Indiana Lottery: Informant reported lottery scam
Agency criticized for silence in scratch-off case; director says he lacked evidence to notify police
Marion County Prosecutor Carl Brizzi said Tuesday that Hoosier Lottery officials knew for months there were potential problems with a scratch-off game, but failed to notify police about their suspicions of a possible scam.
A day after charging ex-security agent William C. Foreman and two other men with stealing from the lottery, Brizzi said an informant, rather than lottery officials, alerted his office to the scheme.
"There were no efforts by anyone in the lottery to bring this to law enforcement," Brizzi said. "But for the efforts of (investigators) Tom Trathen and Mike Thayer, $50,000 of public money would be paid out (per year) to these thieves over the next 20 years."
The lottery already had paid out the first installment to Foreman's alleged accomplices before Monday's arrest.
Lottery Director Jack Ross defended his agency.
"I had the option of either paying the ticket or leveling a very serious allegation," Ross said. "I did not have the evidence to level that serious allegation."
Foreman, 59, Indianapolis, was arrested Monday and charged with felony counts of disclosing confidential lottery information and theft.
Investigators say Foreman, a lottery security officer who resigned in September, told two men that a winning ticket in the "$2,000,000 Bonus Spectacular" game could be purchased at a store in southeastern Indiana.
The men who cashed in that ticket, Chad R. Adkins and Daniel J. Foltz, were formally charged Tuesday with theft.
According to court records, Adkins and Foltz say Foreman told them where to buy the winning ticket. The men then arranged to purchase the store's entire supply.
The documents do not say how Foreman, a retired Indianapolis police officer, gained that information.
When ordered to take a polygraph test, Foreman resigned his $52,800-a-year job on Sept. 13. Prosecutors say he was a few months short of being able to claim full retirement benefits.
Foreman, who is free on bond, is scheduled to appear in Marion Superior Court today. Adkins, 28, and Foltz, 31, both of Shelbyville, are charged with theft and scheduled to appear for hearings on Nov. 22.
Investigators have released little information on Foreman's connection with Adkins and Foltz.
Tickets carry codes
Lottery tickets are coded with numbers and other discreet marks that verify their authenticity. Only the manufacturer, Scientific Games, knows the numbers of the winning tickets. That information is never supposed to be shared with people at the lottery until a game is closed.
But in this case, Hoosier Lottery investigator Matthew Hollcraft -- looking into a claim from a person who believed he had lost a winning jackpot ticket -- requested and received a list of winning tickets on May 13.
The identifying numbers, along with distribution information available to some within the lottery, can be used to trace the winning tickets.
A day after receiving the list of winning tickets, Hollcraft was forced to resign from the lottery for reasons including the security breach, Ross said.
In an agreement signed Sept. 30 by Hollcraft and Ross, Hollcraft promised not to divulge any lottery information and agreed he would notify lottery officials beforehand if he is called to testify in court about the security breach.
Investigators also revealed Tuesday that lottery officials paid Hollcraft a $7,500 settlement.
Ross said the settlement allowed lottery officials to get a sworn statement from him detailing the security breach.
Hollcraft, who has not been charged in the case, could not be reached for comment.
"We were trying to make sure no criminal activity was taking place," Ross said. "That was our concern. We hadn't ruled that out as a possibility."
The lottery employs 11 security officers -- most of them former police officers -- and was conducting its own investigation into the matter, Ross said.
During the 2004 budget year, lottery proceeds amounted to about $200 million. The money was set aside to pay pensions of teachers, police officers and firefighters; to lower license plate excise taxes; and to cover other state expenditures.
Legislators weigh in
"Hopefully there's not a wide-scale loss of confidence in the lottery," said state Sen. Murray Clark, R-Indianapolis. "Obviously that's my fear. Definitely it should be looked into, but I don't want to second-guess anybody because I'm not privy to all the facts."
Clark and other legislators said what happened is a "management issue" that does not require legislative action.
"It's always troublesome when something like this occurs, but we should keep in mind the system works," said state Sen. Vi Simpson, D-Ellettsville. "The point is they didn't succeed. I think perhaps Prosecutor Brizzi is making a bigger deal out of this than it is."
Simpson said Ross, a former attorney for Senate Democrats, is "as ethical a guy as you'll ever find."
The McDonald's Corp. survived a similar disaster with its monopoly game three years ago in which 35 people, many associated with the marketing company that ran the contest, pleaded guilty to rigging it, said Lisa Howard, a company spokeswoman.
The thefts involved more than $20 million in fraudulently redeemed game pieces. The company fired the marketing company and gave away $25 million in cash and prizes to customers.
The company continues to run the popular promotion.
Following McDonald's lead, Ross said the lottery is looking for ways to make things right for players of the scratch-off game.
"That's clearly something we would like to do," Ross said. "We certainly don't want to profit from this."