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 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 also includes two actual Lottery winners charged with tax evasion or failure to file a tax return for having circumvented the legal ticket-claiming process.
Ten-percenting is a practice that the Lottery and law enforcement officials have been aware of and trying to address for decades. 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.
"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," Lottery Executive Director Michael Sweeney said.
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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.
"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," the treasurer said.
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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. 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.
When the Lottery first introduced a new policy meant to disrupt professional ticket cashers in 2017, Obey was one of the high-volume cashers on a list that the Lottery keeps of people who frequently claim large prizes and collect tens of thousands of dollars a year. In early August 2017, Lottery officials said he had claimed 609 winning tickets so far that year worth a total of more than $1.1 million.
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. Obey and McNamara are also charged with making false statements under the penalty of perjury.
Adam Derebala, 29, of Revere, and Peter Marano, 52, of Boston, are charged with failure to file a tax return and tax evasion, respectively, in connection with them having someone else claim their Lottery winnings.
The other defendants, who each face a single charge or conspiracy to evade taxes, are John Heller, 73, of Revere; Karl Voelker, 67, of Boston; Paritosh Patel, 48, of Reading; Nelson Tejada, 43, of Chelsea; MDGolam Talukder-Manik, 57, of Lynn; Ghanshyam Patel, 45, of Malden; and Muhammad Khan, 52, of Medford. Healey's office said all defendants will be arraigned in Suffolk Superior Court at a later date.
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.
The Lottery said it is in the process of suspending the Lottery retail licenses for each store and removing all Lottery equipment from them. Decisions about whether to revoke the licenses would be made after a more complete review, Lottery officials said.
In August, federal prosecutors indicted a Watertown man and his two sons on a raft of tax fraud and money laundering charges related to what was alleged to be an elaborate Lottery prize-claiming scheme in which they cashed more than 13,000 Lottery tickets and claimed nearly $21 million in winnings between 2011 and 2019.
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.