A Massachusetts father and son accused of committing a $21 million fraud after cashing in an estimated 13,000 Massachusetts State Lottery tickets were found guilty by a federal jury last week, according to the Massachusetts U.S. Attorney’s Office.
Ali Jaafar, 63, and Yousef Jaafar, 29, of Watertown, were convicted on charges of conspiracy to defraud the Internal Revenue Service, conspiracy to commit money laundering and filing a false tax return, the agency confirmed in a news release shared on Saturday (December 10).
Mohamed Jaafar, another son of Ali accused in the scheme, had previously pleaded guilty to conspiracy to defraud the IRS in November.
“By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars. This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted,” said United States Attorney Rachael S. Rollins in the news release.
Ali Jaafar was reported to have cashed in more than 10,000 lottery tickets worth at least $600 for a total value of $15 million, according to court documents obtained by the U.S. Attorney’s Office.
Mohamed Jaafar is reported to have chased in about 2,500 lottery tickets valued at $3.3 million between 2012 and 2019.
Yousef Jaafar is accused of cashing in 1,360 lottery tickets valued at $2.5 million between 2013 and 2019.
The Massachusetts State Lottery requires all lottery winners to fill out a form with their name, address, taxpayer identification number and that they are the sole recipient of the payment and “not claiming the prize to assist another in avoidance of financial obligations,” federal authorities confirmed to MassLive.com in 2021.
A tactic known as “ten-percenting” is when lottery winners avoid the IRS and potentially having their winnings garnished for unpaid taxes or child support by having other people cash their ticket under their name, with the individual who cashes the ticket typically keeping around 10-20% of the payout, according to federal state records obtained by MassLive.com.
The Jaafars were accused of having the means to cash tickets by having lottery agents and convenience store staff purchase winning tickets from ticket holders for cash at discounted prices and then cashing them in to the lottery commission with false claim forms, according to prosecutors.
Court documents revealed a Somerville convenience store employee purchased a $1,000 winning lottery ticket at a discount in October 2019.
“Over the next several hours, Mohamed Jaafar called a phone number registered to the owner of that Somerville convenience store six times,” investigators said in the federal indictments.
A co-consipirator from Cranston, Rhode Island reportedly cashed the $1,000 lottery ticket and signed that he was the “sole recipient” the following day, according to court documents.
The documents also accused Ali and his sons of cashing in multiple lottery tickets at once during numerous occasions, including a July 2019 incident in which Ali cashed in 10 winning lottery tickets, while Mohamed cashed in nine and Yousef cashed in six.
The fraud was further propelled by the COVID-19 pandemic as the lottery commission closed its claim centers to the public and allowed winners to submit claims by mail, according to authorities.
“Between on or about March 23, 2020 and on or about June 12, 2020, the Defendants together claimed approximately $360,807 in Massachusetts lottery winnings by submitted the claims through the mail,” court documents read.
During that span, Ali claimed 190 tickets valued at $225,456, while Mohamed claimed 12 tickets for $60,727 and Yousef claimed 13 tickets for $74,623.
The father and sons also reportedly claimed three winning tickets for more than $10,000 during the pandemic closure, including one valued at $20,000, according to court documents.
All three individuals were accused of filing false tax returns, paying far less than they should have, according to the U.S. Attorney’s Office.