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Hoosier Lottery increases funds for security

Indiana LotteryIndiana Lottery: Hoosier Lottery increases funds for security

People wouldn't play the Hoosier Lottery if they didn't think they could win.

That's why the William C. Foreman case is so troubling for those who run the state's lottery.

For months, officials have been trying to repair the damage done when Foreman, a former lottery investigator, was accused in November of obtaining insider information to help friends get a $1 million scratch-off ticket. Prosecutors say he had his friends buy every ticket in a store where he knew there was a winner.

Lottery officials have increased spending on security 40 percent — to $1.4 million — to repair the damage from the scandal.

They're upgrading to new, better security cameras, hiring more investigators, better training lottery staff and making security audits more stringent.

They've subtly redesigned scratch-off tickets by moving validation codes so lottery clerks have a harder time trying to cheat and find winning tickets.

The lottery also has stopped paying out prizes on most tickets that players claim were lost or destroyed. Investigators used to try to verify such claims more than 200 times a year.

And, through a complex new computer scrambler program, they're making it nearly impossible for anyone inside the lottery to ever find out where a winning ticket is.

"We need people to know that they have as good a shot as anyone to win," said new Lottery Director Esther Q. Schneider. "But the reputation and the image of the lottery has been hurt. If someone from security could figure out where a winning ticket was, then the game was not secure."

Current and former lottery security officials paint a critical picture of how the security department inside lottery headquarters at Pan Am Plaza used to be run — of video security cameras that didn't work, shoddy record keeping on security problems, hotline phones for lottery ticket thefts that went unanswered and large jackpots paid with no questions asked.

"The most alarming thing to me was the general complacency to safety and security," said new Drector of Security Michael Bare, whose staff now asks lottery winners basic questions (such as "Does anyone in your family work at the lottery?") before paying out big prizes.

A former investigator echoes that criticism.

"There was a Barney Fife attitude to it. We were there just because we had to be," said Matthew Hollcraft, an investigator who worked at the lottery during the Foreman scandal. Hollcraft, who wasn't involved in the reported crime and who prosecutors say won't be charged, is being called as a witness and is now an officer with the Hendricks County Sheriff's Department.

Foreman, who is scheduled to go on trial next month, did not respond to repeated requests for an interview.

Lottery investigator Pete Byrne, who was chief of security during the scandal, said his department suffered because of budget cuts.

"No one ever sees what security does. If nothing goes wrong, then we're doing our jobs. But once you start cutting, that's what you get," said Byrne, a Democrat who survived the scandal and still works at the lottery. He kept his job, in part, because a state law requires the security department to have an equal number of Democrats and Republicans. He also stayed on because he was one of the few left with the knowledge — of everything from passwords to running the security computers — to run the department after several others retired or resigned.

The scandal exposed gaping weaknesses in lottery security, including:

  • Ticket reconstruction. In the Foreman case, a trucker called in to say he thought he had bought a winning ticket in the $2 million Bonus Spectacular game but had lost it. To keep players happy, lottery investigators would try to "reconstruct" the ticket. In many cases, if a lottery player didn't have a ticket but remembered where it was purchased, how much was spent on the ticket and when it was bought, the lottery would try to confirm it, then pay the prize if the winner signed an affidavit. Hollcraft said he did about 20 reconstructions a month, and remembered one case in which a $50,000 prize was paid to a player who didn't have a ticket.
  • Ease of obtaining the winners. Hollcraft was told by his boss, chief of security Byrne, to reconstruct the trucker's ticket. Hollcraft used a secure e-mail program to ask the ticket company, Scientific Games, at what stores the winning tickets were located. Hollcraft obtained a paper record and an electronic record of the list of winning ticket locations, which Byrne and Foreman had access to.
  • Unsold tickets. After the security breach was discovered, the lottery asked for all of the unsold tickets to be destroyed, which was done on June 6. However, the tickets already in stores remained active. Had they been deactivated, which security officials could have done from their office, no one would have been able to cash in the winning $1 million ticket.
  • Accountability. The two men who claimed the $1 million prize raised eyebrows because Byrne recognized one of them as Foreman's friend.

Then-Lottery Director Jack Ross knew there was a problem in September when he demanded Foreman take a lie detector test. Foreman refused and then resigned. Byrne took the lie detector and passed, lottery officials at the time said.

Ross also deposed Hollcraft, who was forced to resign, and then paid him $7,500 as part of a settlement that demanded he keep quiet about the security breach and tell the lottery first if asked to testify about the case. However, Ross didn't call in outside investigators until November, after the general election and after the Marion County prosecutor's office already had filed charges.

