Massachusetts Lottery Frequent Winner Pleads Guilty to Tax Fraud Conspiracy
Posted on: November 8, 2022, 10:52h.
Last updated on: November 8, 2022, 11:26h.
A Waterford, Mass. man who has won the lottery more than 13K times pleaded guilty Friday to charges of tax fraud conspiracy, money laundering conspiracy, and filing false tax returns.
Mohamed Jaafar, 30, is accused of operating an industrial-scale ticket-cashing scheme with his father, Ali Jaafar, and brother, Yousef Jaafar, that grossed $21 million.
The 10-Percenters
In Massachusetts and elsewhere, money owed in federal taxes or child support can be deducted from lottery wins over a certain threshold, $600 in this case.
Winners who find themselves in this predicament can be incentivized to sell their tickets to an underground ticket-cashing business at a discount. Typically, the person cashing the ticket takes 10%, hence the terms “discounting” or “10-percenting.”
Jaafar, along with his father and brother, was indicted by a federal grand jury in August 2021. Initially, the family denied the charges. But Jaafar now admits to conspiring to operate a discounting scheme. It took place between 2011 and 2019 and charged winners between 10%-30% of each ticket’s value, according to prosecutors.
Jaafar personally cashed about 2,500 tickets for around $3.3 million in winnings, but paid just $21K in taxes. He also received $106,032 in tax refunds for cooked-up gambling losses over the same period, according to the indictment.
Ali Jaafar cashed in more than 10K lottery tickets for a total of $15 million, according to court documents. Yousef Jaafar cashed in 1,360 for a total of $2.5 million.
Jaafars Sue Lottery
The Massachusetts Lottery Commission temporarily banned the Jaafars in 2019 when officials realized Ali was the “top individual lottery ticket casher” that year, and his two sons were third and fourth, respectively.
The Jaafars responded by suing the Lottery for an injunction to let them continue cashing out their endless supply of winning tickets. They weren’t successful.
Sentencing is scheduled for next March. The charge of conspiracy to defraud the IRS comes with a sentence of up to five years in prison, three years of supervised release, a fine of $250K or twice the gross gain or loss, whichever is greater, and restitution.
In 2019, an 81-year-old frequent-winner from Lynn, Mass., Clarance Jones, was handed a two-month prison sentence for fraud and filing false tax returns. He cashed thousands of tickets worth more than $10 million. But he squandered the profits at casinos and racetracks, his lawyer said.
Related News Articles
Source: casino.org
