State's top lottery ticket cashers' attempt to create statewide network of scammers halted for good
By Kate Northrop
A father and son duo from Massachusetts was sentenced to prison in federal court on Monday, concluding the case surrounding an absurd number of prize claims that turned out to be fraudulent.
Ali Jaafar, 63, and Yousef Jaafar, 29, both of Watertown, have received their sentencing five months after being convicted of multiple counts related to a scheme that cheated the IRS out of millions of dollars.
The scheme, commonly referred to as "ten-percenting," involves buying winning lottery tickets from players at a discount so that the winner can hide their identity from the state lottery commission, which enforces a state and federal tax on prizes and withholds owed debts, like child support, from winnings.
Meanwhile, the fraudsters who purchased the winning tickets from lottery winners would cash in on the full prize. The Jaafars reported the winnings on their tax returns but avoided paying federal income taxes by claiming false gambling losses.
The family's actions resulted in a total federal tax loss of $6,082,578.
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 carries a 20-year maximum sentence, and one count of filing false tax returns provides for a maximum of three years.
"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 in December. "This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted."
Over the course of eight years, the Jaafar family had cashed in more than 13,000 winning tickets, a phenomenon that statisticians would attribute astronomical odds to.
Court documents show that Ali had simply told his accountant that "he was lucky."
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 Lottery grew suspicious and suspended them from cashing in tickets in accordance with a policy that takes aim at players who win with a frequency deemed "factually or statistically improbable."
Players in violation of the policy should expect to be examined at a hearing and potentially receive a suspension, Lottery Executive Director Michael Sweeney had said.
While common sense might dictate for undiscovered schemers to lay low and prevent further suspicion from arising, the Jaafars did the opposite – they sued the Lottery for suspending them from cashing in more tickets.
"This is not the result of somebody who's lucky or somebody who is, quote-unquote, playing a lot," Sweeney told the New York Times following the suit, which was dismissed in 2020.
The Jaafar family went from being observed under a magnifying glass to being observed under a microscope. 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.
They were collectively charged with over a dozen counts of fraud, money laundering, and tax evasion in August 2021. In December 2022, 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.
Court documents recently show that the Jaafars would recruit co-conspirators to their scheme in an attempt to expand their reach across the state and grow their profits. One such potential recruit, Lina Ghantous, testified at the trial about being approached by Ali to participate in the scam.
At first, Ghantous declined the offer, but during the COVID-19 pandemic, she gave in.
"According to Ghantous, for winning tickets worth $1,000, Ali Jaafar paid $800 or $850 to the customer and $50 to Ghantous for her work as the go-between," court documents explain. "For a ticket worth $10,000, she recalled that Ali Jaafar paid $7,000 to the customer and $100 to Ghantous."
On Monday, Ali was sentenced to five years in prison, Yousef was sentenced to over four years, and both were ordered to pay $6 million in restitution and forfeit the profits from their scam. Mohamed, who also pleaded guilty as a contributing member in the scheme, awaits sentencing.
The lottery retailers who were paid by the Jaafars to facilitate the sales of winning lottery tickets between themselves and actual winners will likely lose their licenses to sell tickets. According to authorities, the state lottery commission is in the process of revoking or suspending the licenses of more than 40 retailers.