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https://www.lotterypost.com/news/337995
Massachusetts father and sons accused of defrauding Lottery of $21 million
Aug 25, 2021, 11:00 am
"Statistically improbable" number of wins raises red flags
By Kate Northrop
A Massachusetts family is accused of defrauding the Massachusetts Lottery of nearly $21 million in a tax evasion scheme that took place over the past decade.
It wouldn't be farfetched to say that cashing in more than 13,000 winning lottery tickets worth almost $21 million over eight years would be statistically impossible, if not improbable. This many wins could not simply be attributed to sheer luck.
"A statistician will say that there's some astronomical odd," Lottery Executive Director Michael Sweeney told the New York Times. "But the reality is, it's zero."
Ali Jaafar, 63, and his sons Mohamed Jaafar, 31, and Yousef Jaafar, 28, conducted a ticket-cashing scheme commonly referred to as "ten-percenting," where scammers will buy winning lottery tickets from players for cash at a discount between 10-20% of the ticket's value. This means that players who originally held the tickets would not have to report the winnings on their tax returns or pay owed child support. The fraudsters then present the winning tickets to the Lottery as their own, claim the prize for themselves, and report the winnings on their tax returns such that they would be offset by alleged gambling losses, thus avoiding federal income taxes.
Between 2011 and 2019, Ali only paid $24,500 in federal taxes on the $15 million in lottery winnings he reported. On top of that, he received $886,261 back from the federal government in refunds.
The suspicions of fraudulent activity did not suddenly come out of nowhere. In 2019, Ali was named the "top individual lottery ticket casher," Mohamed ranked third, and Yousef ranked fourth. Combined, their winnings that year alone totaled $5.8 million. The Massachusetts State Lottery Commission had their eye on the Jaafar's since then and even suspended them from cashing in tickets.
In retaliation, the family brazenly sued the Lottery.
"I think it really speaks to a level of hubris," Sweeney said in an interview. "This is not the result of somebody who's lucky or somebody who is, quote-unquote, playing a lot."
In 2018, the Lottery introduced a policy that took aim at players who won with a frequency deemed "factually or statistically improbable." It allows the Lottery to freeze payouts for 90 days for anyone who claims at least 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," Sweeney told WBUR.
The Jaafar family's prize claims were, without a doubt, factually impossible to the highest degree. State prosecutors said 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.
The Jaafars' claim was dismissed last year, and on Monday, they were collectively charged with over a dozen counts of fraud, money laundering, and tax evasion.
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.