A Massachusetts father and his two sons used a chain of convenience stores and tax-shy scratch winners to defraud the lottery of more than $20 million, officials said.
Ali Jaafar, 63, of Watertown, has tried to pass off his winning streak as luck — but the lottery commission is launching an investigation into the “factually or statistically improbable” results, according to a Boston Globe report on the saga Tuesday.
He began the elaborate scheme around 2011, when he claimed 136 lottery tickets worth $217,000, according to the newspaper.
The following year, he claimed 214 tickets for a total payout of $367,000, and in 2013 – the same year he implicated his sons Yousef and Mohamed in the plot – he nabbed 867 tickets worth nearly $1.3 million, the outlet said.
The trio cashed in using a form of money laundering known as “10 percent,” where real lottery winners ask middlemen to avoid paying huge taxes on their winnings.
Instead of claiming the lucky ticket itself, the winner has a middleman like Jaafar to claim the prize in exchange for a 10 to 25 percent cut of the earnings.
Real winners can then reap cash benefits from their winnings without a tax bill, and ten percent typically avoid taxes by claiming gambling losses on their own filings, the outlet said.
Ali Jaafar now faces five years in prison. Massachusetts Lottery
Within a decade, authorities told the Globe, Ali Jaafar – a Lebanese immigrant who started a prepaid phone card business in the 1990s, and had easy access to convenience stores and their owners – and his son were the most productive 10 percent in Massachusetts.
Ali Jaafar admitted to the illegal scheme at their trial last year, and said their chain of convenience stores would contact them if they had a winning ticket over $600, the outlet reported.
Often, Ali or one of his sons shows up and buys the ticket for less than the full prize, and never learns the name of the real winner, the outlet reported.
Convenience store operators get their own kickbacks – usually between $50 and $100 – and Jaafars march to the lottery office to claim the jackpot.
Yousef Jaafar, 29, was sentenced to about four years in prison. Massachusetts Lottery
Ali then claimed bogus gambling losses on his tax returns, which allowed him to avoid paying taxes despite his roughly $10 million in lottery earnings, according to the Boston Globe.
By 2019, however, the jig was up: Michael R. Sweeney, executive director of the Massachusetts State Lottery Commission, caught wind of the Jaafars as “high-frequency winners,” and began an investigation that suspended the trio in May of that year.
With the Lottery Commission’s new director of compliance and security, Jaafar tried to cover their tracks by asking friends to cash in tickets at their local lottery office.
At that point, however, the IRS started sniffing them out, too: An undercover IRS agent sold the winning ticket to a convenience store clerk in Somerville, only for it to end up in the hands of representatives Yousef Jaafar, Ahmed Shikhalard and Nicholas Frankel, the Globe reported.
After Jaafar was labeled a “high-frequency winner”, the Massachusetts State Lottery Commission launched an investigation that suspended the trio in May 2019. Shutterstock
In the summer of 2020, both Yousef and Mohamed — the latter of whom showed promise as an intern for then-Senator John Kerry — were rejected at the lottery office.
Three years later, in November 2023, Mohamed, 33, pleaded guilty to one count of conspiracy and was later sentenced to six months in prison, $964,000 in restitution, and a two-year ban on lottery activities, the Boston Globe reported.
Ali and Yousef, 29, went to trial in December, and were both found guilty of one count of conspiracy to defraud the IRS, one count of conspiracy to commit money laundering and one count each of filing false tax returns, according to the US District Attorney’s Office in Massachusetts.
Ali was sentenced to five years in prison, and Yousef to 50 months, the DA said.
“Instead of using business acumen and skill to build a legitimate multi-generational family business, Jaafar ran a decade of complex tax and lottery fraud, building a vast network of conspirators to further their illegal activities,” said Joleen Simpson, Special Agent in Charge of the Criminal Investigative Service. Internal Revenue in Boston.
“Tax evasion has been mistakenly referred to as a victimless crime, but honest law-abiding citizens are harmed when someone tries to manipulate our nation’s tax system.”
As a result of the scheme, the Massachusetts State Lottery Commission is now in the process of revoking or suspending the licenses of more than 40 lottery agents, the DA confirmed.
At his sentencing in July, Mohamed Jaafar tearfully regretted the “heinous and disturbing” crimes he, his father, and his brother had committed.
Although the judge handed down a harsher sentence than his lawyer had asked for, Mohamed told the judge that he was relieved now that the ordeal was over.
“It feels like a dark cloud has floated by,” he said,
“And finally I can see a clear path.”
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Source: thtrangdai.edu.vn/en/