"The scratch-off tickets are the most vulnerable, and they had the least amount of security," said former director of security Ellen Corcella, who was hired by Schneider in February but resigned after less than six months because of conflicts with the new director.

Volunteer review

Indiana's lottery woes drew attention outside the state.

In Tennessee, the 18-month-old lottery doesn't allow ticket reconstructions like the one in the Foreman case without petitioning the chief executive officer in writing. In addition, the Tennessee Lottery doesn't have the ability to know where certain lottery ticket packs are located.

"Indiana was unique in that regard. They had the keys to the gate," said David Jennings, the Tennessee Lottery's vice president of security. He said Tennessee officials took note of Indiana's scandal, contacted Hoosier officials about their problems and reviewed Tennessee's procedures to make sure a similar scam couldn't happen there.

"The integrity of the game is everything," Jennings said.

In Indiana, scratch-off ticket sales are still strong and rival Powerball sales at the Laundry and Tan Connection, known in its Rural Street neighborhood as the Laundry Basket. There, lottery manager Bob Thompson said people have heard about the scandals — but that hasn't shaken their belief that one lucky ticket is out there.

"We have people who play every day — faithfully, no matter what," said Thompson, who said the hot ticket right now is the $250,000 Cash Blast.

All keyed up

To keep players happy — and focused on winning and not scandals — officials say they've fixed the weaknesses brought to light in the Foreman case. Ticket reconstructions are rarely done, and only after approval by the lottery director and head of security.

A newly patented system called Keyed Dual Security scrambles lottery information between the ticket company, Scientific Games, and the lottery, so that no one from either place knows where the winners are.

And, to beef up accountability, the lottery has moved the internal security officer outside the department to serve as its watchdog, to report to the executive director.

Ross, the lottery director at the time of the scandal, didn't want to talk specifically about the Foreman case while the criminal case is ongoing. Nor would he explain why he waited months to contact outside criminal investigators.

"Security always is a priority — it was a priority. We were very secure," Ross said. "I wouldn't want to comment further on security."

About the Hoosier Lottery security scandal

  • What happened: A former lottery official, William C. Foreman, is accused of disclosing the location of a winning lottery ticket in a $2 million scratch-off game. Two Shelby County men, Chad R. Adkins and Daniel J. Foltz, claimed the $1 million prize in September after at least one of them bought all of the tickets in the store where the winner was located.
  • How it happened: A trucker called in and said he thought he had a winning ticket in the $2 million game but lost it. He also couldn't remember which of about 40 stores he bought it at. Security Director Pete Byrne told another lottery investigator to look into the claims. That investigator, Matthew Hollcraft, obtained locations of the winning tickets from the lottery ticket company, Scientific Games, to see if any of the trucker's stores had the winning ticket. The trucker wasn't a winner. Hollcraft told Byrne what he learned. Foreman had access to the locations and is accused of telling Adkins and Foltz where the winning ticket was.
  • Case status: Foreman is scheduled to go on trial next month. Adkins and Foltz have pleaded guilty to theft and agreed to pay back the money in exchange for their testimony against Foreman. Adkins and Foltz are scheduled to be sentenced next month. Byrne still works at the lottery. Hollcraft works for the Hendricks County Sheriff's Department.

Improve your odds for lottery luck

While the Hoosier Lottery does what it can to safeguard its games, players also should take care when trying their luck:

  • Treat your lottery ticket like cash.
  • Sign the back of your ticket immediately. Even if it's a loser, it could be entered in a second-chance drawing.
  • If you don't understand the game, or have a question about whether you won, call the toll-free number on the back of the ticket.
  • If you get a ticket from a retail clerk and it's not what you want, speak up immediately at the store.
  • If part of the ticket already has been rubbed off, ask for another one.
  • If you win and the store can't pay your prize, make sure you get your ticket and your receipt back so you can claim your winnings at another store or at a lottery regional office.

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2 comments. Last comment 11 years ago by LOTTOMIKE.
Page 1 of 1

United States
Member #16612
June 2, 2005
3493 Posts
Posted: July 29, 2005, 1:58 pm - IP Logged

That's a great idea increasing security even if lotto is a winner or a loser.

    LOTTOMIKE's avatar - cash money.jpg
    United States
    Member #7853
    October 15, 2004
    11338 Posts
    Posted: July 29, 2005, 6:10 pm - IP Logged

    indiana lottery is a JOKE.