SAN JOSE, Calif. — Are California Lottery retailers beating the odds, or is there something more going on?
A local media investigation found some store owners cashing in winning lottery tickets at surprising rates.
It's one of the winningest lottery stores in the Bay Area: Dolce Espresso in San Jose has reported 212 winning tickets worth $600 or more in the past decade. The luckiest winner is owner Minh Nguyen. He's claimed 87 of them.
At the Jelly Donut in Daly City, owner Frank Huynh claimed 15 winning Scratchers worth a thousand bucks each, in just the past two years.
And Angela Kouch and her frequent customer Jose Ruiz combined: A whopping 380 wins at her store, MJB Video in L.A.
Notice a theme? Data obtained from the California Lottery shows many of the most frequent winners in California are retailers.
"I definitely would say that some of them defy the odds," said Skip Garibaldi. He's a mathematics professor at UCLA, and an expert on the lottery.
He crunched the numbers for us, and estimates that if these store owners are really buying their own tickets, they're spending a fortune.
Like Frank Huynh at the Jelly Donut: "Over his 642-day span of collecting prizes I think he was spending about $1,300 a day," said Garibaldi. That's $840,000 total to win $32,000.
Numbers like that he says are improbable: "You can get lucky once, you can buy a mega millions ticket and you can win. But if you win twice you either spent a lot of money or something is up," said Garibaldi.
The lottery's chief enforcement officer, Steve Tacchini said something called discounting may be at play.
That's when customers sell their winning tickets to the retailer for less than they are worth. "People have liens or judgments, could be child support payments. They know if the tickets go into a claim, part of that will be garnished. Unfortunately there are some unscrupulous retailers out there that take advantage of these situations," said Tacchini.
Like at MJB video. After half an hour of denials and excuses owner Angela Kouch finally fessed up: I just help the people, but I don't make any one penny on customer," she said.
Tacchini said claiming a ticket that is not really yours is a violation of lottery regulations, it's not a crime.
But another way some retailers could be claiming so many wins is criminal: They could be cheating unsuspecting customers. In stings conducted randomly across the state, lottery investigators posing as customers use a decoy winning ticket to test the retailers' honesty.
Tacchini says the bad apples are a minority. "We have 22,000 retailers and the routine testing we do has them at 98 to 99 percent compliance," he said.
He said the lottery has tightened regulations to stop retailer cheating. Now all winners of $600 or more have to disclose if they are owners or employees of stores. The new rules went into effect in 2007, the very year Minh Nguyen's winning streak abruptly ended at Dolce Espresso.
He didn't want to talk about it, and even denied he plays the lottery at all, even though his name and the name of his store are clearly on the lottery's database.
Same story at the Jelly Donut. Owner Frank Huynh at first denied he plays Scratchers then told us it was his wife. He also denied ever buying discounted tickets from his customers.
Ali Ibrahim, owner of Hi-Crest Liquor & Junior Market in Garden Grove, is also winning big. Ibrahim and his family have cashed in almost all the big winners purchased at his store — more than $300,000.
In the lottery business, winning tickets of more than $600 are called taxable tickets, because prizes of $600 and more have to be cashed at the California Lottery District Office. There, officials will take out federal taxes and any child support or money owed to the state.
Ibrahim is on the list. He won $600 or more 192 times and has gleaned more than $300,000. Most of it came from tickets purchased at his own store; Ibrahim won 142 of the 188 winning tickets at Hi-Crest.
If you include his relatives — they won 166 of the 188 winning tickets — purchased at Hi-Crest, which comes out to 88 percent of the winning tickets.
Garibaldi calculates that Ibrahim must have spent about $2 million on Hot Spot, which is his preferred game. $2 million to win $304,000.
At California Lottery headquarters in Sacramento, security officials say Ibrahim's frequency of winnings certainly has put him on their radar — more than once.
"We've probably done at least 10 investigations in that location ... because we want to test the integrity of the retailer," said Stephen Tacchini, the deputy director of law enforcement for the State Lottery and the former chief of the San Francisco Police Department.
He said they haven't caught Ibrahim doing anything wrong, but they're watching.
"I can draw some conclusions, but there's nothing we found that he's doing wrong. He may be purchasing tickets from customers, which is a violation of our regulations. We know that does occur," Tacchini said.
That's one reason why retailers' names are near the top of the list for suspicious winners.
Experts say they've been known to purchase winning tickets for 50 or 75 cents on the dollar, if the winner is trying to avoid paying taxes or debts. That's against the rules.
Lottery officials also conduct stings in which an undercover officer posing as a customer hands a clerk a winning ticket, only to have him come back and say it's a loser.
Some retailers are also known to gamble more than others, which is why they may win. And when they do, they say it's just their lucky day.
Or is it?
Bill Hertoghe was the former head of security for the California Lottery.
" 'Lucky,' I hear that a lot, yeah," Hertoghe said. "In my experience, they're not that lucky. And if they are, they shouldn't be just retailers. They should be professional gamblers."
He believes some retailers are buying tickets or scamming winners. The Lottery said it has a security force to crack down on those who are skirting the rules.
Critics said these people are beating the odds so much so they may be too lucky.
Lottery officials said that without absolute proof, it's difficult to break the contracts with retailers. In fact, they've been sued for doing so in the past.