Sad but True Winners Stories Plus Educational Stories

Texas - Lottery Commission Tells Woman $11,000 Ticket Was Misprint
Former lottery winner gets 30-month prison sentence
Famous lottery winner dead after lifetime of troubles
Luck was fickle to lottery winner
Lottery dispute takes bizarre turn
Employee made lottery own jackpot
Is lottery vulnerable to inside tampering?
Uncle Sam wins your lottery winnings

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Originally Posted: Dec 8, 2005
Revised: March 15, 2006

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TX - Lottery Commission Tells Woman $11,000 Ticket Was Misprint
Commission Refunds $20 Woman Paid For Ticket

NBC 5
February 17, 2006

FORT WORTH, Texas -- A Fort Worth woman who thought she won $11,000 after scratching off a lottery ticket was told by the lottery commission that her ticket was misprinted and refused to pay her more than $20.

Like thousands of Texans who regularly buy scratch off lottery tickets, Cecilia Brown often slaps down cash for tickets, and with one, she thought she hit the jackpot.

"My heart started pounding," she said.

The clerk went to Brown and looked at the ticket.

"I was like 'Oh my, I just won!'" Brown said.

A copy of the "Viva Las Vegas" black jack ticket shows the dealer had a "6".

"If any of your hands beat the dealer's hand, you win that prize," she said.

"I think it's a 6. I see a 6!"

It meant all of her hands were winners -- for a total of more than $11,000. But when she went to cash it in, the Texas Lottery Commission sent Brown a letter, saying the ticket was "a printing error" and refused to pay.

"I think they should still pay for their mistake," Brown said.

"It's their misprint, they should pay her the money," the clerk said.

It turns out that the dealer's "6" was supposed to be a "16."

The letters "sxn" are underneath, and there appears to be a smudge of ink underneath where the "1" should be.

For now, Brown says she'll still play and still dreams of winning the big one.

The Texas Lottery Commission refunded the $20 she paid for the ticket, but insists it's not liable for the $11,000, no matter what the ticket said.

sibkkc.ru Comment
This is WRONG. The face value of any ticket purchased in good faith should be honored. This woman should file a consumer complaint with the AG's office.


Former lottery winner gets 30-month prison sentence
Associated Press

ROCKFORD, Ill. - A man who won an Illinois lottery jackpot less than a year ago was sentenced to 30 months in prison Friday on gun and drug charges, federal officials said.
Eric Wagner, 33, of Freeport, pleaded guilty last year to selling a firearm to a felon in 2004 and illegally distributing marijuana in 2004 and 2005.

A federal judge in Rockford also fined Wagner $35,000, the U.S. Justice Department said in a news release.

Wagner and eight others purchased a winning Lotto ticket at a Freeport supermarket in April worth $37.5 million. They later agreed to a one-time cash payment of $21.5 million.

Despite the conviction, Wagner will be allowed to collect his share of the prize, Illinois State Lottery spokesman Courtney Hill said.

Wagner faced a maximum 10 years in prison. His attorney, James Zuba, sought a sentence of no more than 24 months, but said his client accepts the judge's decision.

Assistant U.S. Attorney Joseph Pedersen called the sentence "appropriate."


- Two Stories -
Famous lottery winner dead after lifetime of troubles
Associated Press

GULFPORT, Miss. - A former resident of Jackson County who became famous for winning the Pennsylvania lottery has died in Seneca, Pa.

William "Bud" Post III, of Franklin, Pa., lived in Mississippi while he fought an extradition to his home state for an assault conviction.

Post won the lottery after pawning a ring for $40 and purchasing 40 Super 7 lottery tickets in Pennsylvania in 1988.

He won the $16.2 million jackpot, but the good fortune soon turned bad, causing Post to later say that he won "the lottery of death."

Post's landlady helped him buy the tickets and successfully sued him for a third of his profits.

His sixth wife left him, and his brother hired a hitman to kill him.

Post was convicted of attempted assault for shooting at a bill collector. Jackson County deputies served him with a warrant for the Pennsylvania assault conviction in 1998.

He died of respiratory failure Jan. 15 at the age of 66.

"He was eccentric, like a fish out of water once he became a millionaire," said his bankruptcy attorney, John Lacher.

Post worked several odd jobs prior to his lottery win, including carnival work.

At the time of his win he was married to his fifth wife and surviving on an income of Social Security and disability checks.

