Dad, sons run into foul wins
Lottery says trio got tangled in tax-cheat scheme
A father and his two sons were charged Monday with running a “10-percenting” scheme in which they allegedly cashed nearly $21 million in winning Massachusetts state lottery tickets on behalf of the ticket holders to avoid taxes on the winnings, according to the U.S. Attorney’s Office.
Between 2011 and 2019, the three cashed more than 13,000 lottery tickets and claimed more than $20.9 million in lottery winnings, federal prosecutors said. Based on their submitted lottery claims, in 2019, Ali Jaafar was the top individual lottery ticket casher in Massachusetts, his son Mohamed Jaafar was the third-highest individual ticket casher, and his son Yousef Jaafar was the fourth highest, prosecutors said.
“A number of individuals stood out for the frequency and the amount of winnings,” said Michael Sweeney, executive director of the Massachussets State Lottery Commission. “It really set off, for me, a red flag … It just showed how impossible it was.”
Ali Jaafar, 62, and Yousef Jaafar, 28, both of Watertown, and Mohamed Jaafar, 30, of Watertown and Waltham, each was indicted on one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to commit money laundering and multiple counts of filing false tax returns. They pleaded not guilty Monday at their federal court arraignment in Boston and were released on their own recognizance.
Mohamed Jaafar’s lawyer, John Palmer, declined to comment. Ali Jafaar’s attorney did not return a phone call seeking comment, and no attorney was immediately listed for Yousef Jaafar.
Before someone can cash in a winning ticket over $600 in value, lottery officials check to see if the person owes child support or unpaid taxes, Sweeney said.
People who want to prevent their winnings from being garnished or who want to avoid reporting their winnings on their tax returns sometimes sell their winning tickets to someone else to cash in. The latter person typically will keep 10 to 20% of the winnings in what’s known as “10 percenting.”
The defendants and coconspirators are accused of presenting the winning tickets to the Lottery Commission as their own to collect the full value of the tickets, prosecutors said.
The defendants also allegedly reported the ticket winnings as their own on their income tax returns and improperly offset the claimed winnings with purported gambling losses, thereby avoiding federal income taxes, prosecutors said.
“Any attempts to fraudulently claim lottery prizes to abet in illegal activities, including the avoidance of taxes or other debts, are viewed by the Massachusetts State Lottery as serious offenses,” Sweeney said.
Asked whether other lottery winners are being investigated for the same kind of scheme, he said, “Stay tuned. More to come.”