By Kate Northrop
A father and son duo from Massachusetts was found guilty of fraud this past weekend after the Massachusetts Lottery recognized an unusual number of prize claims tied to the pair within the past decade.
Ali Jaafar, 63, and his son, Yousef Jaafar, 29, both of Watertown, were convicted of multiple counts related to a "ten-percenting" scheme, in which they would cash winning lottery tickets on behalf of the actual winners to avoid taxes and receive tax refunds.
In August 2021, the Jaafar family was accused of defrauding the Massachusetts Lottery of nearly $21 million in a tax evasion scheme lasting a decade. Over the course of eight years, they had cashed in more than 13,000 winning tickets, a phenomenon that statisticians would attribute astronomical odds to.
In 2019, Ali was named the "top individual lottery ticket casher," Yousef ranked fourth, and another son, Mohamed, ranked third. Combined, their winnings that year alone totaled $5.8 million.
The Massachusetts State Lottery Commission had their eye on the Jaafars since then and even suspended them from cashing in tickets in accordance with a policy they enacted in 2018 that takes aim at players who win with a frequency deemed "factually or statistically improbable."
The policy allows the Lottery to freeze payouts for 90 days for anyone who claims at lease 20 prizes valued at $1,000 or more in a year.
"If you're in violation of this policy, you should have the expectation that you will have a hearing and a potential suspension regarding this matter," Lottery Executive Director Michael Sweeney told WBUR last year.
In retaliation to being suspended from cashing in more tickets, the family brazenly sued the Lottery.
"I think it really speaks to a level of hubris," Sweeney told the New York Times following the suit. "This is not the result of somebody who's lucky or somebody who is, quote-unquote, playing a lot."
State prosecutors estimated that Ali "would have had to purchase 12,411 tickets per day (each and every day), which equates to purchasing 517 tickets per hour and more than 8 tickets per minute," to account for the 569 winning scratch-off tickets he claimed for prize money over six months. The fact that the tickets were purchased "from Lowell to Nantucket, and Boston to Worcester" further drove the point home that there was cause for suspicion.
The Jaafars' suit was dismissed in 2020. In August 2021, they were collectively charged with over a dozen counts of fraud, money laundering, and tax evasion.
On Saturday, a federal jury convicted Ali and Yousef of one count of conspiracy to defraud the IRS, one count of conspiracy to commit money laundering, and one count each of filing a false tax return. They are scheduled to be sentenced in mid-April of 2023.
Mohamed, one of the other sons involved in the scheme, previously pleaded guilty to conspiracy to defraud the IRS in November. His sentencing will take place in March 2023.
"By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers' dollars," United States Attorney Rachael S. Rollins said in a press release. "This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted."
The Jaafars were found to be conducting a scheme known as "ten-percenting," which involves purchasing lottery tickets at a discount from players across the state. It gets the name "ten-percenting" because the ticket buyers to keep around 10-20 percent of the ticket's value, allowing the real player to avoid reporting the winnings on their tax returns. Then, those conducting the scheme will cash in the winning tickets for the full prize amount and report the winnings on their own income tax returns. They would claim false gambling losses to account for the claimed prize money to avoid federal income taxes and would therefore receive tax refunds.
According to the United States Department of Justice, one count of conspiracy to defraud the IRS comes with a maximum sentence of five years in prison, one count of money laundering has a 20-year maximum sentence, and one count of filing false tax returns provides for a maximum of three years. The accused also face additional supervised release, fines, and restitution for each count.
They are being charged with a tax evasion scheme, The collection of taxes on winnings is a scheme. You should be allowed to cash other people's tickets, as long as you don't claim the income as a loss. Because of the law that winnings over a certain amount is taxable, any effort to circumvent this rule is a crime. And Donald Trump doesn't have to submit tax forms.
Interesting,and I co-sign your reference to Mr. King of Tax Evasion,
Mr.Illegality himself, Trump.
A local store, when I lived in California,
he would always cash one's check(s) for years(owned a liquor/snacks/lottery store) and also was allegedly cashing some lottery checks, or so we heard and later he and his wife in 2014 had "retired"nice and quiet & is still living senior citizen years, in Orange County, and I never knew you're not supposed to, or can't. Interesting. Either way, I agree with your post.
These guys are pikers. You should see what our government agencies get away with - and they do so without repercussions!
The absolute greed and stupidity that runs thru this story is astounding. Across the country there are store owners that will occasionally cash high value winning tickets for people who do not have proper identification or who owe the IRS, child support, etc. But for anyone to cash tickets at the level where you would have to purchase 12,411 tickets per day, every day, is a level of greed that is hard to understand. Most store owners who do this, do it for long time customers, and they do it very infrequently. These gentlemen deserve every day of prison time that is coming their way. Unbelievable!!
"ten-percenting"
It's one thing to charge 10% to cash winning tickets under $5000 but once they got into six and seven figures, it's probably much more than 50%. The Jaafar family got greedy and didn't stop when they could have.
"They would claim false gambling losses"
Apparently the truck loads of losing tickets they had didn't help their case.
Money, greed and the illegal deeds to get more money must be the root of evil.
*'That's what happens when you push your luck.
For a few dollars more...
Some people have to argue and prove they're right to no end, some people are just right. There's a difference.
good send them to jail what does trump got to do with this story dum a** people
You're providing a great point, so i agree with the last part insofar as what you're citing here, yep. (per day) that is i wholly agree, on that part.
So... you would have to purchase 12,411 tickets every single day for 180 days to find 569 winning tickets over a 6 month period of time. Wow.... I don't play many scratch offs but also never realized how bad the odds were.