Seven retailers suspended for colluding
Two New Yorkers were tossed behind bars in the state's first-ever arrests of lottery scammers accused of secretly claiming winning tickets for people who owe child support, back taxes or other debts.
Eduardo Moran-Barrera, 63, of the Bronx, claimed a total of 686 tickets worth a whopping $1.48 million in lottery winnings between 2012 and 2016, officials said.
Neil Ferguson, 50, of Manhattan, raked in $273,139 after claiming 91 winning tickets over the same period.
Both were charged with criminal tax fraud after a joint investigation by the state Gaming Commission and the Department of Tax and Finance.
"This is a unique partnership that we formed and one that we're excited about in that we have a novel way of finding these individuals," said Lee Park, spokesman for the New York State Gaming Commission.
"We expect there to be more of these cases in the future."
The arrests were revealed roughly two weeks after an investigation was published about frequent lottery winners.
State law calls for winners of prizes worth at least $600 to settle their child support and tax debts before they're allowed to collect any money.
Officials say Moran-Barrera and Ferguson acted as corrupt middlemen for shady lotto winners eager to rake in big bucks despite owing money to the state.
The so-called discounters agreed to cash in the winning tickets in exchange for a cut of the prize money. They appeared on investigators' radars after failing to pay taxes on the winnings, officials said.
"The New York Lottery ensures that claimants who owe child support, back taxes or public assistance obligations first pay what is rightfully owed before collecting any winnings," said Gweneth Dean, of the state Gaming Commission.
"With the help of our partners in Tax and Finance, we are putting a stop to those who try to circumvent financial obligations through discounting schemes."
Lawyer Mike Jurena, who represented Moran-Barrera and Ferguson at their arraignments, declined comment.
As part of the investigation, officials also suspended the licenses of seven lotto retailers accused of abetting the scheme.
Six are located in the Bronx; one in Manhattan.
Why would they want to share their winnings with someone else, use that
money to pay off your bills.
To Be Fair: The folks that Owned the Winning Lottery Tickets should also be Procecuted!
Another thing, should people who have little money or debts get tickets and payouts tax free?
Consider this, the tickets were bought with taxed money. ...
In the end, you only think that playing and winning a bit is unfair.
Someone with high debts winning big money, not wanting to pay back his debts and live on the won money? ... USA, today?
Odd. The way it is written it sounds like unless you pay all your debts you cant collect as opposed to the state seizing the prize as partial or full payment of the debts. If you cant collect during the allotted time, does the lottery just keep the jackpot? Then you end up with no winnings and still have the debt.
Because the cut they give to the middlemen is invariably less than they owe. They are only obligated to repay debt from what income they earn. If there is no record of them winning a lottery, then they get an income that's under the radar and therefore can't be seized...or so they thought.
This is incomplete reporting. It took 3 sets of people to pull this scam yet only two sets are reportedly being punished. The biggest culprits in this fraud are the actual winners. They are the linchpins in the entire fraud as nothing can happen without them. What are their names, how much did they owe, how much did they win and what were the punishments meted out?
Its about time! I hear these stories all around my neighborhood.
It's tax fraud. The guys pay less for the tickets. How much less well that depends. It can be close to $1000 or more you pay them. The guys cashing the tickets are idiots. How hard it is to win a win4 game and they're cashing in millions like nothing. Of course they're gonna be investigated. Whatever you owe they deduct, then you get whatever is left. Also not sure but I've heard some convicts or parolees have trouble cashing tickets, so for them it's a win win. You don't know where or who's cashing those tickets. Or where that money's going. Could be anyone anywhere. Out of the country too.
I've heard of men who are parolees like yourself too, heard much stuff about that. wow. smh. i wonder how much prison time, if any the store owner, will get.Get a great lawyer,because a good attorney is not enough."
Another problem that wouldn't occur if all games were registered with personal gambling cards in store or online like here in Sweden.
That is rich considering sweden has let their borders wide open!
This occurred from 2012 - 2016 or over a 5 year period. The amount of the winnings: $1.48 mil + $273,139 = $1,753,139. However, federal, state, and NYC taxes were deducted from that and any remaining taxes, if they were any owed, had to be paid by the claimant the following year. What the gov did not get was the back taxes, child support, liens, which may have been much less, owed by the purchaser.
I'm just not impressed with this investigation/arrests. Seems very ginned up.
What a charming ad hominem.
Sensible commentary. I agree with your objective thought process.
Fed taxes are automatically deducted only if the prize is $5001 and up right?
Correct.
In CA you have to submit a claim form for anything $600 and above. I would assume they would withhold fed taxes at that time. Not sure what they do in NY. Regardless, once the state has a record tho, they will submit to the feds for tax purposes. As to anything less, how many people who win small amounts who dont have debts actually claim and pay taxes on them. I say nada.
The only claims being submitted illegally by 3rd parties are those that the state will automatically withhold, no? So, again, taxes are being paid.
Only prizes worth $5,001 or more have federal taxes withheld, NY has the same threshold for state taxes, UNLESS you owe child support, back taxes or other similar issues in which they withhold the amount needed from any prize claim over $600. Any prize over $600 will be reported to the IRS and state tax agency if applicable.
http://nylottery.ny.gov/wps/portal/Home/Lottery/Quick+Help/Legal/General+Rules
A simpler work-around is playing for wins under $600 (or $600.01 in some states, such as PA) to avoid the paperwork. Pick-3 is among the most popular games for many lotteries. Not just because it's easier to win, but easier to cash out with little scrutiny; tax avoidance.
I know plenty of ppl who do this . If you ever got food stamps or PA they take half. Even if you were on your mother's case 10 yrs ago. I don't think its fair to punish the ones who helped or the ones who did it . I don't think they should take half your money if you ever recieved PA . Child support I can see .
People also forget big brother Jimmy (NYLOT) is watching you and believe me those tickets are time and date stamp for nothing!
They know it all.
The actual charges seem to be strictly about failure to declare the taxable income on the tickets and pay the taxes due. That's it. There's a lot of bluster about discounting and the actual ticket buyers owing money for various reasons, but there's absolutely no mention of crimes or charges related to that, and why these guys had the winning tickets doesn't appear to be the basis of the charges.
There are plenty of news stories about the practice and investigations by state lotteries. but there seem to be very few actual arrests or court cases. Maybe that's because in order to prove somebody guilty beyond a reasonable doubt you'd need to ge the other people who have committed a crime to testify that they've committed a crime. Here's a story about how it went for Massachusetts when they tried to meet a much lower burden of proof: https://www.lotterypost.com/news/238648