No statistical model could explain it, and when a Massachusetts man and his two sons cashed in more than 13,000 winning lottery tickets worth nearly $21 million over eight years, federal prosecutors and lottery officials said it was anything but luck.
“A statistician will say that there’s some astronomical odd,” Michael R. Sweeney, the executive director of the Massachusetts State Lottery, said in an interview. “But the reality is, it’s zero.”
In a 19-page indictment that was unsealed on Monday in U.S. District Court in Massachusetts, Ali Jaafar and his sons Mohamed Jaafar and Yousef Jaafar were collectively charged with more than a dozen counts of fraud, money laundering and tax evasion for taking part in what the authorities say was a ticket-cashing scheme. A vast majority of the tickets were the scratch-off type that are typically sold at convenience stores, prosecutors said.
From 2011 to 2019, according to the indictment, the Jaafars claimed the prizes on behalf of the actual winners, who potentially avoided having their winnings garnished for unpaid taxes or child support, a requirement for any prize over $600 in Massachusetts.
The Jaafars then falsely reported six- and seven-figure gambling losses on their tax returns, allowing them to drastically reduce the taxes they paid on the winnings, prosecutors said.
The family had previously raised the suspicions of lottery officials in Massachusetts, where prosecutors said that Ali Jaafar, 63, of Watertown, Mass., was the “top individual lottery ticket casher” in 2019. Mohamed Jaafar, 31, of Watertown and Waltham, Mass., ranked third that year, and Yousef Jaafar, 28, of Watertown was fourth.
The Massachusetts State Lottery Commission temporarily suspended the three men from cashing lottery tickets, a decision that the Jaafars unsuccessfully challenged in Superior Court in Boston in 2019.
“I think it really speaks to a level of hubris,” Mr. Sweeney said of their legal challenge. “This is not the result of somebody who’s lucky or somebody who is, quote-unquote, playing a lot.”
Ali Jaafar and Mohamed Jaafar pleaded not guilty on Monday afternoon, appearing by videoconference in federal court in Boston. They had both been arrested earlier on Monday and were later released on their own recognizance. Their lawyers did not immediately respond to requests for comment.
It was not immediately clear whether Yousef Jaafar was in custody. His lawyer also did not respond to a request for comment.
The lawyer who represented the Jaafars in their previous civil action against the lottery commission declined to comment on Monday.
A spokeswoman for the U.S. District Court in Massachusetts did not immediately comment further on the case.
In Massachusetts, before someone can cash in a winning ticket that exceeds $600 in value, lottery officials will check to see if that person owes any unpaid state and federal taxes or child support.
To avoid having their prize money garnished, lottery officials said, people will sometimes sell their winning tickets to someone else to cash in with the lottery commission. The person cashing in the ticket will keep 10 percent or 20 percent of the winnings in a scheme known as 10 percenting.
“They’re trying to beat the system,” Mr. Sweeney said.
In the indictment, federal prosecutors said that Ali Jaafar had paid less than $24,500 in federal taxes on $15 million in lottery winnings, and that he had received $886,261 in tax refunds for bogus gambling losses from 2011 to 2019.
Prosecutors said that Mohamed Jaafar had paid less than $21,700 in federal taxes on $3.3 million in lottery winnings, and that he had received $106,032 in tax refunds for phony gambling losses from 2012 to 2019.
Yousef Jaafar paid less than $10,700 on $2.4 million in lottery winnings and received $185,951 in tax refunds for fictitious gambling losses from 2013 to 2019, according to the indictment.
They were charged with one count each of conspiracy to defraud the United States, and money laundering conspiracy. Ali Jaafar and Mohamed Jaafar were each charged with five counts of filing false tax returns, while Yousef Jaafar was charged with three counts of filing false tax returns.
Under state lottery rules in Massachusetts, a person who claims 20 or more prizes of at least $1,000 in one year is subject to a review by the director of the lottery. If the lottery director determines that it was statistically “improbable” for the person to have won so many times, officials said, the person can receive a 90-day suspension from claiming prizes that exceed $600. A second violation can result in a 180-day suspension, and a third violation can result in a one-year ban.
Mr. Sweeney said that the lottery commission had taken administrative action against the Jaafars and had referred the matter to law enforcement. He said that other similar criminal cases involving lottery fraud were continuing.
“It’s safe to assume,” he said, “there are more shoes to drop.”
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