Watertown father, son sentenced to federal prison for near decadelong lottery scam

A Watertown father and son were sentenced to prison in federal court this week for participating in a near decadelong scheme that involved claiming more than 14,000 winning lottery tickets and laundering more than $20 million in revenue, officials said.

Ali Jaafar, 63, was sentenced to five years in prison and Yousef Jaafar, 29, was sentenced to 50 months behind bars, acting US Attorney Joshua S. Levy’s office said in a statement. They were ordered to pay more than $6 million in restitution and forfeit their profits from the scheme.

The pair was convicted in December of one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to commit money laundering, and one count of filing a false tax return.

Prosecutors had argued that, between 2011 and 2020, the pair purchased winning lottery tickets from people who wanted to sell the tickets for a cash discount instead of claiming their prizes themselves from the State Lottery Commission.

The Jaafars also paid the owners of dozens of convenience stores to facilitate these transactions, prosecutors said.

Valerie S. Carter, a lawyer for the Jaafars, said her clients plan to appeal.

“We think the convenience stores were the major wrongdoers and used the Jaafars,” Carter said via e-mail.

Another of Ali Jaafar’s sons, Mohamed Jaafar, pleaded guilty to conspiracy to defraud the IRS in November. He is set to be sentenced on July 25, federal prosecutors said.

“This case should serve as a warning to those who think they can cheat the system for their own financial gain: You will be identified, prosecuted, and held accountable,” Levy said.

He added, “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.”

Levy said the Jaafars laundered more than $20 million in proceeds. They claimed the full lottery winnings as their own and reported them on their tax returns. But they claimed fake gambling losses to offset the liability, allowing them to avoid federal income taxes and receive $1.2 million in fraudulent refunds, prosecutors said. The scheme is known as “ten-percenting,” prosecutors said.

“This case is, at its core, an elaborate tax fraud,” Levy said.

In 2019, Ali Jaafar cashed more lottery tickets than anyone in the state. Mohamed Jaafar cashed the third most and Yousef Jaafar cashed the fourth most, prosecutors said.

The licenses of more than 40 state lottery agents are in the process of being suspended or revoked as a result of the case, prosecutors said. State Treasurer Deborah B. Goldberg, who chairs the Massachusetts State Lottery Commission, said the convictions are “an example of the extensive efforts the Lottery will take in partnering with law enforcement to assist in the prevention of illegal activities.”

“This decision is the culmination of years of hard work to maintain the integrity of the Lottery,” she said.

Travis Andersen of the Globe staff contributed to this report.