Massachusetts Man Sentenced for Lottery Tax Fraud Conspiracy

BOSTON – A Massachusetts man was sentenced today in federal court in Boston for his role in an elaborate “ten-percenting” tax fraud conspiracy involving dozens of convenience stores across Massachusetts. 

Mohamed Jaafar, 31, of Watertown, was sentenced by U.S. District Court Judge Nathaniel M. Gorton to six months in prison and two years of supervised release. Jaafar was also ordered to pay $964,569 in restitution. In November 2022, Jaafar pleaded guilty to one count of conspiracy to defraud the United States. In May 2023, Jaafar’s co-conspirators, Ali Jaffar and Yousef Jaafar, were sentenced to five years and 50 months, respectively.

Between 2011 and 2020, the defendants purchased winning lottery tickets from individuals across Massachusetts who wanted to sell their winning tickets for a cash discount instead of claiming their prizes from the Massachusetts State Lottery Commission. This allowed the real winners to avoid identification by the Commission, which is legally required to identify lottery winners and withhold any outstanding taxes, back taxes and child support payments before paying out prizes. The defendants recruited and paid the owners of dozens of convenience stores to facilitate the transactions. After purchasing tickets from the lottery winners at a discount, using the convenience stores as go-betweens, the defendants falsely claimed the full amount of the prize money as their own. The defendants then 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.

In total, the defendants unlawfully claimed more than 14,000 winning lottery tickets and laundered over $20 million in proceeds. The result was more than $6 million in federal tax loss. As a direct result of this case, the Massachusetts State Lottery Commission is in the process of revoking or suspending the licenses of more than 40 lottery agents.

Acting United States Attorney Joshua S. Levy and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston made the announcement. Assistant U.S. Attorneys Christopher J. Markham and Kristen A. Kearney of the Securities, Financial & Cyber Fraud Unit prosecuted the case.