A Lynn man was arrested today on tax fraud charges in connection with a ‘ten-percenting’ scheme, a multi-million dollar lottery scam that allowed ticket holders to avoid taxes on their winnings.
Clarance Jones, 80, was arrested and charged with conspiring to commit tax fraud and filing false tax returns in a criminal complaint unsealed today. He was released on conditions following an initial appearance today in federal court in Boston.
Two conspirators previously charged by information have pleaded guilty. George Kinslieh, 68, was charged with one count of filing false tax returns. Kinslieh pleaded guilty on Oct. 10, 2018, before U.S. District Court Judge Leo T. Sorokin, who scheduled sentencing for Feb. 4, 2019. Bhavna Patel, 44, was charged with one count of conspiring to defraud the Internal Revenue Service. Patel pleaded guilty on Oct. 16, 2018, before U.S. Senior District Court Judge Douglas P. Woodlock, who scheduled sentencing for Feb. 7, 2019.
The charging documents allege that from at least 2013 through 2015, Kinslieh and Patel, who were store owners, and others, purchased winning lottery tickets from the ticket holders for cash, at a discount to the value of the tickets, thereby allowing the ticket holders to avoid reporting the winnings on their tax returns – a scheme known as ‘ten-percenting.’
Jones reported the winnings on his tax returns, but offset them with purported gambling losses. Jones and the store owners then shared the excess winnings. It is alleged that for the tax years 2011 through 2017, Jones paid less than $16,000 in federal tax on a total of approximately $52,000 of reported income.
The charge of conspiracy to commit tax fraud provides for a sentence of no greater than 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. The charge of filing a false tax return provides for a sentence of no greater than three years in prison, one year of supervised release, a fine of $100,000.
United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Colonel Kerry A. Gilpin, Superintendent of the Massachusetts State Police, made the announcement today. The Massachusetts State Lottery Commission provided assistance with the investigation. Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit is prosecuting the cases.
The details contained in the criminal complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Key Facts
- State: Massachusetts
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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