Crime

Watertown father and son, who cashed over $20 million in winning tickets, found guilty of lottery scam

The pair claimed other people's lottery winnings as their own as part of a scheme to avoid paying taxes.

Dina Rudick/Globe Staff/File

December 12, 2022

A federal jury on Friday found a father and son from Watertown guilty for their part in a lottery scam, in which the pair claimed more than $20 million in Massachusetts lottery winnings over nine years on behalf of the actual winning ticket holders to avoid paying taxes and to collect tax refunds, prosecutors said.

Ali Jaafar, 63, and Yousef Jaafar, 29, were convicted of one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to commit money laundering, and one count each of filing a false tax return, according to the Massachusetts U.S. attorney’s office.

Mohamed Jaafar, another son of Ali Jaafar, previously pleaded guilty to conspiracy to defraud the IRS last month in connection to the same scheme.

“By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars,” U.S. Attorney Rachael S. Rollins said in a statement. “This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted.”

According to prosecutors, the Jaafars conspired with other individuals to buy winning lottery tickets at a cash discount from gamblers around the state. Convenience store owners often facilitated the transactions.

The scheme is known as “10 percenting” because the ticket buyers usually keep between 10 to 20 percent of each ticket’s value, officials said.

In practice, the scam allows the actual gamblers to avoid reporting their winnings on tax returns, while conspirators like the Jaafars present the winning tickets to the Massachusetts Lottery Commission as their own and collect the full value, prosecutors said.

“The defendants also reported the ticket winnings as their own on their income tax returns and claimed fake gambling losses to offset the claimed winnings, thereby avoiding federal income taxes and receiving tax refunds,” prosecutors said.

Between 2011 and 2020, the Jaafars and their co-conspirators cashed over 14,000 lottery tickets and claimed more than $20 million in winnings, officials said.

“Based upon their submitted lottery claims, in 2019, Ali Jaafar was the top individual lottery ticket casher for Massachusetts,” prosecutors said. “Mohamed Jaafar was the third highest individual ticket casher and Yousef Jaafar was the fourth highest individual ticket casher. In total, the three family members received more than $1,200,000 in tax refunds by claiming other peoples’ lottery tickets as their own and then offsetting those winnings with fake gambling losses on their tax returns.”

Both Ali Jaafar and Yousef Jaafar are expected to be sentenced to prison in April.