Two members of a Massachusetts family have been found guilty of operating a lottery scam that cheated the state out of millions of dollars in taxes. Ali Jaafar, 63, and Yousef Jaafar, 29, both of Watertown, were convicted by a federal jury yesterday in connection with a “ten-percenting” scheme in which they cashed winning Massachusetts state lottery tickets on behalf of the ticket holders to avoid taxes and receive tax refunds.
The scheme, referred to as “ten-percenting” because the ticket purchasers typically keep between 10-20 percent of each ticket’s value, allowed the real gamblers to avoid reporting the winnings on their tax returns. The defendants and co-conspirators then presented the winning tickets to the Massachusetts Lottery Commission as their own and collected the full value of the tickets.
Between 2011 and 2020, the defendants and their co-conspirators cashed more than 14,000 lottery tickets and claimed more than $20,000,000 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, another of Ali Jaafar’s sons, previously pleaded guilty to conspiracy to defraud the Internal Revenue Service.
The defendants reported the ticket winnings 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. In total, the three family members received more than $1,200,000 in tax refunds by claiming other peoples’ lottery tickets as their own and then offsetting those winnings with fake gambling losses on their tax returns.
Ali Jaafar and Yousef Jaafar were 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. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for Ali Jaafar on April 11, 2023 and for Yousef Jaafar on April 13, 2023.
The charge of conspiracy to defraud the Internal Revenue Service provides for a sentence of up to five years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, whichever is greater, and restitution. The charge of conspiracy to commit money laundering provides for a sentence of up to 20 years in prison, three years of supervised release, a fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater, restitution and forfeiture.
The charge of filing false tax returns provides for a sentence of up to three years in prison, one year of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Rachael S. Rollins announced the guilty verdict, stating that the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars. The case was prosecuted by Assistant U.S. Attorneys Christopher J. Markham and Kristen A. Kearney of Rollins’ Securities, Financial & Cyber Fraud Unit with assistance from the Massachusetts State Lottery Commission and the Internal Revenue Service’s Criminal Investigations in Boston.
Related Federal Cases
- Viviane Cazeau, Bank Fraud Scheme, Massachusetts, 2023 · New Hampshire
- Adrianne Marta Frazer, Tax Refund Fraud, Phoenix AZ, 2023 · Massachusetts
- Brandon Mace, Prison Tax Scam, Canton OH, 2013 · Kentucky
- Robert Plunkett Charged with Tax Fraud, Orlando FL, 2023 · Georgia
- Muhammad Saleem Iqbal Sentenced to 42 Months for Tobacco Tax Fraud … · Alabama
Key Facts
- State: Massachusetts
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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