Father and son duo who ran a $20 million lottery fraud scheme sentenced to prison

BOSTON — A father and son from Massachusetts have both been sent to prison for running an elaborate lottery fraud scheme designed to enrich themselves and help prize winners avoid paying taxes on their windfall, prosecutors said.

Ali Jaafar, 63, and Yousef Jaafar, 29, both of Watertown, cashed in 14,000 winning lottery tickets over a roughly 10-year period, laundered more than $20 million in proceeds, and then lied on their tax returns to cheat the IRS out of about $6 million, the U.S. attorney’s office in Boston announced Monday.

The Jaafars purchased winning lottery tickets at a discount from people who wanted to avoid identification by the state lottery commission, which withholds taxes and outstanding child support payments from payouts.

After purchasing the tickets, using the stores that sold them as go-betweens, the Jaafars claimed the full prize amount. Although they reported the winnings on their tax returns, they also claimed equivalent fake gambling losses as an offset to avoid federal income taxes, prosecutors said.

Ali Jaafar was sentenced to five years in prison. Yousef Jaafar received a sentence of more than four years. They were also ordered to pay $6 million in restitution and forfeit the profits from their scheme.

They were convicted in December of conspiracy to defraud the IRS, conspiracy to commit money laundering, and filing a false tax return.

Mohamed Jaafar, another of Ali Jaafar’s sons, pleaded guilty to his role in the scheme in November and awaits sentencing.

The defendants paid the owners of dozens of stores that sell lottery tickets to facilitate the transactions, and the state lottery commission is in the process of revoking or suspending the licenses of more than 40 lottery agents, authorities said.