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. 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. Players would choose six numbers for each two-dollar ticket. In the summer of 2011, Gregory Sullivan, Massachusettss Inspector General, compiled a detailed report on the matter. 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. The 12 defendants include store owners, employees and ticket-cashers who are alleged to have been involved from April 2020 through May 2021 in a "ten-percenting" scheme in which they claimed the prizes associated with winning Lottery tickets instead of the true winners in exchange for 10 to 20% of the winnings, Healey's office said. It came the following week, on August 16. AG Healeys Gaming Enforcement Division has a dedicated group of prosecutors and investigators who enforce the states Expanded Gaming Act of 2011 and investigate and prosecute illegal activity such as gaming-related financial crime, organized crime, corruption and money laundering, including the majority of criminal activity occurring at the states casinos. Players will also be able to play an interactive game and winners can . Jerry and Marge bought their tickets primarily from Billys Beer and Wine, run by Paul Mardas, the inspiration behind the character Bill. With a roll-down surely only two or three draws away, betting syndicates started to prepare. Betting success is not just limited by competition, however. Like big bettors at the racetrack or in Las Vegas, each big group started to interfere with the other's strategy. And, there was also the fact that lottery officials in Massachusetts had started to figureout that the Selbees and the MIT students had identified an advantage, but had done very little to combat it. A recent report by the states inspector general reveals more details about the scheme, including the fact that the Massachusetts Lottery knew of the students ploy and for years did nothing to stop it. Download MA Lottery 2nd Chance and enjoy it on your iPhone, iPad, and iPod touch. Community Rules apply to all content you upload or otherwise submit to this site. A U.S. District Court in Massachusetts has indicted a father and his two sons in a $21m lottery fraud scheme. She also worked in product management at The Atlantic. The Lottery reserves the right to disqualify entries that, to a reasonable person: (a) are sexually explicit, unnecessarily violent or derogatory of any ethnic, racial, gender, religious, professional or age group; (b) are obscene or offensive, or may create public disrepute, contempt, scandal or ridicule; (c) defame or invade publicity rights or privacy of any person, living or deceased, or . Stephen Toto displays his check after winning the Massachusetts lottery a second time. Another group was led by Gerald Selbee, a retired shop owner and former math student who had previously had success with a similar game elsewhere. The new movie "Jerry and Marge Go Large" tells the true story of a Michigan couple who used a lottery loophole to win millions of dollars.. Prizes range from $500 to $15 million. He discovered a flaw in the system of the game and found that a positive return is possible if the number of tickets bought to bet is high enough. Because this would take well over 80 hours, the lottery didnt think anyone would be able to tip the total over $2 million unless the jackpot was already above $1.7 million. John Heller, 73, of Revere, is facing one count of conspiracy to evade taxes. State Lotteries AL AZ AR CA CO CT DE DC FL ID IL IN IA KS KY LA ME MD MI MN MT NE NH NM NY OH Assistant U.S. Attorney Sara Miron Bloom of Mendells Securities, Financial & Cyber Fraud Unit is prosecuting the case. Ghanshyam Patel, 45, of Malden, is facing one count of conspiracy to evade taxes. Officials at the Massachusetts State Lottery apparently knew about the flaw in the system, but they kept the game going because they were making a profit selling to people on the other 350 days of the year. 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.". The Lottery in Massachusetts subjects winners to slightly more taxes than in other states. Kenneth Grossman, 69 of Revere was charged with conspiracy to evade taxes, attempting to impede or obstruct the administration of Massachusetts 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. The information was a boost for the MIT group, which until then had been relying on their own calculations. The Season Ticket option offers you two possible subscriptions: 3 months, or 6 months. Prizes Over $100,000. The Massachusetts Lottery has a broad selection of multi-jurisdictional and state-based games, including opportunities to win significant sums of money each day. Tina Kotek has chosen the new chairman of the Oregon Liquor and Cannabis Commission, which is under investigation for corruption. The feedback will only be used for improving the website. A lock icon ( She holds a bachelor's degree from Tufts University and a master's degree from Northwestern University. IT IS KNOW. Sentences are imposed by a federal district court judge based upon the U.S. When nobody won the jackpot until the jackpot money reached $5 million, the prize money got rolled down to the lesser prizes in the absence of a jackpot winner in the next play. 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. Adam Derebala, 29, of Revere, was charged with failure to file a tax return. In addition, defendants also stand accused of presenting the Massachusetts State Lottery Commission with false claim forms in which they declared under the pains and penalties of perjury that the winnings were their own.Two true winners, Marano and Derebala, were identified and stand charged, respectively, for tax evasion and failing to file a tax return. Treasurer Deborah Goldberg, who oversees the Lottery and chairs the Lottery Commission, thanked the state police assigned to her office of investigations, the state police assigned to Healey's office and the State Police Gaming Enforcement Division for their investigation. 