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Lottery scams hard to resist for some

Insider BuzzInsider Buzz: Lottery scams hard to resist for some
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What if you got home today and found a letter in your mailbox telling you that you won thousands of dollars in a Canadian lottery?

It sounds like great news, but it's actually a scam that's costing Americans millions of dollars every year.

Too Good To Be True

This is the scam we get the most calls and e-mails about. And it's very convincing because the letter comes with a check that looks real.

So a Pennsylvania TV news crew went to Canada to find out how the scam works and where your money is going.

Every day, thousands of Americans receive letters telling them they've won a lottery. It says that they've won a share of $96,000 and that the money has been deposited in an escrow account pending claim. The letter has a check for thousands of dollars.

The letter goes on to say that to assist in paying the necessary fees and foreign access taxes, the recipient should deposit the check in their bank account and immediately wire transfer the money to pay Canadian taxes.

The catch is that the check is bogus. It bounces and victims lose thousands of dollars that they wired to the scammers.

Zach Heverling of Lebanon received one of these letters and wants to know how "Exceed Management" determined he won a lottery.

"You have to wonder, 'What's going on?' I didn't work for it," he said.

The TV news crew also wanted to know what's going on, so they decided to take the sweepstakes notification letter to Toronto, Canada to try to find Exceed Management along Elgin Mill Road. The reporter and a photographer were able to find the address, but it led to a cemetery.

The address on the letterhead was real. It just happened to be the address for the Elgin Hills Cemetery and Crematorium north of Toronto. The cemetery director was surprised to learn that his address was being used for a scam.

"We certainly don't have $96,000 to give to anyone and this has nothing to do with the cemetery," said Andre Arndt.

The news came as no surprise to the Toronto police, which has special fraud unit to investigate these scams.

"It's ghosts and shadows. These people hide behind a level of anonymity. They use false names, everything about them is false," said Detective Gary Brennan, of Toronto police.

The phone number on the lottery letter was real. When a producer called, a man answered. He tried to con the producer into believing he really won until the man on the other end was told that the news team had discovered his so-called office was really a cemetery.

The office phone number was untraceable. It could be any one of a number of stolen or pre-paid phones he's using.

"An office can be as little as a pocket with a handful of SIM chips for cell phones," Brennan said.

It's estimated that scams run through Canada rip off Americans for hundreds of millions of year, which is a conservative figure. Law enforcement officials in the U.S. believe that 60% of victims don't even report the crime because they're too embarrassed they fell for the scam.

Americans do report close to $100 million lost to these scams each year, but postal inspectors tracking the scam mail say that may only be a fraction of the real loss.

"It's the most prevalent scam going right now. It's the priority investigation of this particular office we're working," said postal inspector Nick Alicia.

Conning Through Canada

Toronto is the economic capital of Canada, and it's believed that much of the money swindled in the Canadian lottery scams flows through the city.

"However when it comes to Canada, it doesn't necessarily mean it stays here and the head of the snake is here. It simply means we are part of the process that is being used," said Detective Gary Brennan of the Toronto police.

Fraud investigators for the Toronto police said the lottery scams run through Canada often operate like small corporations. Someone outside the country may create the phony lottery letters and send them into Canada.

"Where the recipient in Canada will take them out of the courier package and put them into the Canadian mailing system," Brennan said.

With a Canadian postmark, the lottery letter gains authenticity. And the fake check that comes with the letter — it can fool just about anybody.

"Some people work at banks. And they saw this and said, 'You got to be kidding. Nobody's going to send you a check for nothing.' So it's got to be legit cause the checks in there," said U.S. Postal Inspector Jim Wilson.

Most of the time, the checks are real good fakes. And sometimes they are real checks that have been stolen, drawn on business accounts that are not even in Canada.

"But people don't look at that. They only look at the $3,600 on that check and that check is going to pay the taxes for that $300,000 prize," said U.S. Postal Inspector Nick Alicia.

After depositing the fake check, the "lottery winner" or victim is supposed to call the lottery office. The lottery office probably is someone sitting in a room using a number of temporary cell phones.