"He didn't know how to handle money," Lacher said. "To him, money was folly. He once brought a laptop in my office to show me. He liked it so much he bought 30 of them."

Post received his money in yearly $498,000 payments, habitually spent it all and then borrowed more money, Lacher said.

In 1996 Post filed for bankruptcy, but managed to hold on to more than $1 million in cash.

At some point in the mid-1990s, Post purchased a $260,000 sailboat and docked it in Biloxi.

Post is survived by his seventh wife, Debra Wice, and nine children.

-----

Luck was fickle to lottery winner

By Jack Markowitz
FOR THE TRIBUNE-REVIEW
Wednesday, January 25, 2006

It is hard to resist moralizing over the life and death of William Post III. Indeed, he seems to have viewed himself as a lesson walking.
This was a man with an extraordinary belief in luck. He once pawned a ring for $40 and bought 40 tickets to the Pennsylvania Lottery. And won! Suddenly, $16.2 million was his.

But luck is fickle. It turns in the air and lands in unexpected places. Like federal bankruptcy court, where "Bud" Post stood just eight years after striking it rich in 1988.

"I want to get rid of the lottery, believe me, your honor," he told the judge in 1996. "It's been nothing but a pain." A "lottery of death," he once called it in a blue mood.

Even in bankruptcy, however, his luck didn't entirely run out. To pay debts, the court auctioned off $4.9 million of his remaining winnings, but that still left about $1 million, not exactly privation.

It was his wild ride up and down that was so disillusioning. And not untypical of working-class people (the lottery's best customers) suddenly made rich by pure "luck." Luck, that is, with no connection to hard work, talent, perseverance, a great idea or native shrewdness. The money isn't earned, it's just there. And tends to leave the same way, not least to the hard-luck cases, swindlers and moochers that swarm around a winner like flies.

Bud Post, his lawyer said, "did everything you would expect of a guy who became a millionaire overnight." (And some things you wouldn't expect, like marrying for a sixth time.) In fact, he was survived by his seventh wife, and nine children, when he died of respiratory failure last week at 66 in a Venango County hospital.

Among the illusions Post should have resisted was assuming he had a knack for making money. He went into business with siblings. But entrepreneurship isn't for everyone. One of his brothers tried to kill him. Post himself ran into trouble for blasting a shotgun over the head of a bill collector in the 1990s.

He knew what a day's work was, certainly, at odd jobs, including as a carnival worker. But he was on Social Security disability from a job injury that magical night when the numbered, air-blown ping pong balls of the lottery fell his way.

Even that joy didn't last. His landlady had given him $20 for 20 tickets the same day he put down $40 for his 40 -- and uh-oh, which was the winner? She sued successfully for a third of the take. Yet still, doled out in annual payments of $498,000 -- after taxes -- there should have been enough for both to live happily ever after.

And the moral of the story? But why belabor it? Rest in peace, Bud Post.

Retired business editor Jack Markowitz writes Sundays and Wednesdays.
E-mail him at


Lottery dispute takes bizarre turn

The Woonsocket Call
RUSS OLIVO, Staff Writer
02/03/2006

BLACKSTONE -- In October Kevin Donovan became the talk of the town when he claimed to have thrown away a winning $1 million lottery ticket that another man found in the trash.

Now, while embroiled with the Massachusetts Lottery Commission in a battle to reclaim the ticket from the man who found it, Donovan has suffered the ultimate loss.

Just 49 years old, Donovan suffered a fatal heart attack while traveling in Hyannis on Tuesday, according toKate Donovan, his ex-wife. The couple had been divorced since 2002, and Kate Donovan said she had no interest -- financial or otherwise -- in her ex’s legal bid to reclaim the ticket.

"He was optimistic about it," she said. "But he was a gambler. I’m a very risk-averse person."

Donovan’s death does not necessarily mean the end of his claim, however.

Donovan had two children, including Dan Donovan, 20, who is considering pursuing his father’s claim. As an heir and legal adult, he has the standing to do so, his mother said. At this point, however, he is undecided.

Kevin Donovan ran a gas station in town and lived with his son on Lincoln Street, according to Kate Donovan, of Indian Run Road in Bellingham.

News of Donovan’s untimely demise took just about everyone involved in the lottery imbroglio by surprise.

"You gotta be joking," said Edward St. John, the 82-year-old man who discovered Donovan’s jettisoned jackpot. "Is that official?"