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. 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. The Boston Globe stories, written by the same Spotlight team that had exposed child sexual abuse in the Catholic church (and served as the basis for an Oscar-winning movie)--foretold the end of the story. Established in 1971, the Massachusetts State Lottery is one of the oldest lotteries in the United States. Obey, Grossman and "their runners" then "presented the Massachusetts State Lottery Commission with false claim forms in which they declared, under the pains and penalties of perjury, that the winnings were their own," Healey's office said. The really lucky winners who win at least $100,000 can only claim at the Massachusetts Lottery Head Office. While searching for a topic, he became interested in lotteries. Easily find the app in the Play Market and install it for signing your masslottery. To claim a prize by mail, send the signed winning ticket, a completed claim form, proof of your Social Security number, and a copy of your ID to: Massachusetts State Lottery P.O. Play a dollar here and there, and you might win occasionally. 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. State lotteries represent an unethical capitulation of governments to laziness, cowardice and greed, as they choose emulate casinos to entice the poor, desperate and stupid to give away their money rather than do their duty and make hard political choices about taxes. After watching thousands of customers, Jerry figured out how to hackthe odds in a certaintype of lottery: called Winfall in Michigan, and later Cash WinFall in Massachusetts. In 2003, Selbee had noticed a loophole in a Michigan lottery game that also included roll-downs. The Mega Millions jackpot varies but will be at least $40 million for matching five numbers plus the Mega Ball. They then presented them to the Massachusetts State Lottery Commission with false claim forms in which they declared, under the pains and penalties of perjury, that the winnings were their own. According to the AG's office, store owners and employees funneled winning tickets to Obey, Grossman and their runners. All were charged with conspiracy to evade taxes and may have their licenses revoked after a full review is completed. By the end of the month, they planned to have thousands more dollars in winnings. 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. Share sensitive information only on official, secure websites. Mass.gov is a registered service mark of the Commonwealth of Massachusetts. The game was finally discontinued in 2010 after a report was published by The Boston Globe. Shop Our Favorite February Amazon Deals Before the Sales End, The 14 Best Mineral Sunscreens of 2023, According to Pros, 14 TikTok-Famous Cleaning Products That Actually Work, According to Our Experts, 14 Best Healthier Candy Alternatives of 2023, According to Taste Tests. 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. Kathyann Pellegrini won a $2 million prize on Oct. 18 after playing the "$2,000,000 50X Cashword" instant. The Lottery said it is in the process of suspending the Lottery retail licenses for each store and removing all Lottery equipment from them. He has been identified as an employee of Robinson's News Convenience Store located at 1556 Eastern Avenue in Malden.Muhammad Khan, 52, of Medford, is facing one count of conspiracy to evade taxes. Miller's latest win matched a February 18 drawing, which he claimed at the Massachusetts Lottery headquarters this month. Several years ago, while doing research for a school project, a group of MIT students realized that, for a few days every three months or so, the most reliably lucrative lottery game in the country was Massachusetts Cash WinFall, because of a quirk in the way a jackpot was broken down into smaller prizes if there was no big winner. It is also alleged that the defendants reported the ticket winnings as their own on their income tax returns and improperly offset the claimed winnings with purported gambling losses, thereby avoiding federal income taxes. In some cases, the true winner might be attempting to evade past-due child support payments, taxes or other debts which the Lottery is legally obligated to help collect, officials have said, or the claims may be part of a money laundering scheme. If they matched all six in the draw, they won a jackpot of at least half a million dollars. For some reason, there had been a huge increase in ticket sales, enough to drive the total prize money past $2 million. (Update: If you thought this story was something, check outthe Stanford PhD who reportedly gamed the Texas lottery and walked away with $20 million.). Instead of taking $25,000 a year, he decided to cash out a one-time . If the prize money rose to $2 million without a winner, the jackpot would roll-down and instead be split among the players who had matched three, four, or five numbers. The popular Mass Cash game was introduced in 1991 and the state joined Powerball in 1996. Since selling our first ticket in March of 1972, the Lottery has returned more than $31 billion in net profit to the Commonwealth. This flood of sales triggered a premature roll-down. This material may not be published, broadcast, rewritten, or redistributed. The stores indicted are: Underground Express in Boston, Richdales in North Reading and NT