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Ontario Lottery tries to recover $12.5M insider win

Canada Super 7Canada Super 7: Ontario Lottery tries to recover $12.5M insider win
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Chung family created 'spider web' of properties, bank accounts

More than seven years after a Toronto-area woman cashed in a stolen $12.5 million Lotto Super 7 ticket, Ontario's lottery corporation is trying to recoup the money, but the lengthy wait may have cost the Crown agency.

CBC News has learned that the Ontario Lottery and Gaming Corporation (OLG) filed a lawsuit in March against the woman who claimed the ticket, Kathleen Chung, and her family and associated companies for "deliberately deceiving" the corporation.

Police allege that Chung's father and brother stole the free play ticket in 2003 from its rightful owners who validated the ticket at the Chung-managed Variety Plus store in Burlington, Ont. The duo then allegedly gave the ticket to Kathleen to claim in an attempt to cover their tracks.

The Chungs were charged in September 2010. Kathleen Chung, 30, faces charges of fraud, possession of property obtained by crime and laundering proceeds of crime. Her brother, Kenneth Chung, 29, and their father, Jun-Chul Chung, 61, were each charged with several counts of theft, possession of property obtained by crime and laundering proceeds of crime.

Since Kathleen Chung cashed in the ticket in late 2004, her family appears to have socked money away in dozens of bank accounts in the Toronto area, Seoul and New York, tucked it into life insurance policies and bought $10.5-million worth of properties, including mansions and a Tim Hortons building, according to the lawsuit and land registry documents.

Forensic accountant Marilyn Abate says the Chungs appear to have set up a sophisticated "spider web" of accounts and numbered companies, a sign they were likely expecting the OLG to come after them.

"They've had seven years to try and hide it and transfer it to different accounts, different jurisdictions and to different properties, or spend it," says Abate.

"As the time goes on, your chances [to recover it] become worse and worse."

Two-year window closed: defendant

Time is also not on the OLG's side in terms of the civil lawsuit. In her statement of defence, Kathleen Chung says she didn't know the ticket was stolen, but also that the limitation period — typically a two-year window — ran out long ago.

The winning ticket has already cost the Crown agency more than twice its original worth. In January, the OLG paid the rightful owners $12.5 million, plus $2.3 million in interest.

The case was highlighted in a 2007 Ontario ombudsman's report about unusually high numbers of insider wins and featured in a documentary by CBC's The Fifth Estate. In 2009, Ombudsman Andre Marin urged the OLG to launch civil suits to regain millions in taxpayer dollars lost to suspected fraudulent insider wins.

Asked why the provincial lottery agency waited until 2011 to sue the Chungs, OLG spokesman Tony Bitonti said it "did not want to prejudice the OPP investigation surrounding this case." The civil lawsuit is currently on hold until the criminal case wraps up.

Lengthy wait questioned

Legal expert James Morton says the OLG appears to have waited an "awfully long time" considering there's a two-year limit in Ontario for filing a civil lawsuit, which starts the day the fraud is discovered.

"You don't have to wait," said Morton. "It's common ... to issue the claim basically the same time you go to the cops."

In Kathleen Chung's statement of defence, filed Oct. 12, it says that the OLG ought to have known years ago that the prize money was wrongfully claimed. It points out that the OLG carried out an almost year-long investigation before giving her the lottery money in late 2004, plus there was a 2007 report by Ontario's ombudsman highlighting Chung's claim as questionable.

Chung denies knowing the ticket was stolen and claims she wasn't "enriched" by the lottery win, instead she claims the money went to her parents and brother.

The family's assets have been frozen in relation to the criminal proceedings.

The family members no longer live in the two mansions worth $3.4 million purchased in the wake of the lottery prize.

The parents and their son live in separate high-rises in the Greater Toronto Area. Kathleen Chung and her husband, Jung Ho Park, 37, who had twin girls in March 2010, have moved into a more modest Oakville home bought in September for $880,000.

