraudulently claim Lottery prizes to assist others in the avoidance of paying taxes, child support or other debts are viewed by the Lottery as serious offenses,” Mark William Bracken, the interim executive director of the Massachusetts State Lottery, told McClatchy News in a statement on Dec. 12.
The ‘ten-percenting’ lottery scheme
Between 2011 and 2019, the Jaafars engaged in a “ten-percenting” scheme by working with others, including convenience store workers, to buy winning lottery tickets from ticket holders at a discount, prosecutors said. As a result, the ticket holders could avoid paying taxes on their lottery winnings.
For each winning lottery ticket the Jaafars bought, they would keep about 10% to 20% of the ticket’s value, according to court documents.
On numerous occasions, three men claimed the winning tickets on their own and collected the full cash prizes from the Massachusetts Lottery Commission, prosecutors said. This helped the actual lottery winners get out of reporting their winnings on tax returns.
One example included how Ali Jaafar bought a winning lottery ticket worth $20,000 from a convenience store clerk at a discount and cashed it in on April 29, 2016, according to court documents. To do so, he lied on a Lottery Commission claim form stating the winnings were solely his and that he was “not claiming [the] prize to assist another in the avoidance of financial obligations.”
By 2019, Ali Jaafar ranked the top individual lottery ticket casher in Massachusetts, officials said. Meanwhile, Mohamed Jaafar ranked third and Yousef Jaafar ranked fourth.
As part of their scheme, the Jafaars reported every lottery win they claimed “as their own on their income tax returns and claimed fake gambling losses to offset the claimed winnings, thereby avoiding federal income taxes and receiving tax refunds,” according to the release.
This resulted in all three men illegally receiving more than $1.2 million in tax refunds, prosecutors said.
Mohammed Jaafar will be sentenced on March 8, according to the release. Ali Jaafar’s sentencing is scheduled for April 11 and Yousef Jaafar will be sentenced on April 13.
Their convictions are “the latest example of the Mass Lottery’s ongoing efforts to partner with law enforcement to assist in preventing illegal activities, while also maintaining the integrity of the Lottery,” Deborah B. Goldberg, the state treasurer and receiver general, who is also the chair of the Massachusetts State Lottery Commission, told McClatchy News in a statement.
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