Lynn Man Admits $52K Income Scam

BOSTON – Clarance Jones, 80, of Lynn, Massachusetts, isn’t celebrating a windfall. He’s facing federal prison time after pleading guilty today to a brazen scheme to defraud the IRS out of millions by exploiting the Massachusetts State Lottery. Jones admitted to participating in a “ten-percenting” operation, buying up winning tickets at a steep discount to help others dodge their tax obligations. This wasn’t about a lucky streak; it was calculated criminality.

According to court documents, from at least 2013 through 2015, Jones worked with store owners George Kinslieh, 68, and Bhavna Patel, 44, to purchase winning lottery tickets from ticket holders for cash, at a significant discount. This allowed the original winners to avoid reporting the income on their tax returns – a classic “ten-percenting” maneuver. Jones then presented those same tickets to the Massachusetts State Lottery Commission as his own, collecting the full winnings.

The scheme wasn’t just about hiding income, it was about falsifying it. Jones reported the lottery winnings on his tax returns, but conveniently offset them with fabricated gambling losses. The excess winnings were then split between Jones and his co-conspirators, Kinslieh and Patel. The feds say Jones paid less than $16,000 in federal tax on approximately $52,000 of reported income between 2011 and 2017, claiming professional gambler status and conveniently large losses.

This isn’t a solo act. Kinslieh and Patel also face consequences. Kinslieh, charged with one count of filing false tax returns, is scheduled to be sentenced on June 26, 2019. Patel, who pleaded guilty to conspiring to defraud the Internal Revenue Service, is slated for sentencing on May 28, 2019. Neither reported their ill-gotten gains to the IRS, a clear disregard for the law.

U.S. District Court Judge F. Dennis Saylor IV has scheduled Jones’ sentencing for August 13, 2019. The conspiracy to commit tax fraud charge carries a potential sentence of up to five years in prison, three years of supervised release, and a fine of $250,000 (or twice the gross loss or gain, whichever is greater). Filing a false tax return could land Jones up to three years behind bars, plus one year of supervised release and a $100,000 fine. The actual sentence will be determined by the judge based on U.S. Sentencing Guidelines and other factors.

The investigation was a joint effort led by United States Attorney Andrew E. Lelling, Kristina O’Connell, Special Agent in Charge of the IRS’s Criminal Investigation in Boston, and Colonel Kerry A. Gilpin, Superintendent of the Massachusetts State Police. The Massachusetts State Lottery Commission provided crucial assistance. Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit is prosecuting the case, sending a clear message that tax evasion, no matter how cleverly disguised, will not be tolerated.