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Lottery winner charged in tax conspiracy

Insider BuzzInsider Buzz: Lottery winner charged in tax conspiracy
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In February 2008, Kendrick D. Francis won a 10,000-to-one bet on the Pennsylvania Lottery's Big 4 game for a payday of $532,000.

But, federal prosecutors in Delaware said, that apparently wasn't enough for Francis, a Wilmington resident, who then conspired with a convenience-store operator to hide his winnings and make it appear a number of other people had won instead to avoid federal taxes.

This month, the U.S. Attorney's Office for Delaware filed felony conspiracy and tax evasion charges against Francis and Chirag R. Patel, each of which carries a maximum penalty of three years in prison and a $100,000 fine. According to court papers, the 50-year-old Francis was such a regular lottery customer at Conley's Market in Woodlyn, Pa., that he was allowed to phone in his orders for lottery tickets and pay for them the next day.

And on Feb. 23, 2008, Francis phoned in an order for 360 tickets, at 50 cents each, all with the number 4177.

Two hundred of those tickets were played "straight" — meaning it had to be an exact match to win — and 160 tickets were "boxed," in which any sequence of those numbers would pay off, but for a smaller amount.

According to criminal information filed against the pair, Patel offered to help Francis in cashing in the 200 "straight" tickets to avoid owing taxes on the full jackpot.

In exchange for a $50,000 "fee," Patel had others — for several hundred dollars per ticket — cash in the winning tickets over the next month at Conley's Market or a nearby gas station, according to prosecutors.

Court papers claim the men later lied on their 2008 tax returns, with Patel failing to claim the $50,000 "fee" as income and Francis failing to acknowledge $249,500 of his lottery proceeds as well as claiming a $90,000 debt for the year due to "gambling losses."

It is unclear in court papers how law enforcement became aware of the scam, and Assistant U.S. Attorney Lesley F. Wolf declined comment this week, as did Patel's attorney, Edmund "Dan" Lyons.

Francis' attorney, John Malik, said his client was "overcome by his tremendous luck" at winning the lottery but his enthusiasm "led to some very bad decisions" about trying to avoid his tax responsibility.

Malik said his client has hammered out an agreement with prosecutors and plans to plead guilty and accept responsibility for his actions.

A date for Francis to enter a plea has not yet been set.

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39 comments. Last comment 3 years ago by sully16.
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Boney526's avatar - NjlpLogo
New Jersey
United States
Member #99034
October 18, 2010
1439 Posts
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Posted: January 26, 2011, 4:18 pm - IP Logged

Ughhhh

 

The Federal Government shouldn't be taxing Lottery Winnings...

 

EDIT:  If I ever one 180 times straight and box on Pick 4... if there were no federal taxes- that'd be the day.

    RJOh's avatar - chipmunk
    mid-Ohio
    United States
    Member #9
    March 24, 2001
    17831 Posts
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    Posted: January 26, 2011, 4:32 pm - IP Logged

    Although you can't go to a lottery website and find out where every winner was bought, the lotteries track every winner and 200 straight pick4 winners from one store is going to be noticed regardless of where they were cashed.  Plus I thought any ticket worth more than $600 require the winner to fill out papers for a W-2G which means the folks who cashed those tickets may had paid some taxes too.

    * you don't need more tickets, just the right ticket * 
    * your best chance to win a lottery jackpot is to buy a ticket * 
        Wink 

      Todd's avatar - Cylon 2.gif
      Chief Bottle Washer
      New Jersey
      United States
      Member #1
      May 31, 2000
      21506 Posts
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      Posted: January 26, 2011, 4:33 pm - IP Logged

      Although you can't go to a lottery website and find out where every winner was bought, the lotteries track every winner and 200 straight pick4 winners from one store is going to be noticed regardless of where they were cashed.  Plus I thought any ticket worth more than $600 require the winner to fill out papers for a W-2G which means the folks who cashed those tickets may had paid some taxes too.

      Great point!  Thumbs Up

       

      Check the State Lottery Report Card
      What grade did your lottery earn?

       

      Sign the Petition for True Lottery Drawings
      Help eliminate computerized drawings!

        Hermanus104's avatar - 5027340606 1e360c8038_s.jpg
        Northern Virginia
        United States
        Member #83350
        December 5, 2009
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        Posted: January 26, 2011, 5:02 pm - IP Logged

        Ah yes. Money does strange things to people.

        Today's winning 3-ball is going to be a number between 000 and 999.

        In a lot of states, lotteries benefit education. That makes the REAL winners the only people who can't play!

          Avatar
          Florida
          United States
          Member #102885
          December 27, 2010
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          Posted: January 26, 2011, 5:03 pm - IP Logged

          I say take all the winnings away from the winner. Heck, I would be so happy just to win. Tax me away just let me win.

            Rowen's avatar - animal eel.jpg
            Illinois
            United States
            Member #82001
            November 3, 2009
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            Posted: January 26, 2011, 6:08 pm - IP Logged

            Great point!  Thumbs Up

            Curious if it might have gone unnoticed had it been won on bunch of pick 3 or scratchers instead. Probably not because there are camera and scanners everywhere.

              dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
              Oklahoma
              United States
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              Posted: January 26, 2011, 6:41 pm - IP Logged

              I say take all the winnings away from the winner. Heck, I would be so happy just to win. Tax me away just let me win.

