They have been ordered to pay over $6 million in restitution
A father and son from Massachusetts have been sent to prison for a scheme that saw the duo illegally claiming more than $20 million in lottery winnings. The duo were sentenced in federal court in Boston for orchestrating an elaborate "ten-percenting", according to a news release by the US Attorney's Office for the District of Massachusetts.
The duo also lied on their tax returns to dodge more than $6 million in federal taxes. Ali Jaafar, 63 has been sentenced to five years in prison and his son Yousef Jaafar, 29, has been sentenced to 50 months in prison. They have been ordered to pay over $6 million in restitution and forfeit their profits from the scheme.
The duo were convicted in December of conspiracy to defraud the IRS, conspiracy to commit money laundering, and filing a false tax return, ABC News reported.
Mohamed Jaafar, another of Ali Jaafar's sons who was also involved in the scheme, previously pleaded guilty to conspiracy to defraud the Internal Revenue Service on November 4, 2022, and is scheduled to be sentenced on July 25, 2023.
In 2019 alone, 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. The scheme also resulted in federal tax losses of over $6 million, more than $1.2 million of which went directly to the defendants in the form of fraudulent tax refunds, the news release said.
"This case is, at its core, an elaborate tax fraud. Over the course of a decade, this father-and-son team defrauded the Massachusetts State Lottery Commission and the IRS to pocket millions of hard-earned taxpayers' dollars," Acting US Attorney Joshua S. Levy said in the news release. "These defendants worked together to recruit a wide network of co-conspirators and spread their lottery scam across Massachusetts, avoiding detection by repeatedly lying to government officials."
Between 2011 and 2020, the defendants purchased winning lottery tickets from individuals across Massachusetts who wanted to sell their winning tickets for a cash discount instead of claiming their prizes from the Massachusetts State Lottery Commission. This allowed the real winners to avoid identification by the Commission, which is legally required to identify lottery winners and withhold any outstanding taxes, back taxes and child support payments before paying out prizes.
The defendants recruited and paid the owners of dozens of convenience stores to facilitate the transactions. After purchasing tickets from the lottery winners at a discount, using the convenience stores as go-betweens, the defendants lied to the Commission, claiming the full amount of the prize money as their own. The defendants then further profited by reporting the winnings on their income tax returns and claiming equivalent fake gambling losses as an offset, thereby avoiding federal income taxes and receiving fraudulent tax refunds, the news release said.