But scam artists can only hide behind temporary telephone numbers, phony letterheads and fake addresses for so long. Eventually they need to surface to collect the cash they're trying to scam. And most often, in Toronto, that happens along Weston Road. Lining the road, are a lot of small shops that allow people to send and receive Western Union and Money Gram wire transfers. Convenience stores, even beauty shops, offer wire transfer services.

"A lot of the people that own these Western Union and Money Gram outlets are collusive agents of the organization," Alicia said.

Victims in the lottery scam are asked to wire the money because it's immediate. It can be picked up anywhere in Canada, and then it turns to cash.

"But that's where the trail goes cold. Once it turns to cash, it's very difficult to follow," said Brennan. "Does the money stay in Canada? I'd have to think not because of the volume. I believe that it goes elsewhere."

Some investigators said that more than half the wire transfers going from the U.S. to Canada are involved in fraud. Once it's picked up by someone in Canada, it's believed some of the money goes to Europe. But most of it goes to western Africa.

Many scam victims often ask, 'How did they get my name and address to begin with?'

Scammers can simply buy lists of names and addresses from marketing companies. Most often they target lower-income individuals.

One thing to keep in mind to help spot a Canadian lottery scam — they tell you these checks are provided to pay taxes. If you win the lottery in Canada, the winnings are tax-free.

Crooks "borrow" popular web site names

An ever-growing number of these lottery scams try to lend credibility to their deception by placing the names and graphics of popular lottery web sites in the scam letters.

USA Mega (www.usamega.com) and Lottery Post (www.lotterypost.com) are two of the scammers favorite "identity thefts".

Because the two popular lottery web sites are well-known to players worldwide, someone seeing the familiar name and graphics will assume the letter is legitimate.

Todd Northrop, the creator of both web sites, said dealing with the enormous amount of e-mails and questions about fake prizes can be overwhelming at times.

"Even with big warnings about the scams right on the contact page I still receive dozens of e-mails a day from people trying to claim a fake prize," Northrop said.

"I imagine the warning message stops a lot of people from writing, so the fact that I still get so many e-mails says to me that the number of victims falling for this must be astronomical."

Northrop created a page at USA Mega that shows some of the actual scam letters with USA Mega logos.  (http://www.usamega.com/lottery-scams.asp)

What will it take to stop these thieves?  Certainly law enforcement will play a big role, but Northrop thinks public awareness is the key.

"Victims of lottery scams generally are not regular players of the lottery, because lottery players see scam warnings all the time, thanks to efforts of the lottery associations and web sites like Lottery Post."

"Consumer advocacy groups need to find better ways of letting everyone else know."

News 8 and Lottery Post Staff

We'd love to see your comments here!  Register for a FREE membership — it takes just a few moments — and you'll be able to post comments here and on any of our forums. If you're already a member, you can Log In to post a comment.

17 comments. Last comment 9 years ago by MIlottoplayer.
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Raven62's avatar - binary
New Jersey
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June 28, 2005
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Posted: June 28, 2007, 4:52 am - IP Logged

If I Won: Don't Send a Letter: Just Send the Money! LOL!

A mind once stretched by a new idea never returns to its original dimensions!

    dvdiva's avatar - 8ball

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    Posted: June 28, 2007, 9:11 am - IP Logged

    If you want to win the Canadian Lottery you have to go to Canada and buy a ticket. Although speaking from experience it had better be from Ontario since that's where all the winning tickets seem to be sold.

      justxploring's avatar - villiarna
      Wandering Aimlessly
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      Posted: June 28, 2007, 11:12 am - IP Logged

      I Agree!

      It's a shame that people try to cheat others all the time.  I realize a lot of people aren't too bright, and those seem to be the ones who are fooled all the time, but my heart goes out to them.  I'll tell you why.  I'm not sure it's only greed that creates victims.  If anyone here knows what it's like to feel desperate, you understand how logic sometimes gets clouded by hope. 

      Still, I don't see how anyone who didn't buy a ticket in the first place can believe he won anything at all, and anyone who sends money to win money isn't using common sense.   

