Family Charged in $21m Massachusetts Lottery Scheme

A Massachusetts family has been indicted in a $21m lottery fraud scheme, with charges including money laundering and tax evasion. [Image: Shutterstock.com]

19-page indictment

A U.S. District Court in Massachusetts has indicted a father and his two sons in a $21m lottery fraud scheme. Ali Jaafar, 63, and his two sons Mohamed Jaafar, 31, and Yousef Jaafa, 28, were charged on August 23 with over 12 counts of fraud, money laundering, and tax evasion in what officials reportedly dubbed a “ticket cashing scheme.”

over 13,000 winning lottery tickets worth millions

A 19-page indictment unsealed on Monday in U.S. District Court in Massachusetts revealed that, over an eight-year period, the Jaafars cashed in over 13,000 winning lottery tickets worth millions. Prosecutors said a vast majority of the winning tickets cashed in were of the scratch-off variety commonly sold at convenience stores.

According to the indictment, the Jaafars claimed the prizes instead of the actual winners, who potentially dodged getting their winnings garnished for unpaid state and federal taxes or child support.

Massachusetts requires lottery officials to check anyone wishing to cash in winning tickets over $600 for any unpaid taxes or child support. If officials find winners owing such dues, the wins get garnished. According to the New York Times, lottery officials said that to sidestep prize-money garnishing, people will elect to sell their winning tickets to someone else to cash in with the lottery commission. This scheme, known as ten-percenting, sees the person who cashes in the ticket pocketing 10% or 20% of the winnings.

To compound matters, prosecutors said the Jaafar trio then falsified their tax returns by reporting fictitious six- and seven-figure gambling losses, which substantially lowered the taxes they paid on the winnings.

Charges against the Jaafars

Officials arrested Jaafar senior and son Mohammed on Monday. It was not immediately clear if Yousef suffered the same fate. Released under their own recognizance, Ali and Mohamed later that day pleaded not guilty via videoconference in a Boston federal court.

Monday’s charges for all three were one count each of conspiracy to defraud the United States plus money laundering conspiracy. The court added five counts each of filing false tax returns to Ali and Mohamed’s slate, with the younger son hit with just three.

Ticket-cashing kings

This, however, was not the first time the name Jaafar appeared in court records in connection with lottery tickets. Prosecutors said that the allegedly fraudulent family had drawn the suspicions of Massachusetts lottery officials in the past, after Ali’s chart-topping “top individual lottery ticket casher” performance in 2019. That same year, Mohamed and Yousef made it a family affair, ranking third and fourth respectively in the ticket-cashing stakes.

every year since 2014, “Ali Jaafar has been the winningest person playing the Massachusetts State Lottery”

Boston news outlet WBUR said that every year since 2014, “Ali Jaafar has been the winningest person playing the Massachusetts State Lottery.” The news source said that the Massachusetts State Lottery Commission in 2019 temporarily suspended two of the Jaafars, excluding Ali, from cashing lottery tickets. The Jaafars unsuccessfully challenged their suspension later that year in the Superior Court in Boston.

In the indictment, however, it was Ali who topped the inter-family charts. Federal prosecutors said Jaafar senior paid under $24,500 in federal taxes on $15m in lottery winnings and pocketed $886,261 in tax refunds for fictitious gambling losses from 2011 to 2019. The indictment places Mohamed in second place, paying less than $21,700 in taxes on $3.3m winnings, with Yousef bringing up the rear on less than $10,700 taxes paid on $2.4m worth of lottery winnings.

Anything but luck

Massachusetts introduced a state policy in July 2018 designed to target people winning the lottery with a regularity that was “factually or statisically improbable.”

Federal prosecutors and lottery officials said the Jaafars’ $21m lottery winnings were anything but luck. The director of the Massachussets State Lottery, Michael R. Sweeney, told the NY Times that, while a “statistician will say that there’s some astronomical odd […] the reality is, it’s zero.”

In October 2020, Italy’s Guardia di Finanza Special Currency Police Unit arrested 12 people in connection with alleged fraud involving four instant lottery jackpots worth €24m ($28m). The scheme involved lottery staff sending their relatives to purchase jackpot-winning tickets at several retail locations across the country.

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