St. John was reluctantly thrust into the national spotlight in early October when he discovered the ticket while making his usual rounds at the White Hen Pantry, a convenience store on Main Street where he regularly fishes through trash receptacles for discarded lottery tickets. Earlier, St. John found a $10,000 winner in the store’s trash bin.

When St. John picked out a $1 million winner on the Texas Hold ‘em Poker game, even Jay Leno and Good Morning America wanted to put him on TV -- offers St. John has spurned. Upon learning of Donovan’s untimely demise yesterday, St. John was very stingy with his expressions of sympathy for the man he blames for blocking his payday.

While St. John said he feels sorry for anyone who dies, he added that it’s pretty hard to feel sorry "when they’re trying to give you the business like he’s been doing to me."

St. John said he would have been able to cash the disputed ticket long ago if it weren’t for Donovan, and now he’s just waiting for a call from the Massachusetts Lottery Commission to see what happens next. All he wants is to collect his winnings so he can share the windfall with other members of his family.

"This isn’t fun for me," St. John said. "I just want to get this straightened out so I can live my life -- what’s left of it. I know my time is limited."

Donovan, through his lawyer, Dan Doyle, had claimed he inadvertently discarded the winning lottery ticket knowing it was a winner, but unaware of the actual size of the jackpot.

Donovan was said to have purchased every ticket on the White Hen Pantry’s dispenser of Texas Hold ‘em tickets on the day in question -- about $600 worth. Among the evidence introduced to the Massachusetts Lottery Commission on his behalf was a security videotape from the store showing Donovan buying tickets.

Donovan had filed an appeal with the commission and, following a hearing in November, he and St. John had been waiting for a decision.

The ruling, however, was expected to be a mere prelude to yet another phase of the dispute in Superior Court. Despite granting Donovan an internal, administrative hearing, the commission had already announced publicly that St. John was entitled to the winnings because lottery tickets are "bearer instruments," payable to whomever is in possession of them.

Doyle did not return telephone calls for comment about the case.

In a telephone interview Thursday, Beth Bresnahan, spokeswoman for the lottery, said officials at the agency were also stunned by news of Donovan’s death.

"When I told the paralegal her jaw just dropped, so this isn’t something that happens very often," said Bresnahan. "This was an amazing story to begin with."

Such situations are so rare that Bresnahan could not initially say how Donovan’s death would affect his appeal. But after researching the matter, she said that in the eyes of the law, Donovan’s appeal is a property claim, meaning his estate -- his heirs, in other words -- have the option of pursuing it. A decision in the case is due next month, she said.

In addition to his son, Donovan also had a daughter, Lisa, 17, who lived with her mother in their yellow raised ranch overlooking Lake Hiawatha, Kate Donovan said.

Kevin Donovan would have turned 50 on Feb. 12. Lately, it seems, his family had been plagued by tragedy because his father, Francis Donovan, just passed away about two months ago, leaving his mother, Mary, alone, according to Kate Donovan. Francis Donovan was a well-known public servant in the Milford area, she said.

Kevin Donovan was traveling on Cape Cod with a girlfriend when he suffered a heart attack and was later pronounced dead at Cape Cod Hospital in Hyannis, said his ex-wife. His body was to be cremated after his organs harvested for donation, she said.

Although Donovan had told his children that he had lost a $1 million lottery ticket, Kate Donovan said he never told her, at least face to face.

"He never had to," she said. "It was all over the news."


Employee made lottery own jackpot

The Trenton Times
Friday, February 03, 2006
By KEVIN SHEA

As an employee of the New Jersey Lottery, Christopher Vitoritt would be ineligible from winning the Mega Millions, but authorities say he struck his own jackpot nonetheless.

Vitoritt, of Hamilton, has pleaded guilty to skimming about $5,000 in lottery money while collecting cash receipts from North Jersey stores that are lottery agents.

The state's Division of Criminal Justice charged Vitoritt with theft by unlawful taking for acts uncovered by lottery officials.

Vitoritt pleaded guilty Wednesday before Superior Court Judge Maria Sypek in Mercer County. He is scheduled to be sentenced March 17.

Vitoritt, who has been fired from the lottery, was a field collections representative and gathered lottery proceeds from stores in three North Jersey counties that did not use electronic methods to transmit proceeds, a Criminal Justice spokesman said.

The case against Vitoritt shows that from July 2003 through July 2005, he diverted up to $5,000 of money and used it for personal gain. The thefts were uncovered by lottery officials, who fired Vitoritt in July 2005 and forwarded the information to Criminal Justice for investigation.

