A father and his son have been found guilty in federal court Friday in connection to a scheme where they cashed winning Massachusetts state lottery tickets on behalf of ticket holders to avoid taxes.Massachusetts father, sons charged in $20M lottery scam
The father, 63-year-old Ali Jaafar of Watertown, and son, 29-year-old Yousef Jaafar of Watertown were both convicted of one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to commit money laundering and one count each of filing a false tax return. Another son previously pleaded guilty to conspiracy to defraud the Internal Revenue Service on November 4.
“By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars. This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted,” said United States Attorney Rachael S. Rollins.
According to the charging documents, the defendants conspired with others to purchase winning lottery tickets from the actual winners for cash, at a discount that was typically between 10-20 percent of each ticket’s value, thereby allowing the ticket holders to avoid reporting the winnings on their tax returns – a scheme commonly known as “ten-percenting.”
The defendants and co-conspirators then allegedly presented the winning tickets to the Massachusetts Lottery Commission as their own and collected the full value of the tickets. The defendants would then report the ticket winnings as their own on their income tax returns and improperly offset the claimed winnings with purported gambling losses, thereby avoiding federal income taxes.
Between 2011 and 2019, the defendants together cashed more than 13,000 lottery tickets and claimed more than $20,989,284 in Massachusetts lottery winnings. Based upon their submitted lottery claims, in 2019, Ali Jaafar was the top individual lottery ticket casher for Massachusetts. Mohamed Jaafar was the third highest individual ticket casher and Yousef Jaafar was the fourth highest individual ticket casher.
They are scheduled for sentencing on April 11 and April 13, 2023.