Jung Ho Park, a dentist who works at five Toronto-area practices, is also named in the lawsuit. He has filed a statement of defence denying he received any money traceable to the lottery win.

Kathleen and Kenneth's mother, Young Ja Chung, is also named in the OLG lawsuit, as are three individuals whose relation is unknown: Sung Chan Kim, Young In Song and Hi Ok Chung.

Kathleen Chung's statement of defence is counterclaiming for $12.5 million, plus costs, against her father, mother and brother, if the OLG is successful in its lawsuit seeking to recoup the money from her.

Chungs 'credit-proofed' money

Experts will have to dig through a sophisticated network of 34 accounts, including one in South Korea and another in New York, to determine where the $12.5 million went.

Abate says that such a convoluted chain of accounts is typically used to move money around, making it difficult to trace, suggesting the Chungs knew what they were doing.

"They credit-proofed things, they went and hid their money in assets that would be difficult to get at and costly to get at," says Abate.

She also notes that the Chungs used mortgages to pay for more than three-quarters of their $10.5-million in properties, ensuring they could invest their money elsewhere — and making it far more difficult for the OLG to claim.

"The bank is going to get paid out first," says Abate. "Then the money is going to be held frozen by the Crown. And then after the criminal suit's done, we'll see if there's anything left over for OLG."

Thanks to Steve for the tip.

CBC News

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23 comments. Last comment 5 years ago by louise black.
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Avatar
Keokuk,Iowa
United States
Member #116504
September 12, 2011
305 Posts
Offline
Posted: November 15, 2011, 9:29 am - IP Logged

It looks to me like the Chung family might have just committed the perfect crime.

    rdgrnr's avatar - walt
    Way back up in them dadgum hills, son!
    United States
    Member #73904
    April 28, 2009
    14903 Posts
    Offline
    Posted: November 15, 2011, 10:32 am - IP Logged

    The Texas Lottery could take a lesson from the Ontario Lottery and give Willis Willis his money too.


                                                 
                         
                                             

     

     

     

     

                                                                                                       

    "The only thing necessary for evil to triumph is for good men to do nothing"

                                                                                                --Edmund Burke

     

     

      Avatar
      Monkey Butt, USA
      United States
      Member #54569
      August 23, 2007
      1124 Posts
      Offline
      Posted: November 15, 2011, 10:53 am - IP Logged

      The moral of the story.......

      Sign your d-a-m-n ticket.........

      In INK!!!!

      Not PENCIL!!!!!!

      And get a receipt listing your ticket(s) serial number(s).

        dpoly1's avatar - driver
        PA
        United States
        Member #66141
        October 16, 2008
        1672 Posts
        Offline
        Posted: November 15, 2011, 12:12 pm - IP Logged

        Government ....................... Stooges

          ChaosX's avatar - dnf
          Morris County, NJ
          United States
          Member #114357
          July 29, 2011
          656 Posts
          Offline
          Posted: November 15, 2011, 12:18 pm - IP Logged

          So apparently they launched an investigation that took over a year and still gave her the money. 

           

          And now it's 7 years later....

           

          I don't even know what to say, except what others have said: SIGN YOUR TICKET!

          "If you really want something in this life you have to work for it. Now quiet, they're about to announce the lottery numbers." - Homer J. Simpson

            ChaosX's avatar - dnf
            Morris County, NJ
            United States
            Member #114357
            July 29, 2011
            656 Posts
            Offline
            Posted: November 15, 2011, 12:21 pm - IP Logged

            So apparently they launched an investigation that took over a year and still gave her the money. 

             

            And now it's 7 years later....

             

            I don't even know what to say, except what others have said: SIGN YOUR TICKET!

            And they even paid the 'original' owner of the ticket... and still waited 7 years?!