Vitoritt's guilty plea requires him to repay the stolen money to the state. He also faces a potential sentence of up to five years in state prison and a fine of up to $15,000. Vitoritt also will be prohibited from holding any public employment.

Authorities say Vitoritt has a gambling problem and is getting counseling for it.

Court papers show Vitoritt waived an indictment and pleaded guilty to the initial accusation from the Criminal Justice Division's Special Prosecutions Bureau.


Is lottery vulnerable to inside tampering?

Fort Wayne News Sentinel
A column by Kevin Leininger
January 31, 2006

No one can see the numbers in advance, the executive director says.

You’d think Jim Grimes would be happy.

After all, the retired Noble County engineer, whose concerns about the integrity of the Hoosier Lottery were the subject of a column in June 2004, helped spark an investigation that led to three indictments in an alleged million-dollar scam. But, if anything, Grimes is even more frustrated than he was when we first talked nearly two years ago – even though he is no longer willing to lose money to a game he still believes is rigged.

“I don’t take any satisfaction from charges being filed,” Grimes said from his home in Kimmell, about 35 miles northwest of Fort Wayne. “They stopped short of investigating everything we brought up.”

Two years ago, the crux of Grimes’ complaint was this: When the lottery in 2001 stopped using pingpong balls to select numbers and started using a computer instead, his mathematically precise method of predicting winners was no longer so successful. Using a computer, he believed, allowed lottery officials to know which numbers were being played, by how many people, and where – making it possible to limit the state’s payout by manipulating the computer’s supposedly “random” number selections.

Not long after my column appeared, Grimes called and said he had been in touch with two police investigators from Marion County. Would I be willing to meet with them?

No journalist could turn down an offer like that. So, a few days later, I met in The News-Sentinel offices with Grimes, Thomas Trathen of the Marion County prosecutor’s office and Sgt. Michael Thayer of the Indianapolis Police Department. They seemed very interested in what Grimes had to say. They took lots of notes; we shook hands, and they left.

And nothing happened. Or so it seemed.

Then, in the first week of November 2004, a team of investigators acting under the authority of Marion County Prosecutor Carl Brizzi searched the lottery’s offices in downtown Indianapolis and arrested three men on charges they had conspired to claim a scratch-off ticket worth $1 million.

Police say William C. Foreman used his inside knowledge as a lottery official to learn which retail outlet had received a winning ticket in the $2 million “Bonus Spectacular Game.” Foreman then allegedly told accomplices Chad Adkins and Daniel Foltz to buy the entire supply of tickets – worth about $700 – from a store in Cross Plains.

Adkins and Foltz, both of Shelby County, redeemed the ticket, which would have paid each of them $25,000 per year for 20 years.

If they had not already agreed to plead guilty and testify against Foreman, that is. If convicted, Foreman could face up to 50 years in prison – the harshest penalty imposed by any state for breeching lottery security. Lottery Executive Director Esther Schneider, however, thinks the punishment would fit the crime.

“You’re talking about someone who cheated somebody out of $1 million,” she said. “It’s not the same as rape or incest, but it is like Enron.”

Even though the indictments are not directly linked to Grimes’ contention that computer-generated winning numbers aren’t really drawn randomly, Thayer said Grimes’ concerns were helpful nonetheless.

“When we started asking questions, other people brought other things to us,” he said.

Although Grimes believes the lottery continues to manipulate numbers to limit payouts, Thayer and Schneider insist his suspicions are baseless. “We’ve spent $1 million on security so players know the system is fair. My integrity and reputation is invested in this,” said Schneider, who took over the job a year ago.

“This was a one-time situation,” Thayer said.

Grimes remains skeptical, however. If an unscrupulous lottery official could allegedly hand-pick winners, what other abuses might be possible, he wonders.

But Schneider said the security changes she’s made should prevent a recurrence of what Foreman supposedly did. Access to winning numbers is more strictly controlled now, with multiple layers of oversight, and no one can see the numbers until the game is closed.

Attorney Jack Crawford, the lottery’s first director, is defending Foreman against the state’s “unconstitutionally” harsh penalties.

“I find that very ironic,” Schneider said.

Grimes no doubt would choose a stronger word.


Uncle Sam wins your lottery winnings
Even tricks don't keep IRS out of lump-sum gains

BY ALBERT B. CRENSHAW
The Washington Post (reprinted nation-wide)
January 15, 2006

WASHINGTON - Attention, lottery players: If you win a nice big prize, opt to take it as a stream of payments and then change your mind and wish you had taken it as a lump sum, don't expect any special tax benefits if you sell your annuity for immediate cash.