        Avatar
        Kentucky
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        Posted: June 28, 2007, 4:38 pm - IP Logged

        I Agree!

        It's a shame that people try to cheat others all the time.  I realize a lot of people aren't too bright, and those seem to be the ones who are fooled all the time, but my heart goes out to them.  I'll tell you why.  I'm not sure it's only greed that creates victims.  If anyone here knows what it's like to feel desperate, you understand how logic sometimes gets clouded by hope. 

        Still, I don't see how anyone who didn't buy a ticket in the first place can believe he won anything at all, and anyone who sends money to win money isn't using common sense.   

        "and anyone who sends money to win money isn't using common sense."

        The first time I hit the Pick-4 straight I had to fill out the paper work, get it notarized, and go to a designated bank to collect the $2600 in winnings. I knew there was a $10 fee at the bank but I didn't know that the teller would demand the fee up front. Apparently she was either absent the day they taught "common sense" and to just deduct the fee and give me $2590 or she thought it was her job to hassle people.

        When people get these scams in the mail, which part of "any taxes should and can be deducted from the winnings" don't they understand?

          stavros's avatar - avatar 6898.gif
          Florida
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          Posted: June 28, 2007, 8:30 pm - IP Logged

          Exactly!  Duh, if you didn't play it, how can you win it????

          Good Luck!

          Stavros

           

            RJOh's avatar - chipmunk
            mid-Ohio
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            Posted: June 28, 2007, 8:56 pm - IP Logged

            "and anyone who sends money to win money isn't using common sense."

            The first time I hit the Pick-4 straight I had to fill out the paper work, get it notarized, and go to a designated bank to collect the $2600 in winnings. I knew there was a $10 fee at the bank but I didn't know that the teller would demand the fee up front. Apparently she was either absent the day they taught "common sense" and to just deduct the fee and give me $2590 or she thought it was her job to hassle people.

            When people get these scams in the mail, which part of "any taxes should and can be deducted from the winnings" don't they understand?

            I think is was her job to hassle you. 

            The time I won $1500, I have to drive 14MI to a designated bank in the another town.  When the teller checked my paper work she found my home address was missing.  I started to write it in but she told me I would have to return to the store that verified my ticket and do it in front of the store owner.  The store owner said I could have done it at the bank because she didn't need to know that information and since the signing was notarized by a bank employee. 

            That teller cost me an extra 28MI of driving and 45min of time.

             * you don't need to buy more tickets, just buy a winning ticket * 
               
                         Evil Looking       

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              Posted: June 28, 2007, 9:29 pm - IP Logged

              Being a reader of this board, and being that I wouldn't trust a Lottery that I didn't have to enter to win, and because I'm not up to a trip to Canada to claim a prize.. I'd read it for its amusement value and I'd report it to authorities. Sometimes I get "checks" for $5 that are real but the fine print says you're signing up for a club of some kind that would charge your credit card $100 a year or thereabouts. It's such a common way to fool people. I suggest this, the US Post Office should send a mass mailing to everyone warning about these scams. It's something involving the Mail so use the Mail to fight it.

              "Just Send the Money..." and make sure it's American $ not like in Stonesylvanian Krupeks!

              Drive to a designated bank, get it notarized.. pay a fee.. what?? Here in nj all you do is fill a claim form at the ELE7VEN, mail it in with the winning tkt and you get a check a few weeks later minus the withholding.

                justxploring's avatar - villiarna
                Wandering Aimlessly
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                Posted: June 29, 2007, 2:15 am - IP Logged

                Apparently she was either absent the day they taught "common sense" and to just deduct the fee and give me $2590 or she thought it was her job to hassle people.

