How a Massachusetts Family Was Finally Caught in a $20 Million Lottery Scam

From 2011 to 2019, a family from Watertown, Massachusetts, collectively claimed over $20 million in lottery winnings from more than 14,000 scratch-off tickets, according to The Boston Globe.

The scheme started in 2011 when Ali Jaafar, a Lebanese immigrant who previously ran successful taxi and prepaid phone card businesses, first cashed a lottery ticket in what is known as a 10 percenter scam.

As a 10 percenter, Jaafar would buy winning tickets from winners who wished to remain anonymous, cash the tickets at one of the state's lottery offices claiming to be the winner and take a 10%-15% cut. In order, to avoid paying taxes, Ali would claim gambling losses on his tax returns, the Globe said.

In 2011, Ali cashed 136 tickets worth $217,000. A year later he claimed $367,000 worth of winnings, and in 2013 he claimed nearly 900 tickets worth $1.3 million. He eventually recruited his sons, Mohamed and Yousef, to join him in the scheme.

In total, the family earned $2 million from the scam and $1.2 million in tax refunds.

It wasn't until a 2017 Boston Globe expose on ten percenters revealed that Massachusetts was the state with the most repeat winners that its lottery commission started cracking down on the scam.

The Massachusetts State Lottery Commission adopted a policy that year of suspending high-frequency winners for cashing in winnings that were determined to be “factually or statistically improbable.” In 2019 the commission held hearings investigating the Jaafars and suspended them.

The Jaafars hired an attorney to fight the suspensions, however by then the IRS was also investigating them.

In 2020, one of their associates, Nicholas Frankel, entered an immunity agreement with the government, and the Jaafars were indicted for conspiracy to commit money laundering and filing false tax returns.

Mohamed also cooperated with federal prosecutors and struck a deal, pleading guilty to tax fraud conspiracy.

Mohamed Jaafar was sentenced to six months in prison this past July for his involvement in Massachusetts's largest lottery scheme. His father, Ali, and younger brother, Yousef, were sentenced in May to much harsher sentences of five years and nearly four years, respectively.