Over and over in the past few years -- and especially since capital gains tax rates were lowered in 2001 -- lottery winners have sold their rights to future payments and tried to treat what they got in exchange as capital gains. Since capital gains are now taxed at a maximum of 15 percent and ordinary income rates run into the mid-30 percent range (and higher a few years ago), that strategy would have a clear tax advantage if it worked. But it doesn't.

The U.S. Tax Court has rejected this idea so many times it all but ran out of breath citing precedents as it threw out yet another effort in November.

The essential principle involved here, the court said, is that if you sell the right to receive ordinary income, what you get in exchange is ordinary income.

In the most recent case, a Rochester, N.Y., woman back in 1997 won the right to receive a total of $17.5 million over 26 years. She took the payments for 1997 through 1999, but then sold the right to the remaining payments to a Georgia company for a lump sum of $7.1 million. The Georgia firm sent the woman a Form 1099-B, listing the amount as proceeds from the sale of "stocks, bonds, etc."

The woman reported the $7.1 million as a long-term capital gain. The Internal Revenue Service said it was ordinary income and as a result she owed the government another $1.3 million.

In the Tax Court the Rochester woman argued that her lottery winnings were a capital asset because, as the court put it, "her purchase of a lottery ticket was an underlying investment in capital," and that there had been "an increase in value above the cost of the asset."

But the Tax Court, pointing to a decision by the 9th U.S. Circuit Court of Appeals last year as well as a line of cases dating further back, found nothing to distinguish the Rochester woman's situation from other unsuccessful attempts "to transform ordinary income into capital gain."

A lottery winner cannot argue that buying a lottery ticket is a capital investment. Thus, there is no "cost" to the winner for the right to receive future payments and "therefore, the money received for the sale of the right could not be seen as reflecting an increase of value above the cost of any underlying asset," the Tax Court said, summing up the appellate court's reasoning and its own.

Pointing to a half-dozen or so similar decisions, the Tax Court concluded, "We see no reason to depart from consistent treatment of identical cases," and upheld the IRS.

Lump sum quandary

In addition to the tax issues, the cases highlight an important question for lottery players: Assuming I win, should I take the annual payments, or the lump sum, which most games now offer?

The annual payments sound like more, and in a nominal sense they are. But that ignores the time value of money, which, simply put, means that a dollar in the hand today is worth more than a dollar in the hand tomorrow.

Typically, the lump sum is the "present value" of the stream of income represented by the annual payments, and if done properly should be the accountants' best approximation of an amount that is equal in real terms to the value of the total of the annual payments.

So lottery players, especially when buying a chance on a big pot, should think about whether they'd prefer the security of a stream of payments, or opportunities that a big lump sum might bring.

Of course, the odds of winning in the first place are vanishingly small, so as a purely economic proposition, playing the lottery makes little sense.



Texas Lottery Denies Cheating Lotto Texas Winners
But excerpts from Commission Meetings refutes the TLC claims
of innocence. The complete story including a winners complaint letter
to the DA. (Special note to those winners who called inquiring about
the way you were paid - your suspicions. I've included a spreadsheet
that includes the rate that was applicable at the time of your win
so you can now figure out if you received your full amount.
) Click here.

What is Problem Gambling? Click here.

Real Life Examples of Gambling Related Crime and Corruption. .

Sad but True Winners Stories (1), Click here

Read story about a Texas $31 million winner
who committed suicide (1999). Click here.

Sad but True Winners Stories (AOL), Click here.

One Winner - One Loser - What a story.
Everyone should read this one.
Three other stories
include an interview with a winner, a news story
regarding the Oct 13 Lotto Texas machine malfunction
and the huge sales decline for New York's in state
Lotto game since joining MM.
Click here.

Store Owners and Employees Admit Stealing
$100,000 Powerball Ticket ...
Don't let this happen
to you. Click here.

Canada Has A Gambling Problem. And so will Texas.
Governments hooked on gambling. Here's WHY we need to oppose
expanded gambling in Texas and why the TLC turns me OFF.
Click here
.

About that 2005 Texas Lottery Demographics Study.
See what the "real" truth was! A Texas Tech Study. Click here.

Thank You Dallas Morning News ... Their study of lottery sales
by districts confirms who really plays the games of Texas. Click here.

Just point and click ...

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