                Stack, how can you even compare what I wrote to your experience?  You went to a bank!  You didn't get something in an email telling you that you won a prize that you didn't even bet in the first place.  I don't know if you are just trying to be argumentative or you're not using "common sense" by quoting me.  In fact, I just read my post again and I clearly said I felt badly for people who fall for scams.  Still, paying taxes on a lottery win or a fee to a bank and sending money to an unknown source because you received a letter are 2 different things.  If I won money and drove to the Lottery Office, I certainly would expect to complete paperwork, show ID and have the 25% tax deducted.  If I got a letter in the mail telling me I just won the FL lottery and to please pay $XXX I wouldn't be using any sense if I didn't check my tickets to see if they matched what is posted on the web site or in the newspaper and I'd check first by calling the Lottery.  (actually, I'd laugh and tear up the letter)

                When people get these scams in the mail, which part of "any taxes should and can be deducted from the winnings" don't they understand?

                Are you serious? I shouldn't even be responding to this because as I wrote above, this has nothing to do with paying taxes for a game you actually played and a prize you actually won.  Did you read the article?  These people are getting letters asking them to deposit money in an account and wire transfer it to Canada.  Why would you do that, especially if you never bought a ticket for that drawing in the first place? 

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                  Kentucky
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                  Posted: June 29, 2007, 8:24 am - IP Logged

                  Apparently she was either absent the day they taught "common sense" and to just deduct the fee and give me $2590 or she thought it was her job to hassle people.

                  Stack, how can you even compare what I wrote to your experience?  You went to a bank!  You didn't get something in an email telling you that you won a prize that you didn't even bet in the first place.  I don't know if you are just trying to be argumentative or you're not using "common sense" by quoting me.  In fact, I just read my post again and I clearly said I felt badly for people who fall for scams.  Still, paying taxes on a lottery win or a fee to a bank and sending money to an unknown source because you received a letter are 2 different things.  If I won money and drove to the Lottery Office, I certainly would expect to complete paperwork, show ID and have the 25% tax deducted.  If I got a letter in the mail telling me I just won the FL lottery and to please pay $XXX I wouldn't be using any sense if I didn't check my tickets to see if they matched what is posted on the web site or in the newspaper and I'd check first by calling the Lottery.  (actually, I'd laugh and tear up the letter)

                  When people get these scams in the mail, which part of "any taxes should and can be deducted from the winnings" don't they understand?

                  Are you serious? I shouldn't even be responding to this because as I wrote above, this has nothing to do with paying taxes for a game you actually played and a prize you actually won.  Did you read the article?  These people are getting letters asking them to deposit money in an account and wire transfer it to Canada.  Why would you do that, especially if you never bought a ticket for that drawing in the first place? 

                  "If I won money and drove to the Lottery Office, I certainly would expect to complete paperwork, show ID and have the 25% tax deducted."

                  In Ohio and in most states when you win $600 up to $5000, any lottery terminal agent can validate the ticket, fill out a form, and give you a voucher that you take to a designated bank for payment. Taxes are not deducted. The bank charges a $10 processing fee and that's what I meant about the Teller having no common sense because she wanted the 10 bucks before she would give me the $2600. Would it be that difficult for her to subtract it and count out $2590?

                  "Did you read the article?"

                  Yes I did and made that last statement because I read "One thing to keep in mind to help spot a Canadian lottery scam — they tell you these checks are provided to pay taxes. If you win the lottery in Canada, the winnings are tax-free."

                  Maybe I should have made it clearer by saying "any taxes on winnings over $5000 and/or fees should and can be deducted from the winnings", but the scam was the flubberized check they sent with the notification. It's obvious the idea was to deposit the check in a bank and if the mark went to the same bank I did, that teller probably would have wanted to charge them a fee.

                  I don't see much difference between these scam artist and the people representing your credit card that call and say they have a "free gift" for you.

                  "Why would you do that, especially if you never bought a ticket for that drawing in the first place?"

                  The people that would probably entered other promotions and sweepstakes so they don't know any better. I wonder how much these con artist could have make if they had put a picture of Ed McMahon on the letter.

                    justxploring's avatar - villiarna
                    Wandering Aimlessly
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                    Posted: June 29, 2007, 10:28 am - IP Logged

                    I don't see much difference between these scam artist and the people representing your credit card that call and say they have a "free gift" for you.

