How a single US family cashed in 14,000 winning lottery tickets and screwed the taxman out of $6M

• A father and son were sentenced in Massachusetts' largest lottery fraud scheme to date.
• They used a scheme called "ten-percenting" to cash in more than 14,000 winning lottery tickets.

A Massachusetts family led an elaborate lottery-fraud scheme, cashing in more than 14,000 winning tickets and pocketing money due to the tax authorities.

Father and son Ali Jaafar, 63, and Yousef Jaafar, 29, from Watertown in Boston, were sentenced in May after they were found guilty of conspiring to defraud the IRS and launder money.

The case has gone down as the largest lottery fraud in the state's history, according to a new report in the Boston Globe that details exactly how they were caught after nine years.

It cost federal taxpayers more than $6 million, the DOJ said in a December press release.

The case found that between 2011 and 2020, the pair were involved in what is called "ten-percenting."

Here's how it works: Winning ticket holders don't particularly like paying the tax due on larger wins. And they often don't like going public, either. So a "ten-percenter" offers to buy the ticket for around 90% of its value in cash, in an off-the-books transaction.

Brandishing the ticket, the ten-percenter then goes and claims the prize, pocketing the difference for themselves. They then report the winnings as their own on income tax filings, but often offset that by inventing losses from gambling losses to offset them.

In the process they are "thereby avoiding federal income taxes and receiving tax refunds," per the DOJ's description.

This means they only get a fraction of the winnings, but it adds up — especially over 14,000 tickets. Between them, Ali, Yousef and another son, Mohamed, took in more than $2 million this way using tickets with a combined value of $20 million, gaining around $1.2 million in tax refunds, court filings seen by the Boston Globe show.

It's a practice that can take root anywhere that gambling takes place, and in this instance the DOJ says it cost federal taxpayers more than $6 million.

The Massachusetts State Lottery Commission eventually began noticing just how extraordinarily lucky the Jaafars were getting, the Boston Globe reported.

The family was claiming winnings hundreds of times a year, in an off-the-charts lucky streak that was statistically almost impossible, mathematicians for the lottery commission told the outlet. To win that often with ordinary luck you would need to buy 22,859 tickets a day, an unnamed official said.

To access their 14,000 winning tickets, the men ran a vast network through state convenience stores, where the clerk would call them any time they had a significant winner, the paper reported.

But, per the Globe, even though they sometimes paid others to go in and cash the tickets for them, they became far-too-familiar faces at the lottery offices.

Mohamed, who had tried to leave the scheme in 2019, took a plea deal when the case came to trial, according to the paper.

The fallout has been huge — according to the DOJ, the Massachusetts State Lottery Commission began revoking and suspending more than 40 lottery licenses across the state. And, of course, Ali and Yousef Jaafar were sentenced to be imprisoned, for five years and 50 months respectively. They must pay their "winnings" back, as well as $6 million to the IRS in restitution, the DOJ says.