People Tried to Trick the IRS with Lottery Wins, Guess What Happened?
Some lottery winners try to skip out on taxes. Others fake wins to steal refunds. From a family who cashed in 14,000 tickets to people who claimed $145 million in fake prizes, these real cases show what happens when you try to outsmart the IRS. Spoiler: it doesn’t end well.
Winning the lottery should be the best day of your life. You dream, you scream, and maybe you even dance around the room a little. But after the happy shock wears off, there’s one thing standing between you and your jackpot: the IRS.
Yes, the tax man.
But what happens when people try to outsmart the IRS? What if someone fakes a lottery win or lies about losing money to avoid paying taxes?
Well, it’s happened. Many times. And almost every time, the story ends with handcuffs, courtrooms, and long vacations in federal prison.
So buckle up. Here are some of the wildest, sneakiest, and flat-out craziest stories of people who thought they could beat the system—and lost.
The Jaafar Family’s 10-Year Trick
Let’s start with a real headliner.
For nearly ten years, a father and his two sons in Massachusetts made millions by pretending they were really lucky lottery winners.
But they didn’t win those tickets. Other people did—people who didn’t want to deal with taxes or paperwork. So the Jaafars would buy those tickets (for a discount), then cash them in under their own names.
That’s called “ten-percenting.” You win, they claim it, and everyone walks away with a little less money but no tax headaches… or so they thought.
To cover their tracks, the Jaafars told the IRS they had huge gambling losses. That way, they said, “We didn’t really make a profit!” They also applied for fake tax refunds, pocketing even more money.
They did this over 14,000 times, taking home $20 million in prizes and about $6 million in phony tax refunds. The scam was so big it made national news.
But the IRS noticed. The family went to prison. Dozens of store owners who helped them lost their lottery licenses. The dream became a disaster.
Lesson: You can lie to your neighbor. But don’t lie to the IRS. They bring calculators… and handcuffs.
The Man Who Gambled with the Truth
Next up: Mustafa Shalash, a man from Ohio who really did win the lottery—$1 million!
Sounds great, right?
But instead of paying taxes like everyone else, he tried to get clever. He told the IRS he’d lost even more than he won—over $1 million at casinos. He thought that if he claimed big enough losses, he wouldn’t owe a dime in taxes.
There was just one problem: no proof. No receipts. No records. No nothing.
The IRS looked into it, and surprise! They weren’t buying the story. Mustafa had to pay back a quarter million dollars—and he got a criminal record too.
Lesson: If you’re going to claim big gambling losses, at least keep your slot machine receipts. Or better yet—just tell the truth.
The Woman Who Faked the Whole Thing
Some people lie about losing money. Danielle Edmonson went a step further—she and her dad lied about winning it.
They told the IRS they’d won hundreds of millions in lottery money and paid millions in taxes. They didn’t. It was all made up.
But the IRS didn’t check right away. They just saw big numbers and sent out refund checks—over $3 million in total.
Danielle used some of that money to buy a luxury car and a house. The dream didn’t last long.
When the fraud was discovered, both she and her dad were sentenced to prison. Her six-year sentence probably felt longer than any jackpot was worth.
Lesson: Making up lottery wins is like writing your own fairy tale—and forgetting the IRS is reading the last page.
The Cruelest Trick of All
There’s another kind of lottery lie: the one that doesn’t steal from the IRS, but from people.
David McIntosh ran a scam where he called elderly people and told them they’d won a big lottery prize. But to “claim the prize,” they had to send money first—usually for fake “taxes” or “fees.”
These victims thought they were finally lucky. They weren’t.
Over time, McIntosh stole more than $1.8 million from trusting people. When the IRS and FBI caught him, he was sentenced to more than 13 years in prison.
Lesson: If someone tells you that you’ve won the lottery but need to send money first… hang up. That’s not how real prizes work.
What These Stories All Have in Common
In every one of these stories, someone thought they could be smarter than the system. Smarter than the rules. Smarter than the tax man.
But the IRS is like a very slow, very quiet detective. It might take them a year, or five, or ten—but they don’t forget. They connect the dots. And when they do, the consequences are huge.
You could go to jail. You could owe back taxes. You could lose everything.
Final Thought: Just Be Honest
Winning the lottery is amazing. But cheating the system? Not so much.
So if you ever do hit the jackpot—first, call your family. Then call a good accountant. And don’t try to pull a fast one.
Because the IRS doesn’t play games. And if you lie? They’ll win. Every time.
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