            Skeptical

            "If you really want something in this life you have to work for it. Now quiet, they're about to announce the lottery numbers." - Homer J. Simpson

              Litebets27's avatar - power
              Maryland
              United States
              Member #10465
              January 14, 2005
              6065 Posts
              Offline
              Posted: November 15, 2011, 12:32 pm - IP Logged

              And they even paid the 'original' owner of the ticket... and still waited 7 years?!

              Skeptical

              Hey ChaosX, I was just about to post.. it looks like Ontario Lottery didn't intend to get the money back from the Chungs.  After continued heat from the original owner, the payout that was made has sparked new interest, probably, too late to reclaim original money.

              Therefore, there were two winners 7 years ago.

              Feeling,  PRICELESS!!!Banana

              Come on Jackpot!!!

                ChaosX's avatar - dnf
                Morris County, NJ
                United States
                Member #114357
                July 29, 2011
                656 Posts
                Offline
                Posted: November 15, 2011, 12:39 pm - IP Logged

                Hey ChaosX, I was just about to post.. it looks like Ontario Lottery didn't intend to get the money back from the Chungs.  After continued heat from the original owner, the payout that was made has sparked new interest, probably, too late to reclaim original money.

                Therefore, there were two winners 7 years ago.

                I'm not sure which gets to me more, that, or the fact they investigated Chung for over a year before they paid her.

                "If you really want something in this life you have to work for it. Now quiet, they're about to announce the lottery numbers." - Homer J. Simpson

                  jeffrey's avatar - moon
                  Hamilton, OH
                  United States
                  Member #4162
                  March 27, 2004
                  277 Posts
                  Offline
                  Posted: November 15, 2011, 1:58 pm - IP Logged

                  It looks to me like the Chung family might have just committed the perfect crime.

                  just cut off their hands and throw them bleeding in the street

                    maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
                    Massachusetts
                    United States
                    Member #37433
                    April 14, 2006
                    2747 Posts
                    Offline
                    Posted: November 15, 2011, 4:14 pm - IP Logged

                    It seems our regular Patels' are taking a break haha  they'll be back soon to a store near you ;-)

                    The Chungs should give back all that money with interest

                    That money's gone fo ever

                      Slick Nick's avatar - Lottery-035.jpg
                      Rochester
                      United States
                      Member #103282
                      January 1, 2011
                      603 Posts
                      Offline
                      Posted: November 15, 2011, 7:19 pm - IP Logged

                      It sounds to me that the Chung's were misbehaving. It sure is strange that things have taken so long, the statue of limitations will certainly come into play. Oh well, as the old saying goes, "what goes around, will come around". If they're proven wrong and guity, they will get theirs someday. Oogle

                      Money is a terrible master, but a great servant...Smile

                        gocart1's avatar - lighthouse
                        ONEONTA,NEW YORK
                        United States
                        Member #30516
                        January 17, 2006
                        419 Posts
                        Offline
                        Posted: November 15, 2011, 9:41 pm - IP Logged

                        It sounds to me that the Chung's were misbehaving. It sure is strange that things have taken so long, the statue of limitations will certainly come into play. Oh well, as the old saying goes, "what goes around, will come around". If they're proven wrong and guity, they will get theirs someday. Oogle

                        Does Canada have a statue of limitations in its laws...I always hate hearing about storys like this ..Good people getting ripped off...Always check your own ticket...PartyUS FlagPartyNoel


                          United States
                          Member #108380
                          March 25, 2011
                          505 Posts
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                          Posted: November 15, 2011, 10:49 pm - IP Logged

                           the chungs knew they were dealing with inept canadian law enforcement agencies. nothing to fear from them as they continually stumble and bumble their way through this.

                            Bondi Junction
                            Australia
                            Member #57242
                            December 24, 2007
                            1102 Posts
                            Offline
                            Posted: November 15, 2011, 11:43 pm - IP Logged

                            I said it before, and I'm still right! Lotteries should allow players to register. It would reduce to possibility of fraud.

                            We all get a lot out of lotteries!