US father and son imprisoned over elaborate $30m lottery fraud
A Massachusetts father and son have been sentenced in the US federal court for a scheme that saw the pair illegally claim more than $20 million USD ($30.6 million AUD) in lottery winnings.
The pair also lied on their tax returns to dodge more than $6 million USD ($9.2 million AUD) in federal taxes, prosecutors said.
Ali Jaafar, 63, was sentenced to five years in prison while his 29-year-old son Yousef Jaafar was sentenced to four years and two months in prison, the US Attorney's Office for the District of Massachusetts said in a Monday news release.
They were also ordered to pay over $6 million USD ($9.2 million AUD) in restitution and forfeit their profits from the scheme.
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In December, the two 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.
"This case is, at its core, an elaborate tax fraud. Over the course of a decade, this father-and-son team defrauded the Massachusetts State Lottery Commission and the IRS to pocket millions of hard-earned taxpayers' dollars," Acting US Attorney Joshua S Levy said in the news release.
"These defendants worked together to recruit a wide network of co-conspirators and spread their lottery scam across Massachusetts, avoiding detection by repeatedly lying to government officials."
Valerie S Carter, an attorney for Ali and Yousef Jaafar, told CNN in an email on Tuesday it's "the Jaafars' intention to appeal to the First Circuit Court of Appeals".
Mohamed Jaafar, another of Ali Jaafar's sons who was also involved in the plot, pleaded guilty last year to conspiracy to defraud the IRS and will be sentenced in July.
CNN has reached out to his attorney for comment.
The men represented three of the top four individual lottery ticket cashers in the state in 2019, according to the US Attorney's Office.
"This case is an example of the extensive efforts the Lottery will take in partnering with law enforcement to assist in the prevention of illegal activities. This decision is the culmination of years of hard work to maintain the integrity of the Lottery," said Deborah B Goldberg, state treasurer and receiver general and chair of the lottery commission.
How the scheme worked
"From at least 2011 through at least June 2020, the Defendants conspired with others known and unknown to the grand jury to launder the funds from Massachusetts state lottery winnings of others," an indictment for the three said.
The men would buy winning lottery tickets from people across the state who wanted to sell their ticket for a cash discount instead of claiming their prize, the US Attorney's Office said in its news release.
That meant the real winners avoided identification by the state's lottery commission, which is required to "withhold outstanding taxes, back taxes and child support payments" before paying the prize, the release said.
After buying the discounted tickets from the winners, with the help of convenience store owners that would "facilitate the transactions," the defendants would claim the prize money to the commission as their own, the release added.
Dozens of lottery retailers that participated in the scheme will have their lottery agent licenses revoked by the Massachusetts State Lottery Commission, the US Attorney's Office said.
Prosecutors say the Jaafars unlawfully cashed over 14,000 lottery tickets totaling more than $20 million USD ($30.6 million AUD) in the "elaborate 'ten-percenting' scheme."
Prosecutors say the defendants further profited by "reporting the winnings on their income tax returns and claiming equivalent fake gambling losses as an offset, thereby avoiding federal income taxes and receiving fraudulent tax refunds."
"Instead of using business savvy and skill to build a legitimate multi-generational family business, the Jaafars carried out a complex decade-long tax and lottery scam, building a vast network of co-conspirators to further their illegal activities," Joleen Simpson, special agent in charge of the IRS' Criminal Investigations in Boston, said in the release.
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