The "ten-percenting" scheme is designed to defeat government collection of back taxes through the Department of Revenue Intercept Program, which is an automated process used to intercept and collect Massachusetts State Lottery Commission winning payouts over $600 to satisfy delinquent debt. with approximately 98 percent of funds generated go directly back into the economy through prizes (73 percent),. Like big bettors at the racetrack or in Las Vegas, each big group started to interfere with the other's strategy. 1998 - 2023 Nexstar Media Inc. | All Rights Reserved. The problem with rollovers is that winnerswho are good publicity for a lotterycan be rare. one lottery official joked in an email that later became public. Jerry and Marge played their last Cash WinFall game in January 2012 as well. Please remove any contact information or personal data from your feedback. The lottery is usually a lousy return--but for a husband and wife team who figured out a math error in games run by two states, it became a wildlyprofitable investment strategy. It's all in this six-part documentary series that details the true story of how $24 million was stolen from the McDonald's Monopoly game during the 1990s, the mystery mastermind behind the scam and the intrepid FBI agents on his trail. The information was a boost for the MIT group, which until then had been relying on their own calculations. If they matched some but not all the numbers, they won a smaller sum. Follow Boston.com on Instagram (Opens in a New Tab), Follow Boston.com on Twitter (Opens in a New Tab), Like Boston.com on Facebook (Opens in a New Tab), Watertown father and son, who cashed over $20 million in winning tickets, found guilty of lottery scam, Heres what is on the 2022 Massachusetts election ballot, Here are the states two latest newly minted scratch ticket multimillionaires, False Statement Under Penalty of Perjury (2 counts), Attempting to Impede/Obstruct Administration of Massachusetts Tax Laws. The Mega Millions jackpot varies but will be at least $40 million for matching five numbers plus the Mega Ball. A Winfall ticket cost $1. State law prohibits the unlawful assignment of winning lottery tickets.Authorities said they also identified Obey, Grossman and McNamara as individuals who were using the Massachusetts State Lottery to launder money.The defendants will be arraigned on the charges they face at a later date in Suffolk Superior Court.The charges are the result of an investigation by members of the Massachusetts State Police assigned to Healey's office and the State Treasurer's Office of Investigations, as well as the MSP Gaming Enforcement Division and the Massachusetts State Lottery Commission. The Massachusetts Lottery shut down the game. Thank you for your website feedback! 2023, Hearst Television Inc. on behalf of WCVB-TV. In this particular scheme, store owners and employees allegedly funneled the winning tickets to Obey, Grossman and their runners. After two weeks of betting, during which he made $6,300 after buying $3,400 worth of tickets--andthen grossed$15,700 after buying $8,000 worth of tickets, he came clean. In-depth news coverage of the Greater Boston Area. Any attempts to fraudulently claim lottery prizes to abet in illegal activities including the avoidance of taxes or other debts owed to the Commonwealth are viewed by the Massachusetts State Lottery as serious offenses, said Michael Sweeney, executive director of the Massachusetts State Lottery. Assistance was provided by the Massachusetts State Lottery Commission. But the really hardpart, once the Selbees figured it out, was simply the process of actually buying and examining thousands of lottery tickets. Home | Massachusetts Lottery Supporting Communities MSLC meeting, Tuesday February 28. Looking at past draws, the group found that if the jackpot failed to top $1.6 million, the estimate for the next prize was almost always below the crucial value of $2 million. Soon, he began to reap profits. All the defendants will be arraigned in Suffolk District Court at a later date. The charges resulted from an investigation by Massachusetts State Police assigned to Healeys office, State Police assigned to the State Treasurers Office of Investigations, the State Police Gaming Enforcement Division, and the Massachusetts State Lottery Commission, prosecutors said. You picked six numbers, 1 through 49, and the Michigan Lottery drew six numbers. The charges are the result of an investigation by members of the Massachusetts State Police assigned to Healey's office and the State Treasurer's Office of Investigations, as well as the MSP Gaming Enforcement Division and the Massachusetts State Lottery Commission. The inspector generals report claims that lottery officials actually bent rules to allow the group to buy hundreds of thousands of the $2 tickets, because doing so increased revenues and made the lottery even more successful. But in 2008, the lottery finally sent him the guidelines. The defendants will be arraigned in Suffolk Superior Court at a later date. Gerald