              LOL.... luisM I was thinking the same thing ..."tax me away just let me win" ROFLROFL

                dphillips's avatar - littleuns
                Albuquerque, New Mexico
                United States
                Member #5128
                June 18, 2004
                377 Posts
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                Posted: January 26, 2011, 6:45 pm - IP Logged

                Wow, he's in a world of hurt! How did he think he was going to get away with it, anyway? Since the government is hurting for money, and I'm not blaming him for trying to keep his, the government is attempting to squeaze every nickel and dime from its citizens to pay for 1) roads; 2) war; 3) building projects; 4) education; 5) loss revenues by the democrats and the republicans); 6) Obama's Wall Street bail out; and anything else the government can perceive as belonging to them.

                See Ya!-- Bye, bye!  When you win, may you glow as brightly as theSun Smiley

                  Litebets27's avatar - power
                  Maryland
                  United States
                  Member #10465
                  January 14, 2005
                  5555 Posts
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                  Posted: January 26, 2011, 7:18 pm - IP Logged

                  Why do people think they can outwit the government with schemes of tax evasion at anytime. I sat on a Grand jury many years ago for a story involving a lottery winner very similar to this. The barcodes on the tickets have codes the feds follow. Series of winning tickets such as his 200 str8 and 100 or so boxed can easily be tracked. The time of the purchase, merchants special code, terminal that the ticket is generated from are all located in the barcodes.

                  It's best to buy the winning tickets and pay the taxes. Even the taxesyou pay is going to hurt, but, being a storyline whose story ends in jail hurts even more, for you and your family..

                  Feeling,  PRICELESS!!!Banana

                  Peace be with you!!

                    Avatar
                    Florida
                    United States
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                    December 27, 2010
                    334 Posts
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                    Posted: January 26, 2011, 7:20 pm - IP Logged

                    LOL.... luisM I was thinking the same thing ..."tax me away just let me win" ROFLROFL

                    Tax away...tax away..as long as I win who cares?? also there's no state tax in Delaware which makes this story even worse

                      Boney526's avatar - NjlpLogo
                      New Jersey
                      United States
                      Member #99034
                      October 18, 2010
                      1439 Posts
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                      Posted: January 26, 2011, 7:22 pm - IP Logged

                      Why do people think they can outwit the government with schemes of tax evasion at anytime. I sat on a Grand jury many years ago for a story involving a lottery winner very similar to this. The barcodes on the tickets have codes the feds follow. Series of winning tickets such as his 200 str8 and 100 or so boxed can easily be tracked. The time of the purchase, merchants special code, terminal that the ticket is generated from are all located in the barcodes.

                      It's best to buy the winning tickets and pay the taxes. Even the taxesyou pay is going to hurt, but, being a storyline whose story ends in jail hurts even more, for you and your family..

                      I really don't think they'd have come after him if he had say 30 box bets.  But god , you can't skip on over 100,000 dollars worth of taxes.  If he really had 90000 in Gambling losses - I'm pretty sure he could have put the 90000 against the (a little more than) 500000 and claim the taxes on the difference back.  If my understanding of the federal taxing of lotteries is right, he could potentially have only owedabout 75000 in taxes.

                        Littleoldlady's avatar - basket
                        Clarksville
                        United States
                        Member #487
                        July 15, 2002
                        17638 Posts
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                        Posted: January 26, 2011, 7:44 pm - IP Logged

                        It is just another case of greed and stupidity.  The tickets are tracked to see where the winners are.  Also, if he didn't pay for his tickets on the spot in cash but instead had some kind of "credit thing" with the merchant  isn't that illegal, too?  I thought you couldn't play on credit.

                        If you know your number is going to hit, have patience and then KILL IT!

                        You never know when you will get another hit.

                          time*treat's avatar - radar

                          United States
                          Member #13130
                          March 30, 2005
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                          Posted: January 26, 2011, 7:50 pm - IP Logged

                          Curious if it might have gone unnoticed had it been won on bunch of pick 3 or scratchers instead. Probably not because there are camera and scanners everywhere.

                          It'd have made no difference, even without video (with any printed-on-the-spot tickets, at least); when you buy tickets, the time of the purchase is one of many things encoded on them.

                          There's no way multiple real people could place a buy in the same location (and what are the odds of them all playing the same number) and complete their transaction in as short a space as it would take one person to buy the same quantity of tickets. 

                          Minutes vs. milliseconds. Wink

                          In neo-conned Amerika, bank robs you.
                          Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

                            RJOh's avatar - chipmunk
                            mid-Ohio
                            United States
                            Member #9
                            March 24, 2001
                            17831 Posts
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                            Posted: January 26, 2011, 9:00 pm - IP Logged

                            Curious if it might have gone unnoticed had it been won on bunch of pick 3 or scratchers instead. Probably not because there are camera and scanners everywhere.

                            Any time some one buys 360 pick3 or pick4 tickets with the same numbers and win $516,000, it's going to be investigated for security reasons.  When you consider the normal payouts amount for the whole state and one store sell 50% of the winning tickets in a period of 10 minutes, what do you think going to happen. 

                            After paying his partner in crime a $50,000 fee and a fee to those who actually cashed the tickets he probably would have been ahead to have just cashed the tickets himself, claimed his losses of $90,000 from other drawings and paid the taxes.

                            * you don't need more tickets, just the right ticket * 
                            * your best chance to win a lottery jackpot is to buy a ticket * 
                                Wink