An American father and son criminal duo has been sentenced to a collective near-decade in prison over a $30 million lotto scam that saw them win 14,000 times.
The pair were found guilty in December and sentenced this week in the US federal court for a scheme that saw them illegally claim more than $US20 million ($A30.6 million) in lottery winnings.
They were also found to have lied on their tax returns to dodge more than $US6 million ($A9.2 million) in federal taxes.
Ali Jaafar, 63, was sentenced to five years in prison over the scam, while his 29-year-old son Yousef was sentenced to four years and two months, the US Attorney’s Office for the District of Massachusetts said in a news release.
The duo was ordered to fork out $US6 million ($A9.2 million) in restitution and forfeit their profits from the scheme.
“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 (the Internal Revenue Service, the equivilant of the Australian Taxation Office) to pocket millions of hard-earned taxpayers’ dollars,” said acting US Attorney Joshua S Levy.
“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.”
The Jafaars were found guilty late last year and 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.
Mohamed Jaafar, another of Ali’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.
Ali and Yousef intend to appeal the convictions, a legal representative said.
How the scheme worked
From at least 2011 to June 2020, Ali and Yousef Jaafar conspired with a group of other conmen to launder funds from the Massachusetts state lottery winnings, according to an indictment. Some of their co-conspirators are known, while others have yet to be identified, the indictment 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 the prize, the US Attorney’s Office explained in a media 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, the father and son would claim the prize money to the commission as their own, with the help of convenience store owners who would “facilitate the transactions”.
The Jaafars unlawfully cashed more than 14,000 lottery tickets, totalling some $US20 million ($A30.6 million), prosecutors said. They 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,” said Joleen Simpson, special agent in charge of the IRS criminal investigations in Boston.
The Jaafars represented three of the top four individual lottery ticket cashers in Massachusetts in 2019, according to the US Attorney’s office.
Dozens of lottery retailers partook in the scheme and will have their lottery agent licences revoked, the agency added.