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Pa. man pleads guilty in bizarre lottery tax case

Sep 28, 2012, 12:45 pm

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Pennsylvania LotteryPennsylvania Lottery: Pa. man pleads guilty in bizarre lottery tax caseRating:

PITTSBURGH, Pa. — A 70-year-old Pennsylvania man faces up to a year and half in prison for having more than 40 people cash in lottery tickets worth $520,000 so he could avoid paying federal income tax on the winnings.

Sherman Friend, of McClellandtown, faces a sentence of 12 to 18 months in federal prison when he is sentenced Feb. 15 on the tax evasion charge he pleaded guilty to Friday before U.S. District Judge Arthur Schwab in Pittsburgh.

Assistant U.S. Attorney Nelson Cohen said Friend won big when he bought 208 50-cent tickets on the number 1127 for the lottery's mid-day Big 4 drawing on Dec. 17, 2009. Each ticket was worth $2,500, so Friend asked more than 20 friends who, in turn, recruited others, to cash the tickets so the tax liability couldn't be traced back to him.

In most instances, Friend paid the ticket-cashers $250, or 10 percent of each ticket's value, Cohen said.

Friend's attorney, John Cupp Jr., declined to comment about how often Friend plays the lottery or whether he was using a system to place his bets.

"I wish I knew," Cupp said.

Friend had previously won a vehicle in a fire department raffle in Maryland in 2007 and became angry when he learned he owed income tax on the vehicle, which he had given to a relative, Cohen said.

"We would submit that as evidence of his knowledge that if you won a lottery or raffle, you have to pay the tax," Cohen told the judge.

So, when Friend hit big on the lottery, he was determined to avoid the taxes.

"He went on to explain that he didn't feel he owed the taxes on these moneys," Cohen told the judge, referring to a statement Friend gave to Internal Revenue Service investigators.

In all, Friend avoided more than $132,000 in federal income taxes by failing to declare his cut of the winnings, which added up to more than $481,000 in 2009 and 2010, the two years in which he had the others cash the tickets. The lottery winnings were Friend's primary source of income in those years.

Cohen told the judge that Friend has agreed to repay the back taxes and that he may be sued by the IRS for penalties and interest, which have yet to be calculated.

AP

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73 comments. Last comment 10 years ago by mjwinsmith.
Page 1 of 5
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nanaimo,bc
Canada
Member #93106
June 21, 2010
27 Posts
Offline

mr.friend tried his best efforts NOT to pay taxes and now he is caught he should pay the penalty and serve the law ful time in jail he has earned the jail timeSmash

    RJOh's avatar - chipmunk
    100
    mid-Ohio
    United States
    Member #9
    March 24, 2001
    20272 Posts
    Offline

    "Friend's attorney, John Cupp Jr., declined to comment about how often Friend plays the lottery or whether he was using a system to place his bets."

    Sounds like they not only wanted to punish him and get the unpaid taxes, but someone wanted to get his system too.

     * you don't need to buy every combination, just the winning ones * 

    Thumbs Up       

      brina5eva's avatar - Lottery-050.jpg
      Georgia
      United States
      Member #6168
      August 9, 2004
      232 Posts
      Offline

      i know right.

      i probably would have tried the same thing. i have played .50 straights before of cash 4 so that i wouldn't have to pay the taxes if i won i still do. i gotta give it to give him for trying. i don't blame him ,i want all my money too. but i havent went to the extreme as 208 tickets. wow. but if he did have a system. he could have gotten away with it, he just went about it all wrong concentrating on that one number like that. he could have play ten and this number . 50 straight, a couple of days later.  ten on that number . 50 straight... and so on and just slowly cash them in with just you and probably 2 other people. he caused to much attention to himself on that number.

        RJOh's avatar - chipmunk
        100
        mid-Ohio
        United States
        Member #9
        March 24, 2001
        20272 Posts
        Offline

        mr.friend tried his best efforts NOT to pay taxes and now he is caught he should pay the penalty and serve the law ful time in jail he has earned the jail timeSmash

        Sounds like he didn't try hard enough.  He should had set up his system as some kind of investment scheme rather than income, that way he wouldn't have had to pay any more taxes than he paid his friends to cash those tickets for him.  I'm sure he could have found some lawyers like Romney used to get his tax rate to 13% or less.

         * you don't need to buy every combination, just the winning ones * 

        Thumbs Up       

          Set4life's avatar - 2554
          East Hampton, NY
          United States
          Member #41994
          June 25, 2006
          1137 Posts
          Offline

          <snip> what a win!  Tim Geithner cheated on his taxes and got a job as Sec. Of treasury lol

          This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

               $Group Hug$

               FOR THE WIN!

            helpmewin's avatar - dandy
            100
            u$a
            United States
            Member #106660
            February 22, 2011
            19967 Posts
            Offline

            Wow, i thought taxes is already taken out as soon as you Win Smiley

            Patriot

              Wooddrive's avatar - Lottery-046.jpg
              Delco PA
              United States
              Member #80102
              September 16, 2009
              194 Posts
              Offline

              Wow, wish I won more than 500Grand. I'll gladly pay 25% fed tax and keep 375Grand for myself. Better than not winning. Could have sold the strategy and made more money. If there was one. Dropping $104 on one number takes some balls...


                United States
                Member #116263
                September 7, 2011
                20244 Posts
                Offline

                Its my guess that this guy is wealthy...... remember when the IRS showed up at Willie Nelsons house??

                  rdgrnr's avatar - nw barkeep.jpg
                  100
                  Grand High Exalted Mystic Ruler
                  The Hall Of The Mountain Kings Tennessee
                  United States
                  Member #73902
                  April 28, 2009
                  15287 Posts
                  Offline

                  Wow, wish I won more than 500Grand. I'll gladly pay 25% fed tax and keep 375Grand for myself. Better than not winning. Could have sold the strategy and made more money. If there was one. Dropping $104 on one number takes some balls...

                  The rate is 35% and the President wants to make it 45% after the first of the year.


                    United States
                    Member #116263
                    September 7, 2011
                    20244 Posts
                    Offline

                    Yeah but thats only on the rich.............. Right????????

                      rdgrnr's avatar - nw barkeep.jpg
                      100
                      Grand High Exalted Mystic Ruler
                      The Hall Of The Mountain Kings Tennessee
                      United States
                      Member #73902
                      April 28, 2009
                      15287 Posts
                      Offline

                      Yeah but thats only on the rich.............. Right????????

                      It'll come out of your jackpot no matter if you're rich or poor.

                        sully16's avatar - sharan
                        25
                        Ringleader
                        Michigan
                        United States
                        Member #81738
                        October 28, 2009
                        98159 Posts
                        Online

                        Hello Friend, said the cell mate.

                        Happy National Yucatan Shrimp Day! Hyper

                          Wooddrive's avatar - Lottery-046.jpg
                          Delco PA
                          United States
                          Member #80102
                          September 16, 2009
                          194 Posts
                          Offline

                          The rate is 35% and the President wants to make it 45% after the first of the year.

                          your rate is 35%, mine is 25% buddy.

                            Artist77's avatar - batman14

                            United States
                            Member #121739
                            January 16, 2012
                            7895 Posts
                            Offline

                            The rate is 35% and the President wants to make it 45% after the first of the year.

                            The "current" president.

                            His time is up.

                             

                            Foul

                            Job killing

                            Barbarians