A father and son had their day in court after a decade of lying and scheming to defraud the Massachusetts State Lottery – illegally claiming more than $20 million in lottery winnings to avoid federal taxes.
Ali Jaafar, 63, was sentenced to five years in prison, and his son, Yousef, 29, will serve 50 months for “unlawfully” claiming more than 14,000 winning lottery tickets in a “ten-percenting” scheme involving multiple convenience stores across the state from 2011 to June 2020, the U.S. Attorney’s Office for the District of Massachusetts said in a press release. The scam resulted in $6 million in federal tax losses.
The Jaafars purchase winning lottery tickets at a discount from people who wanted to avoid having to identify themselves — lottery winners in the state are legally required to identify themselves to collect their winnings. This allowed the winners to dodge any outstanding tax or child support payments, which are deducted from the prize money if owed, according to the U.S. Attorney’s Office for the District of Massachusetts.
The scammers would pay convenience stores for leads on winners and then lie to the Massachusetts State Lottery Commission to claim winnings on their behalf. The Commission is set to revoke or suspend more than 40 licensed lottery agents as a “direct result of this case,” said Acting United States Attorney Joshua S. Levy in a press release. “This case is, at its core, an elaborate tax fraud.”
Watertown father and son sentenced to prison for decade-long lottery and tax fraud scheme. More than 40 Massachusetts lottery agent licenses to be revoked or suspended https://t.co/ivAnac8hts
— U.S. Attorney Massachusetts (@DMAnews1) May 22, 2023
“Instead of using business savvy and skill to build a legitimate multi-generational family business, the Jaafars carried out a complex decade-long tax and lottery scam, building a vast network of coconspirators to further their illegal activities. Tax violations have been erroneously referred to as victimless crimes, but it’s the honest law-abiding citizen who is harmed when someone tries to manipulate our nation’s tax system,” said Joleen Simpson, special agent in charge of the Internal Revenue Service’s criminal investigations in Boston, in the release.
Ali, his other son Mohamed (who’s awaiting sentencing after pleading guilty to conspiracy to defraud the Internal Revenue Service in November), and Yousef have been some of the highest individual ticket cashers in the state for years.
“This case should serve as a warning to those who think they can cheat the system for their own financial gain: you will be identified, prosecuted and held accountable,” Levy said.
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In addition to defrauding the Commission, the Jaafars would then report their winnings on their income tax returns as fake gambling losses, which allowed the family members to avoid federal income taxes and pocket fraudulent tax refunds totaling $1.2 million.
Ali and Yousef were convicted by a federal jury in December for one count of conspiracy to defraud the Internal Revenue Service and one count of conspiracy to commit money laundering. Both were also hit with one count each of filing a false tax return. They were ordered to forfeit their profits from the scheme and pay $6,082,578 in restitution.
“The outcome of this case sends a clear message that anyone complicit in the avoidance of financial obligations through fraudulent Lottery prize claims faces real and severe consequences,” said Mark William Bracken, interim executive director of the Massachusetts State Lottery, in a statement.
https://www.entrepreneur.com/business-news/father-son-duo-to-serve-time-for-20-million-lottery-scheme/452816