Selbee pointed out that if a group wanted to maximize their profits during a roll-down week, they needed to buy 312,000 betting slips, but the process of buying so many tickets was not always straightforward. The charge of conspiracy to defraud the Internal Revenue Service provides for a sentence of up to five years in prison, three years of supervised release, a fine of$250,000 or twice the gross gain or loss, whichever is greater, and restitution. All were charged with conspiracy to evade taxes and may have their licenses revoked after a full review is completed. Download MA Lottery 2nd Chance and enjoy it on your iPhone, iPad, and iPod touch. Ten years after a group of Massachusetts Institute of Technology students and a professor famously took Las Vegas casinos to the cleaners counting cards, a new gambling scandal has arisen that. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The AGs Office alleges that from April 2020 through May 2021, the defendants, who are ticket-cashers, store owners or employees, purchased winning lottery tickets from the true winners for cash, at a discount to the value of the tickets. Using his mathematical abilities, Jerry finds a way to ensure profits while buying an enormous number of WinFall tickets. As per reports, Cash WinFall was shut down in January 2012. When Selbees syndicate heard about WinFall, they turned their attention to Massachusetts. In fact, the expected payoff was sometimes positive: When a roll-down happened, there was at least $2.30 waiting in prize money for every $2.00 ticket sold. The arrangement allows for the true lottery winners to avoid financial obligations, including state and federal taxes. But in the end, it was the Boston Globe newspaper that brought the whole thing crashing down. All rights reserved. Plus, watch Keno and Wheel of Luck in View Mode for a simple drawing . BOSTON (USDOJ) A father and his two sons were charged yesterday in connection with a ten-percenting scheme in which they allegedly cashed winning Massachusetts state lottery tickets on behalf of the ticket holders to avoid taxes on the winnings. Store owners and employees funneled winning tickets to Frank Obey, Kenneth Grossman and their runners. Six people have been federally indicted since 2018 for illegal activities tipped off by the high frequency cashing of lottery tickets.. (Update: If you thought this story was something, check outthe Stanford PhD who reportedly gamed the Texas lottery and walked away with $20 million.). Thrilling Prizes Mega Millions Drawing on Feb 24, 11:00 pm Est Jackpot Est Cash: $63.9 million Powerball Drawing on Feb 22, 10:59 pm Est Jackpot Est Cash: $51.3 million Megabucks Doubler Drawing on Feb 22, 9:00 pm Est Jackpot Est Cash: $2.71 million By taking these types of necessary actions to prevent crimes, we are maintaining the integrity of the Lottery and the best interests of the people of the Commonwealth, state Treasurer Deborah B. Goldberg, chair of the Massachusetts State Lottery Commission, said in a statement. Paritosh Patel, 48, of Reading, is facing one count of conspiracy to evade taxes. It didn't matter, as the Selbees would later argue, that theirout-of-state money was pumping millions of dollars into the Massachusetts lottery's coffers--and was ultimately distributed to the state's cities, towns, and schools. The attorney general's office said three businesses -- Underground Express on Winter Place in Boston, Richdale on Lowell Road in North Reading, and NT Lucky Variety on Arlington Street in Chelsea -- that sold Lottery products also face charges of conspiracy to evade taxes. They decided that WinFall would avoid this awkward situation by limiting the jackpot. Twelve men along with three stores in Chelsea, Boston and North Reading have been indicted in an alleged money laundering scheme to hide lottery winnings and pilfer tax revenue from the state. In May 2020, prosecutors say Lamb won $10,000 on a Massachusetts State Lottery Commission scratch ticket, which he then sold to a convenience store owner for $7,500 in cash. The individuals will be arraigned in Suffolk Superior Court at a later date. However, it had one important difference: Usually, when nobody wins the jackpot in a lottery, the prize rolls over to the next draw. According to the charging documents,the defendants conspired with others to purchase winning lottery tickets from the actual winners for cash, at a discount that was typically between 10-20 percent of each tickets value, thereby allowing the ticket holders to avoid reporting the winnings on their tax returns a scheme commonly known as ten-percenting. The defendants and co-conspirators then allegedly presented the winning tickets to the Massachusetts Lottery Commission as their own and collected the full value of the tickets. As well as waiting for an appropriate jackpot sizeone close to but below $1.6 millionthe MIT group had to fill out around 700,000 betting slips, all by hand. In such a competitive environment, it was crucial to obtain an edge over other teams. If they matched