A father and son are having their day in court after a decade of lying and plotting 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, is serving a 50-month sentence for “unlawfully” selling more than 14,000 lottery tickets in a “ten percent” scheme at several convenience stores across the state from 2011 to June 2020, the US Attorney for the District of Massachusetts said in a statement press release. The fraud resulted in $6 million in state tax losses.
The Jaafars buy lottery tickets at a discount from people who don’t want to identify themselves – lottery winners in the state are required by law to produce identification in order to collect their winnings. This allowed winners to avoid any outstanding taxes or child support payments, which the US Attorney for the District of Massachusetts says will be deducted from prize money if owed.
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The scammers paid convenience stores to point out winners and then lied to the Massachusetts State Lottery Commission to claim prizes on their behalf. As a “direct result of this case,” the commission will withdraw or suspend more than 40 licensed lottery agents, Acting US Attorney Joshua S. Levy said in a press release. “This case is essentially a complex tax fraud.”
Watertown father and son sentenced to prison for decades-long lottery and tax fraud schemes. More than 40 lottery agency licenses in Massachusetts are being revoked or suspended https://t.co/ivAnach8hts
— US Attorney Massachusetts (@DMAnews1) May 22, 2023
“Rather than using business acumen and skill to build a reputable, multi-generational family business, the Jaafars conducted a complex, decade-long tax and lottery scam and built a vast network of co-conspirators to further their illicit activities. Tax violations were erroneously reported.” “Victimless crimes are considered victimless crimes, but it’s the honest, law-abiding citizen who is harmed when someone tries to rig our nation’s tax system,” said Joleen Simpson, for the Internal’s criminal investigation Revenue Service special agent in Boston, in the press release.
Ali, his other son Mohamed (who is awaiting conviction after pleading guilty to conspiracy to defraud the Internal Revenue Service in November) and Yousef have been among the most successful single cashiers in the state for years.
“This case should serve as a warning to those who believe they may be cheating the system for their own financial gain: they will be identified, prosecuted and held accountable,” Levy said.
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In addition to cheating the commission, the Jaafars then reported their winnings as fake gambling losses on their income tax returns, allowing the family members to avoid federal income taxes and collect fraudulent tax refunds totaling $1.2 million.
Ali and Yousef were convicted by a federal court in December of conspiracy to defraud the Internal Revenue Service and conspiracy to launder money. In both cases, an incorrect tax return was also filed. They were ordered to forfeit their profits from the plan and pay $6,082,578 in damages.
“The outcome of this case sends a clear signal that anyone who engages in evading financial obligations through fraudulent lottery winning claims faces real and serious consequences,” said Mark William Bracken, interim executive director of the Massachusetts State Lottery, in a statement.
