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They cheated, a federal court ruled.
Ali Jaafar, 63, and Yousef Jaafar, 29, were found guilty on Friday, Dec. 9, of conspiracy to defraud the Internal Revenue Service, conspiracy to commit money laundering, and of filing a false tax return, the US Attorney for Massachusetts said.
Mohammad Jaafar, 30, pleaded guilty last month to one count of conspiracy to defraud the United States, the prosecutor said.
The US Attorney's Office said that the Jaaffars ran a scheme called "ten-percenting," wherein they would cash the winning ticket for the purchaser and keep 10 to 20 percent of the jackpot for themselves. This allowed the original buyer to avoid income taxes on those winnings, and the Jaafars avoided a hefty bill to the IRS by faking huge gambling losses on their annual returns to offset their paydays, the prosecutor argued.
The Jaafars received more than $1.2 million in tax refunds using this system, officials said.
The Massachusetts State Lottery requires winners to fill out a form with their information and affirm they are the only person claiming the prize money and not doing so to avoid state and federal taxes.
“By defrauding the Massachusetts Lottery and the Internal Revenue Service, the Jaafars cheated the system and took millions of hard-earned taxpayers’ dollars," said United States Attorney Rachael S. Rollins. "This guilty verdict shows that elaborate money laundering schemes and tax frauds will be rooted out and prosecuted,”
Ali Jaafar and Yousef Jaafar face more than two decades in prison following their conviction. Mohammad Jaafar only faces five years following his guilty plea. A judge could also order them to repay the money they made in the scheme as well as hundreds of thousands of dollars in fines.
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