all six in the draw, they won a jackpot of at least half a million dollars. In 2005, another plan started to take shape in the corridors of Random Hall. Between April 2020 through May 2021, the defendants bought winning lottery tickets from the true winners for cash at a discount, prosecutors allege. Unfortunately, the profits did not continue for much longer. With this game, players must choose six numbers from 1 to 49 and, as usual, match them to six drawn numbers. The move is designed to defeat government collection of back taxes through the Department of Revenue Intercept Program, which automatically collects for lottery payouts totaling over $600, Healeys office said. Prior to starting at The Herald, she was a reporter at The Lowell Sun, and previously reported for STAT News, The Boston Guardian, Native News Online, FierceBiotech and other publications. Healeys office alleges that from April 2020 through May 2021, the defendants all ticket-cashers, store owners or employees purchased winning tickets from the true winners for cash at less than the tickets values. Financial investigation was conducted by Senior Financial Investigator James OHara of AG Healeys Gaming Enforcement Division, as well as Financial Investigator James Donahue of the DOR Criminal Investigations Bureau. The state legislature first voted to legalize gambling, with the lottery being organized soon thereafter. Obey, Grossman and William McNamara, 67, of Revere, face charges of conspiracy to evade taxes, attempting to impede/obstruct administration of Massachusetts tax laws and money laundering. Ali Jaafar, 63, and his two sons Mohamed Jaafar, 31, and Yousef Jaafa, 28, were charged on August 23 with over 12 counts of fraud, money laundering, and tax evasion in what officials reportedly dubbed a "ticket cashing scheme." A dozen people and three stores were indicted Friday by a Massachusetts grand jury in connection to what Attorney General Maura Healey's office called "an ongoing scheme to rob the state of tax revenue by laundering lottery winnings and lying under oath on numerous lottery claim forms." Muhammad Khan, 52, of Medford, is facing one count of conspiracy to evade taxes. In addition to draw games, the Massachusetts Lottery currently offers more than 100 scratch cards, or instant games as they are called in the Bay State. This article has been adapted from Adam Kucharski's book, The Perfect Bet: How Science and Math Are Taking the Luck Out of Gambling. After nine years of playing Winfall and Cash WinFall, Jerry and Marge had a gross return of $26-27 million with a profit of $7.75 million before taxes. In the last three years, the Lottery said, collaboration with law enforcement has led to federal indictments of six individuals for illegal activities related to the high frequency cashing of Lottery tickets. "If you figured it out and you could do this, would you do it?" Simple brute force approaches do not require many calculations to pull off. The ten-percenting scheme is designed to defeat government collection of back taxes through the Department of Revenue (DOR) Intercept Program. The charges are the result of an investigation by State Police assigned to the AGs Office, State Police assigned to the State Treasurers Office of Investigations, the State Police Gaming Enforcement Division, and the Massachusetts State Lottery Commission (MSLC) into a calculated scheme carried out by the defendants to defraud the state of taxes on lottery winnings and other debts owed to the Commonwealth. Even within a university as famously offbeat as the Massachusetts Institute of Technology, Random Hall has a reputation for being a little quirky. Defendants were states top individual lottery ticket cashers as result of alleged fraud, claiming more than $20 million in Massachusetts lottery winnings. The only other Lottery . So that's what the Selbees started doing, to the point that playing the lottery became a full-time job at times. A player could pick six numbers between 1 and 49 and win the jackpot of $2 million or higher if the numbers were the same ones drawn by the Michigan Lottery. During the summer of 2010, the WinFall jackpot again approached the roll-down limit. Massachusetts Lottery Games and Drawing Schedules Mega Millions Mega Millions is a multi-state lottery game enjoyed all over the US. The Massachusetts Lottery has a broad selection of multi-jurisdictional and state-based games, including opportunities to win significant sums of money each day. Established in 1971, the Massachusetts State Lottery is one of the oldest lotteries in the United States. Massachusetts then joined Mega Millions in 2010 and launched the regional Lucky for Life game in 2012. 