Lynn Man Sentenced for Multi-Million Dollar Lottery Ticket Scam
BOSTON - A Lynn man was sentenced on Monday, Sept. 23, 2019, for tax fraud charges in connection with a “ten-percenting” scheme, in which he purchased millions of dollars’ worth of winning Massachusetts state lottery tickets at a discount in order to help the ticket holders avoid taxes on the winnings.
Clarance Jones, 80, was sentenced by U.S. District Court Judge F. Dennis Saylor IV to two months in prison and two years of supervised release with the first six months to be served in home confinement. In May 2019, Jones pleaded guilty to conspiring to commit tax fraud and filing false tax returns.
Co-conspirators George Kinslieh, 69, pleaded guilty to filing false tax returns and was sentenced to one year of probation, and Bhavna Patel, 44, pleaded guilty to one count of conspiring to defraud the Internal Revenue Service and was sentenced to one year of probation and ordered to pay a $1,000 fine.
From at least 2013 through 2015, Kinslieh and Patel, who were store owners, and others, purchased winning lottery tickets from the ticket holders for cash, at a discount to the value of the tickets, thereby allowing the ticket holders to avoid reporting the winnings on their tax returns – a scheme known as “ten-percenting.” Kinslieh and Patel gave the winning tickets to Jones, who presented them to the Massachusetts State Lottery Commission as his own, and collected the full winnings. Jones reported the winnings on his tax returns, but offset them with purported gambling losses. Jones and the store owners then shared the excess winnings.
For the tax years 2011 through 2017, Jones paid less than $16,000 in federal tax on a total of approximately $52,000 of reported income. During this period, Jones claimed that he was a professional gambler and that all of his winnings were offset by alleged gambling losses. Patel and Kinslieh did not report to the Internal Revenue Service or pay taxes on the income that they received from the ticket scheme.
United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Colonel Kerry A. Gilpin, Superintendent of the Massachusetts State Police, made the announcement. The Massachusetts State Lottery Commission provided assistance with the investigation. Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit prosecuted the cases.