In June 2017, Viktor Gjonaj walked into a sleepy retail strip on Dequindre Road in Sterling Heights.
He wasn't heading for the massage parlor, or the small Indian and Pakistani grocery store or restaurant or the hair salon. Instead, he went into the Michigan Lottery claim center at the northern edge of Sherwood Plaza.
There, he showed his driver's license and Social Security card, completed a claim form, and left $2.5 million richer with a check cut to him as the prize for the 500 winning Daily 4 tickets he had for the June 18 evening drawing — 7-8-0-0 was the winning number — purchased at Picolo's Liquor & Deli in nearby Shelby Township.
It was the first interaction the Michigan Lottery says it had that stood out with the 42-year-old commercial real estate industry veteran, and it wouldn't be the last. Less than five months later with the Nov. 14 evening drawing (winning number: 2-0-7-6) he would repeat that process with another 800 tickets from Picolo's, leaving $4 million richer.
Ultimately, he ended up claiming no less than $28 million in winnings on the twice-daily game in less than a year, and the state enterprise fund, which earlier this year announced its first-ever $1 billion contribution to the School Aid Fund, some of which would have been funded by Gjonaj's rampant play, instituted unprecedented measures in 2018 to try to slow his gambling by limiting terminals to $5,000 in play per day.
But it didn't stop the founder of Troy-based Imperium Group LLC, a real estate company he started in October 2017, a year after state lottery officials first flagged a high amount of play at Picolo's that has largely been attributed to Gjonaj.
Instead of slowing down as intended, he seems to have attempted to ramp up his play. Gjonaj allegedly recruited at least one person, Gregory Vitto, to work for him full time — ultimately with a job description that only ended up being to play the lottery. To get around the $5,000 limit, Vitto went about establishing what he described in court testimony as a small network of Macomb County party stores at which he would play Daily 3 and Daily 4 to the tune of $80,000 a day for months. Vitto also suggested there were others who played on Gjonaj's behalf.
In his wake, Gjonaj, who hasn't been seen since the summer, allegedly left at least $15 million from investors unrepaid, with speculation that there could be much more owed to those not inclined to seek their money back through legal channels.
Michigan Lottery officials speak clinically about Gjonaj and almost never identify him by name.
"This particular player" or "the player" or "this player" is the only language they use to refer to him publicly because state law allows players to remain anonymous, implicated in a $15 million-plus Ponzi scheme or not.
The only official confirmation that the $3.8 billion fund even knows who Gjonaj is comes in the form of an email Benjamin Vogel, who worked in the Michigan Lottery security division, wrote to James Grady, a detective with the Michigan State Police, two years ago. It was obtained by Crain's through a Freedom of Information Act request.
"Concerning our previous conversation, the retailer is Picolo's Party Store at 13459 23 Mile Rd. in Shelby Township," Vogel wrote to Grady on Feb. 7, 2018. "From 1/1/17 through 2/5/18, Picolo's generated $19,277,352 in Daily 4 sales."
"Viktor Gjonaj is said to work in commercial real estate out of Metro Detroit," the email says.
Michael Shaw, Special Enforcement Section commander, said in mid-January that the Michigan State Police does not have an open investigation into Gjonaj. Michigan Attorney General Dana Nessel's office is reviewing one of the Oakland County court cases.
Aric Nesbitt, who is now a Republican state senator but at the time was the state's lottery commissioner, remembers Gjonaj and the bureau's response.
"As I recall, I believe we took actions at the lottery to try to slow him down and then everything that we read in the news showed him to be some legitimate developer. It seemed like most people at the time thought he was a successful businessman," Nesbitt said in an interview.
"It sounds like his Ponzi scheme was front and center. It sounds like he was chasing his tail. The guy was winning big, I had my people do an investigation, provide recommendations, and I feel like we followed through in trying to provide both responsible gaming and also making sure that everything was followed in our processes."
State: Few options
The state says that all Daily 3 and Daily 4 ticket purchases are anonymous, so it had few, if any, options for preventing a single player from playing too much.
"The anonymous nature of a ticket purchase makes it nearly impossible to determine who is purchasing tickets, and to what extent, until the player presents themselves in a claim center with a winning ticket," the lottery said in emailed responses to questions from Crain's. Requests for information and interviews were directed to a lottery spokesman.
However, after winning $4 million in November 2017 coupled with the $2.5 million win in June five months earlier, lottery officials say that the state had "a better picture of this player's level of play."
At that point, an internal evaluation of how to reduce Gjonaj's Daily 3 and Daily 4 spending was conducted. However, the lottery says it does not have a record of how long the evaluation took or who was involved in it.
"The amount a person may spend on gambling or other activities is subjective to that person," the lottery said in response to emailed questions. "The claim was reported to management in November based solely on the large number of tickets being redeemed."
"Other than the large number of tickets being redeemed at one time, there did not appear to be anything unusual."
It's not known how Gjonaj was able to win so frequently in a game that can have 1 in 10,000 odds of winning a maximum $5,000 prize. The way Gjonaj played, however, improved his odds to 1 in 416 and 1 in 833, according to the lottery.
Experts: Do more
The end result of the lottery's internal evaluation was a cap on terminals play statewide, and a few responsible gaming pamphlets.
The limit and the literature did not work.
"If anybody calls the lottery and tells the lottery they have a gambling problem, and they need help, the lottery will send them to what is available in the state, and I gotta tell you, it isn't a lot," said Michael Burke, president of the Michigan Association on Problem Gambling (see related story). His organization has Michigan Lottery staff on its board.
"Yeah, for a problem like this, we're sending out a pamphlet. I deal also with gamblers who might go through $10,000 in a few months' period, and they get the same thing. There, their play starts to vary, they end up with higher amounts of playing and the lottery will send them the same pamphlet. That's what they have available."
It wasn't nearly enough, said Les Bernal, national director of Washington, D.C.-based Stop Predatory Gambling, a 501(c)(3) advocacy group.
"He's obviously showing that he wagered an enormous sum of money to get this. And what did they do? The answer is nothing," said Bernal.
"It's appalling on both counts. If he was rigging the machine and they didn't cut it off, it's appalling. If they didn't take action to cut off a guy who clearly had suffered from mental health problems, that is equally outrageous and disgusting. The lottery needs to be held accountable. I think in either scenario, the Michigan lottery has some serious questions to answer."