2023 Cinemaholic Inc. All rights reserved. Well, lets find out! There were prizes for every five, four, three, or two same numbers. Whereas clever roulette players have only to outwit the casino, lottery syndicates often have to compete with other teams attempting to win the same jackpot. The Massachusetts Lottery sold its first ticket on April 6th, 1972, with seven people winning $50,000 each in "the Game" drawing. The Massachusetts State Lottery aided in this investigation, by working with investigators in the AGs Office to identify claims of the alleged perpetrators of this scheme. Related content: Father, sons face federal charges in $21M Massachusetts state lottery scam. Selbeestarted on his own in 2003, spending a few thousand dollars a week, while keeping the whole thing a secret from his more risk-averse wife. The ticket machines would jam in humid weather and run slowly when low on ink. Please limit your input to 500 characters. One team consisted of biomedical researchers from Boston University. Spillane's office is actually in Hanover. Other syndicates got in on the action, too. Must be 18 years or older to play the Lottery. While most studentsat the famed Massachusetts Institute of Technology use their powers for good for example, creating drugs that can fight any virus others are busily using their prodigious math skills to game the state of Massachusetts lottery system, earning millions of dollars in the process. Mohamed Jaafar was the third highest individual ticket casher and Yousef Jaafar was the fourth highest individual ticket casher. The unnamed store . Chicopee students learn about criminal justice system, Irish-American heritage celebrations begin in Holyoke, Smith College womens basketball team ranked No. State law prohibits the unlawful assignment of winning lottery tickets. The store sold $1.7 million in lottery products in 2020, lottery sales records show. Prizes range from $500 to $15 million. Please do not include personal or contact information. Twelve people and three stores in Boston, Chelsea and North Reading have been indicted in connection with an ongoing scheme to rob the state of Massachusetts of tax revenue by laundering lottery winnings and lying under oath on numerous lottery claim forms.Massachusetts Attorney General Maura Healey announced Tuesday that the following defendants were indicted by a statewide grand jury of the following charges:Frank Obey, 80, of Lynn, is facing two counts of false statement under penalty of perjury and one count each of conspiracy to evade taxes, attempting to impede/obstruct administration of state tax laws and money laundering.Kenneth Grossman, 69, of Revere, is facing one count each of conspiracy to evade taxes, attempting to impede/obstruct administration of state tax laws and money laundering.William McNamara, 67, of Revere, is facing one count each of false statement under penalty of perjury, conspiracy to evade taxes, attempting to impede/obstruct administration of state tax laws and money laundering.John Heller, 73, of Revere, is facing one count of conspiracy to evade taxes.Adam Derebala, 29, of Revere, is facing one count of failure to file a tax return.Peter Marano, 52, of Boston, is facing one count of tax evasion.Karl Voelker, 67, of Boston, is facing one count of conspiracy to evade taxes.Paritosh Patel, 48, of Reading, is facing one count of conspiracy to evade taxes.Nelson Tejada, 43, of Chelsea, is facing one count of conspiracy to evade taxes.MDGolam Talukder-Manik, 57, of Lynn is facing one count of conspiracy to evade taxes. A spokesperson for Healeys office declined to say how much money was involved. A spokesperson for the State Lottery said that it is in the process of suspending the licenses of the three stores and removing all Lottery equipment from these locations. While most of the men are also charged with conspiracy to commit tax evasion, Frank Obey, 80, of Lynn; Kenneth Grossman, 69, of Revere; and William McNamara, 67, of Revere; face additional charges including perjury, attempting to impede/obstruct tax laws and money laundering. Despite the ongoing competition, some betting syndicates have managed to repeatedlyand legallyturn a profit. According to lottery officials, the Lottery is in the process of suspending the licenses of the three stores involved, which are Underground Express, at 31 Winter Place in Boston; Richdale, at 4 Lowell Road in North Reading; and NT Lucky Variety, at 137 Arlington St. in Chelsea. In November 2022, the Massachusetts Lottery sold about $58.6 million in Powerball tickets, reflecting $48.9 million more than November 2021, or a roughly sixfold increase. Then, Michigan closed down the game they were playing, and they focused on Massachusetts, where thestakes were higher. The lottery designed the game so that $1.20 of every $2.00 would be paid out in prizes, with the rest being spent on local good causes. The DOR program is an automated process used to intercept and collect Massachusetts State Lottery Commission winning payouts, over $600, to satisfy delinquent debt. James Harvey was nearing the completion of his mathematics degree and needed a project for his final semester. When the estimated jackpot reached $2 million, players knew that the money would roll-down if nobody matched six numbers. Marge Selbee, Jerrys wife, accompanies him in the new endeavor. 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