Lucky Variety in Chelsea, all of which are charged with conspiracy to commit tax evasion. Then, Michigan closed down the game they were playing, and they focused on Massachusetts, where thestakes were higher. She grew up on the North Shore, and will always say yes to a scoop of Richardson's ice cream. But the really hardpart, once the Selbees figured it out, was simply the process of actually buying and examining thousands of lottery tickets. Acting United States Attorney Nathaniel R. Mendell and Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Services Criminal Investigations in Boston made the announcement. Follow Amy on Twitter @amysokolow. (Employee of Grab N Go located at 367 Washington Ave in Chelsea, The ten-percenting scheme is designed to defeat government collection of back taxes through the Department of Revenue (. Healey's office said Lottery retailers and employees would direct winning tickets and their holders to Frank Obey, 80, of Lynn, and Kenneth Grossman, 69, of Revere. There was also the question of how to store and organize all the tickets they bought. State Attorney General Maura Healeys office said the con, allegedly perpetrated by store owners and clerks along with two Massachusetts State Lottery winners, involved laundering lottery winnings and lying under oath on numerous lottery claim forms.. Defendants were states top individual lottery ticket cashers as result of alleged fraud, claiming more than $20 million in Massachusetts lottery winnings. In-depth news coverage of the Greater Boston Area. At All Checks Cashed in Everett . This investigation also identified Frank Obey, Kenneth Grossman and William McNamara as individuals who were using the Massachusetts State Lottery to launder money. The roll-down happened when the jackpot money hit $2 million. Download Claim Form 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. 12 people, 3 stores in Greater Boston area indicted in perjury, tax avoidance lottery scheme, THE CDC FINAL APPVARO BEN: 12 PEOPLE INDICTED IN CONNECTION WITH AN ONGOING SCHE TMEO ROB THE STATE BY LAUNDERING MODERATE WINNINGS. Chicopee students learn about criminal justice system, Irish-American heritage celebrations begin in Holyoke, Smith College womens basketball team ranked No. 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. Learn all about Mega Millions The store sold $1.7 million in lottery products in 2020, lottery sales records show. Box 859036. Buying $600,000 worth of tickets would bring a 15%20% return on investment, according to the New York Daily News. By 2005, the group had earned almost $8 million with its system, according to an investigationbythe Boston Globe. The ticket cost $2 and the player could pick six numbers between 1 and 46. Powered by WordPress.com VIP. Peter Marano, 52, of Boston, was charged with tax evasion. The business NT Lucky Variety, located at 137 Arlington St. in Chelsea, is facing one count of conspiracy to evade taxes. MIT students figured out how to make winning the Massachusetts lottery a sure thing, and a recent investigation suggests that the lottery commission knew about it. All the defendants will be arraigned in Suffolk District Court at a later date. Over the course of nine years, it worked, to the point that their estimated total lottery haul was almost $27 million. Welcome to the official Massachusetts Lottery App! Suggestions are presented as an open option list only when they are available. As he studied the game, Harvey realized that it was easier to make money on WinFall than on other lotteries. Mega Millions players select five numbers 1 to 70 and one Mega Ball number 1 to 25. Massachusetts then joined Mega Millions in 2010 and launched the regional Lucky for Life game in 2012. They decided that WinFall would avoid this awkward situation. If they matched some but not all the numbers, they won a smaller sum. Some of them have become so dependably successful, in fact, that they even have investors and file tax returns. Ten years ago, students and a professor were involved in a massive card-counting scandal in Las Vegas casinos. The charge of filing false tax returns provides for a sentence of up to three years in prison, one year of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. This arrangement allows the true winners to avoid financial obligations, including state and federal taxes, officials said. This scheme is commonly known as "ten-percenting" and is a practice where individuals claim winning lottery tickets and retain a percentage of the winnings, sometimes as high as 10% or 20% of the proceeds, as a fee from the true winner. Box 859036 Braintree, MA 02185-9036 Keep a copy of all claim documents for your records. 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. Why are supply rates going down for gas but not electricity? A Massachusetts woman who accidentally tossed out a $1 million lottery ticket eventually collected her winnings thanks to the kindness and honesty of the owners of the convenience store where. Within a year, The Boston Globe had published a story about the loophole in WinFall and the betting syndicates that had profited from it. 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. The dodge allows lottery winners to avoid state and federal taxes, child support and other financial obligations. 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." Massachusetts could get another snowstorm Friday: What areas were the jackpot zones in this past storm? Please let us know how we can improve this page. Two true winners, Marano and Derebala, were identified and stand charged, respectively, for tax evasion and failing to file a tax return. 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