WCAC

 

If you went into Moody Spa, Village Market, Veronica’s or True Convenience recently, you might have noticed unlit jackpot signs outside and no Mass State Lottery products for sale inside.

That’s because the Massachusetts State Lottery Commission suspended the lottery licenses of the four convenience stores for their involvement in an expansive lottery and tax fraud scheme.

Meanwhile, three other Waltham stores await hearings on 60 day suspensions for their alleged roles.

Huge Winnings

If you follow the lottery, one of the biggest drawbacks is paying taxes on the winnings.

“Ten percenting” involves having lottery winners sell their winning tickets to another person at a discount, thereby evading taxes.

In exchange, the other person unlawfully cashes the ticket for the full amount, retaining as much as ten to twenty percent of the winnings. 

If enough tickets are cashed and enough false gambling losses are reported to the IRS to offset the lottery winnings, a ten percenting scheme can become lucrative.

That’s what happened with Watertown father Ali Jaafar (pictured above) and his sons Mohammed, of Waltham, and Yousef (pictured below), also of Watertown. 

Together, they carried out the largest ten percenting scheme in state history before lottery regulators and federal prosecutors put a stop to it.

“The defendants unlawfully claimed more than 14,000 winning lottery tickets, laundered over $20 million in proceeds and then lied on their tax returns,” said a May press release from the U.S. Attorney’s office in Boston.

The result of the scheme, which ran from 2011 and 2020, was more than $6 million in federal tax losses.

“These defendants pocketed $1.2 million from fraudulent taxpayer refunds,” the DOJ said.

In 2021 the Jaafars were indicted by a federal grand jury for filing false tax returns, conspiracy to defraud the United States and conspiracy to commit money laundering.

Mohamed Jaafar cooperated with federal prosecutors and pleaded guilty. In July 2023 he was sentenced to six months in prison and nearly $1 million in restitution. 

Earlier, in May, a federal judge in Boston sentenced Ali Jaafar to five years in prison and his son Yousef to four years in prison and ordered them to pay more than $6 million in restitution.

It was an ignominious end to an American Dream that started in 1992, when the newly arrived immigrant family rented a house off 128 in Waltham, according to the Boston Globe.

Waltham Agents Suspended

With the Jaafars locked up, the Massachusetts State Lottery commission moved to discipline the “wide network” of 40 convenience store owners who were complicit—including Waltham lottery agents.

Federal court documents said that the agents and convenience store staff would buy the winning lottery tickets in cash at a discounted price. The Jaafars would then buy the tickets from them.

 

The Globe reported that “the convenience store operator got paid—perhaps $50 for a small jackpot, $100 for something larger—and the Jaafars went to a lottery office to claim the full jackpot.” 

Of the seven Waltham lottery agents allegedly involved, four are currently serving suspensions, according to a state lottery spokesperson.

 

Moody Spa at 811 Moody Street was suspended for 90 days from September 8 to December 6, 2023.

 

Village Market at 588 South Street near Brandeis was also suspended for 90 days from September 8 to December 6, 2023.

Both Moody Spa and Village Market have the same corporate officers, according to Massachusetts Secretary of State business records. 

 

A third store with a different owner, True Convenience at 314 River Street, was suspended 60 days from September 21 to November 19.

Suspended and Revoked

The lottery commission came down much harder on Veronica’s at 1074 Main Street.

 

“They’ve been suspended and they’ve been revoked,” said Sheila Capone, the Deputy Director of Stakeholder Engagement for the Massachusetts State Lottery Commission. 

Capone discussed Veronica’s during an unrelated Waltham License Commission hearing last week about proposed full Keno monitors for three Waltham lottery agents. 

 

“We basically shut them down,” Capone said.

Veronica’s lottery license revocation was upheld after an initial appeal, according to the state lottery spokesperson, with another appeal hearing pending.

 

Veronica’s owner declined to comment. 

The store has run into problems before under different owners.

Back in 2016, the Waltham License Commission suspended Veronica’s liquor license for 10 days after it was caught twice selling liquor to minors during two separate underage stings.

More Suspensions Pending

Meanwhile, three other Waltham convenience stores have received notice that the state lottery commission intends to suspend their lottery licenses for 60 days in connection with the Jaafars’ scheme.

The lottery agents allegedly involved are Kristina’s Variety at 42 Warren Street, A-1 Market at 359 Moody Street and Cronin’s Market at 12 Crescent Street. 

Both A-1 Market and Cronin’s Market have the same corporate officers, according to state business records.

 

For Cronin’s Market right off Moody Street, it’s not the first tax evasion scheme.

A former owner, Javed Iqbal Shaikh, 46, of Waltham, was sentenced back in May to six months in prison, according to Middlesex District Attorney Marian Ryan.

 

Shaikh pleaded guilty in Middlesex Superior Court to failing to pay more than $550,000 in tobacco excise taxes while he owned Cronin’s Market from 2018 to 2020.

“Stern Policy”

None of the Waltham convenience stores facing suspensions agreed to comment for this story.

During the Waltham License Commission hearing last week about proposed full-monitor Keno licenses for three Waltham agents, lottery official Sheila Capone offered reassurances.

 

“The lottery over the last couple of years has taken a very stern policy of making sure that agents who are granted lottery licenses are abiding by the rules and regulations,” she said.

Waltham license commissioners wanted, for instance, to ensure that minors would not encounter Keno operations while walking to the register in the convenience stores in question.

They appeared satisfied with the compliance measures taken by lottery regulators and voted to approve the three Keno monitor licenses.

It’s unclear why one of the Keno operators, Kristina’s Variety, received approval if a 60-day suspension over its alleged participation in the ten percenter scheme is currently pending.

The commission was unaware of the proposed suspension, and it was not discussed by lottery commission reps at the meeting.