There’s something that seems especially cruel about a lottery scam, even when compared with other crimes of the same category. Sure, identity theft is creepy and invasive in addition to being financially damaging. Nigerian-prince-type emails are designed to prey on the most gullible among us, and charity scams turn people’s most generous instincts against them. But a lottery scam adds a uniquely malicious twist: It involves convincing people that they’ve just won a windfall that’s going to completely turn their lives around, when in fact, they’re about to be sucked dry.
The recent case of Charmaine Anne King and Althea Peart of Lauterdale, Florida, represents a typical lottery scam. King and Peart sent fake sweepstakes letters to elderly people, telling them that they had won more than a million dollars. They included (also fake) cashier’s checks for thousands of dollars, made out to the victims of their scam. They told them that the checks were to reimburse them for the several-thousand-dollar “fees” that they would have to wire to “claims agents,” who were also co-conspirators, in order to collect their winnings.
King was first caught in the act by the U.S. Postal Inspection Service, and she signed a cease and desist order. But she did not cease, nor did she desist. She continued the fraud, and both King and Peart were both soon arrested.
Elsewhere, authorities in Colorado say that lottery-scammers are now adding insult to injury with new twists on the same old fraud. From KKTV in Colorado Springs:
The typical scam involves a call or email saying you've won a lot of money, but you have to pay taxes and fees up front before you can claim the money.
In the new version, there is a second caller who claims to be with the FBI or some other law enforcement agency.
The alleged law enforcement officer claims the victim really did win a lot of money, and says the first caller was a scam artist who was trying to steal the money. The alleged officer says they have arrested the first criminal, and it is now safe for the victim to claim the money after they pay the fees.
There's another scenario where the alleged officer might accuse the victim of being involved in the scam, and threaten to have them arrested if they don't pay a fine.
In those shameful schemes, the victims are vulnerable, often elderly people who get tricked into thinking they’ve won a lottery that doesn’t exist, and that they certainly wouldn’t remember having entered. But then there’s another type of lottery scheme, where the only victims are actual lottery systems themselves. There are people who seem to be able to game the system and win lotteries with statistically-impossible (or, extremely statistically-unlikely) frequency. Last month, The Palm Beach Post published an in-depth investigation into repeat winners of the Florida Lottery.
The lottery winners that the Post reporters looked at aren’t the enormous jackpot winners that make the news; they’re people like Amit and Nika Thakker, who have won small prizes, but at an improbable frequency—in their case, collecting $531,00 in 214 small wins since 2005. (To put it in perspective, the “Play 4” has a one in 39,000 chance of winning; the Thakkers have won it 95 times.) Is it luck, or is it a crime?
The reporters analyzed state lottery data and found more than 200 people who have won the lottery at least 30 times. From the Post:
Florida’s most prolific winners might be too lucky, and Florida’s Lottery can’t explain why, a Palm Beach Post investigation has found. The winning patterns raise red flags that have led other lotteries and police to uncover widespread ticket theft by store employees, neighborhood “ticket brokers” who helped winners avoid taxes, even drug lords laundering money.
The article explains that sometimes it’s hard to tell whether a ticket is a winner or not, so people often hand them over to ticket-selling store clerks to scan them and find out. Less ethical store clerks can easily see that tickets are winners, but tell the owners that they lost, and then collect the winnings themselves. According to the Post, “Six of the top 10 winners are like the Thakkers, store clerks and owners who sell lottery tickets.”
At one point the administrators of the California Lottery suspected similar fraud, and decided to do undercover stings in stores that sold lottery tickets. The investigation there found that winning tickets were stolen by store clerks 18 percent of the time. In San Francisco, the theft rate was twice that. Florida did not have a history of investigating those types of crimes, but since the Post’s series ran last month, the state has started cracking down.
“Ticket brokers” sometimes “help” people cash in their winnings by submitting them under someone else’s name (committing identity theft, basically), so that the real winners can avoid getting hit with the taxes. Winners are also often afraid that the state will check their names for overdue child support, or their immigration status. The result is that people like 68-year-old Louis Tillman Johnson learn that he’s “won” $719,000, “in 69 different stores, from North Lauderdale to Vero Beach,” and that he owes $50,000 to the IRS in accompanying taxes. But of course, he hasn’t. A ticket broker has stolen his identity and is cashing in other people’s winnings in his name.
In an interview with the Columbia Journalism Review, the author of the series, Lawrence Mower, described the inspiration for the story, which was a piece in Wired magazine about a statistician in Toronto who had discovered a way to cheat on the scratch-off lottery there. Mower and his fellow Post reporters thought they might find a similar loophole in the Florida system if they gave the lottery data a close look. They didn’t find that, exactly, but they did find all of these different ways people had apparently figured out how to game the system—which was, in many ways, a much more complicated and interesting story to tell.
“It was really just done on a whim,” Mower told the Columbia Journalism Review. “I guess we got lucky.”