A Massachusetts man pleaded guilty Tuesday in U.S. District Court in a scheme to buy millions of dollars' worth of winning Massachusetts State Lottery tickets at a discount to help the ticket holders avoid taxes, according to the U.S. attorney's office.
Clarance Jones, 80, of Lynn, Massachusetts, was arrested last fall and charged with tax fraud and filing false tax returns. Law enforcement authorities alleged he used a "10-percenting" ploy to become the nation's top lottery winner.
Under the scam, ticket holders sold the winning tickets to Jones for less than face value. He presented them to the lottery as his own, and collected the full winnings. Jones reported the winnings on his tax returns, but offset them with purported gambling losses.
From 2011 through 2017, Jones has cashed more than 7,300 winning lottery tickets with a total of $10.8 million.
It is alleged that during that six-year period, Jones paid less than $16,000 in federal tax on a total of $52,000 of reported income. During this period, Jones claimed that he was a professional gambler and all of his winnings were offset by alleged losses.
He is scheduled to be sentenced by U.S. District Court Judge F. Dennis Saylor on August 13. He could spend as many as eight years in federal prison and pay $350,000 in fines.
Jones, who has had at least seven Lynn addresses since the 1990s, according to public records, could not be reached for comment.
In addition, two co-conspirators, store owners whose businesses were not identified in court filings, have pleaded guilty in connection with the scheme.
George Kinslieh, 68, of Lynn, was charged with one count of filing false tax returns. He is scheduled to be sentenced on June 26.
Bhavna Patel, 44, a Peabody resident, pleaded guilty to one count of conspiring to defraud the IRS and is scheduled to be sentenced on May 28.
From at least 2013 through 2015, store owners Kinslieh and Patel purchased winning lottery tickets from the ticket holders for cash at a discount to the value of the tickets. This allowed the winners to avoid reporting the winnings on their tax returns, according to court documents.
Kinslieh and Patel gave the winning tickets to Jones, who presented them to the Massachusetts State Lottery as his own, and collected the full winnings. Jones and the store owners then shared the excess winnings.
Patel and Kinslieh could not be reached for comment.