The lottery has always been a tremendous business when it comes to the volume of money that changes hands. And it has always it has always been common knowledge that wherever there is cash changing hands, there are plenty of scams being implemented by unscrupulous people to try to siphon off some of this money for personal gain.
The lottery, for some reason, has always seemed to fly under the radar of the public's consciousness when it comes to a perception of scamming. Most people tend to think of the lottery the same way they think of a casino - that it is a highly regulated activity where there are strict rules, constant monitoring of activities, stringent operating procedures, and harsh punishments for violations. But the number of stories about lottery scams is changing people's perceptions about the lottery.
This is true when it comes to casinos, but casinos are very different than lotteries. Casinos are very insular. They control the physical transfer of all cash, all activity is monitored and recorded, and all of the people who handle the cash are under the direct employ of the casino. The lottery, on the other hand, employs third parties to sell and distribute the tickets (convenience stores), and the playing (and the winning) of the game is not monitored (with the exception of rare camera footage inside a convenience store).
Typically, lottery scams come in different forms:
I don't classify the Nigerian email lottery scams as "lottery scams". I consider those an email scams that have nothing to do with the lottery.
There are ads on EBay and Craigslist offering losing lottery tickets for sale. A Detroit listing was offering $10,000 worth of scratch-off tickets for $500. One of the earliest convictions for this type of crime occurred in Massachusetts in 1985. An accountant (and former IRS revenue officer) had a client who won $2.7 million in the Massachusetts State Lottery called "Megabucks." The accountant duducted $65,000 in gambling losses to offset the gains. When he got flagged by the IRS, he panicked and rented losing lottery tickets for $500. He and the client got caught. The accountant and client both served time in prison for fraud.
Apparently there are small businesses that rent losing lottery tickets to taxpayers for months at a time in case of an audit. Some of the ads on the internet selling lottery tickets are for legitimate reasons. The lottery, like any other activity that people enjoy, have their fair share of enthusiasts, and some of these lottery fans like to buy lottery tickets as memorabilia. Obviously, the ads that offer a higher quantity or higher dollar volume of tickets are more likely to be shady. Any tickets that have a time and date printed on them (such as state lotteries or horse racing tickets) are more likely to be caught than someone without a time and date (such as a scratch-off).
In Iowa, an information-security director named, Eddie Raymond Tipton, hacked the lottery system and won $14.3 million. He did this by accessing the Random Number Generator (RNG) on Nov 20, 2010 and inserting a USB drive with a program to help him win. He bought the winning ticket a month later. He then moved the winning money among 2 different people as well as different companies.
To make things crazier, the winning ticket went uncashed for almost a year. And then, hours before it was set to expire, a company out of Belize tried to claim the prize through a New-York-based attorney. The lottery officials refused to cash the ticket because the company in Belize would not offer any names for the people trying to cash in the ticket. Tipton faced 2 counts of fraud.
Robert Miles, a central New York maintenance worker, bought a scratch ticket in October 2006 at a Syracuse convenience store owned by Nayef Ashkar. The ticket won a 5 million dollar jackpot. Ashkar’s two sons, Andy and Nayel, convinced Miles the ticket was only worth $5,000 and paid him $4,000 for it. The brothers waited until 2012 to claim the jackpot, which triggered an investigation by lottery officials. During the trial, Miles testified that he was addicted to crack cocaine when he bought the ticket and was confused by what had happened when the Ashkars took it. In 2008, Miles filed for bankruptcy. Andy Ashkar was sentenced to up to 25 years in prison for possessing stolen property (i.e. the ticket). He and his brother were cleared of conspiracy charges. Miles will now get his payout. Originally the ticket would have been paid out as an annual payment of $250,000 over 20 years, but because of a recent change of the lottery rules Miles will have the option of selecting a lump-sum payment of $3,210,000, which would give him $2,124,378 after taxes.
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