                    I agree (a little) but I still think you are comparing apples and oranges. I think getting a letter stating you've won a lottery in Canada or Jamaica when you've never been to either country should be a clue. The credit card offers I've gotten are real.  You just need to always do your due diligence and make sure something is legitimate before giving out personal information.  No credit card company would call you and ask for your social security number for example. You get something in the mail with a toll free number and an offer code which identifies you. Chase & Citi have some nice offers with 0% interest for 15 months and a free gift. I just received one of those cards a few weeks ago.

                    I've also gotten numerous phishing emails that look so real it's frightening, but when you stop and think "How could my account be frozen? That makes no sense. I should drive over there" or "How can my bank lose my account number? I better call them" you won't get scammed.  I get emails from people pretending to be eBay and PayPal all the time.  I used to check my account to make sure it's okay, but now I don't bother and just delete the emails.

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                      Kentucky
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                      Posted: June 29, 2007, 6:15 pm - IP Logged

                      I don't see much difference between these scam artist and the people representing your credit card that call and say they have a "free gift" for you.

                      I agree (a little) but I still think you are comparing apples and oranges. I think getting a letter stating you've won a lottery in Canada or Jamaica when you've never been to either country should be a clue. The credit card offers I've gotten are real.  You just need to always do your due diligence and make sure something is legitimate before giving out personal information.  No credit card company would call you and ask for your social security number for example. You get something in the mail with a toll free number and an offer code which identifies you. Chase & Citi have some nice offers with 0% interest for 15 months and a free gift. I just received one of those cards a few weeks ago.

                      I've also gotten numerous phishing emails that look so real it's frightening, but when you stop and think "How could my account be frozen? That makes no sense. I should drive over there" or "How can my bank lose my account number? I better call them" you won't get scammed.  I get emails from people pretending to be eBay and PayPal all the time.  I used to check my account to make sure it's okay, but now I don't bother and just delete the emails.

                      The phone calls I get are from the people that got my credit card info from the banks that issued me my cards. It's different than the special offers you get with your statement or offers for new cards.

                      You get a call that starts out by saying "because you are a valued costumer, we will send you a free gift for examining things like travel, card thief, or illness insurance for 30 days at no cost to you". They go on to tell you that if you choose to accept the offer, your credit card will be billed later. What they don't tell you is that your card will be billed before they send you anything and you have 30 days to call a toll free number and cancel it.

                      It's not on the same scale as getting a bogus $3600 check in the mail but these "free offers" could cost people a couple hundred dollars if they are not careful. I've deposited checks that are on my balance at the end of the business day but I don't know how long it takes before money the money is exchanged between two banks. If the check doesn't clear, the amount is deducted from your account. The scammers' knowledge of bank processes coupled with gullible people is why this scam works.

                      I use a separate Visa debit card for online transactions, keep a low balance and deposit money into the account before making the purchase.

                        justxploring's avatar - villiarna
                        Wandering Aimlessly
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                        Posted: June 29, 2007, 7:18 pm - IP Logged

                        That's a wise thing to do.  I am trying to stop the offers I get in the mail.  I don't want these "write yourself a check" offers to get into the wrong hands. 

                        Has anyone ever called you to say "Congratulations.  You've won a Cadillac Escalade!"  I've gotten at least 3 of those calls.  I never entered any such contest. Then he says to me "Oh, don't you remember being on (some web site) and entering a contest? I can see why some people might stop to consider it.   I found a couple of online discussions about the same scam.  I think it's just a way to get people to drive to a timeshare presentation, not to steal your identity, but they must be getting my phone number from something I've filled out, although I rarely use my home phone online.

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                          Grand Rapids, Michigan
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                          Posted: June 30, 2007, 6:43 pm - IP Logged

                          I just don't know why people can be so gullable to think they won something in a foreign country.  It's like people falling for those work at home websites or something.  It just sounds way too fishy to me.

                            Dr Lottery's avatar - 10847
                            Albany,Georgia
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                            Posted: June 30, 2007, 6:51 pm - IP Logged

                             get these types of emails daily but I trash them and thats what everyone else should do!!

                            One day I will Hit BIG!!