In February 2008, Kendrick D. Francis won a 10,000-to-one bet on the Pennsylvania Lottery's Big 4 game for a payday of $532,000.
But, federal prosecutors in Delaware said, that apparently wasn't enough for Francis, a Wilmington resident, who then conspired with a convenience-store operator to hide his winnings and make it appear a number of other people had won instead to avoid federal taxes.
This month, the U.S. Attorney's Office for Delaware filed felony conspiracy and tax evasion charges against Francis and Chirag R. Patel, each of which carries a maximum penalty of three years in prison and a $100,000 fine. According to court papers, the 50-year-old Francis was such a regular lottery customer at Conley's Market in Woodlyn, Pa., that he was allowed to phone in his orders for lottery tickets and pay for them the next day.
And on Feb. 23, 2008, Francis phoned in an order for 360 tickets, at 50 cents each, all with the number 4177.
Two hundred of those tickets were played "straight" — meaning it had to be an exact match to win — and 160 tickets were "boxed," in which any sequence of those numbers would pay off, but for a smaller amount.
According to criminal information filed against the pair, Patel offered to help Francis in cashing in the 200 "straight" tickets to avoid owing taxes on the full jackpot.
In exchange for a $50,000 "fee," Patel had others — for several hundred dollars per ticket — cash in the winning tickets over the next month at Conley's Market or a nearby gas station, according to prosecutors.
Court papers claim the men later lied on their 2008 tax returns, with Patel failing to claim the $50,000 "fee" as income and Francis failing to acknowledge $249,500 of his lottery proceeds as well as claiming a $90,000 debt for the year due to "gambling losses."
It is unclear in court papers how law enforcement became aware of the scam, and Assistant U.S. Attorney Lesley F. Wolf declined comment this week, as did Patel's attorney, Edmund "Dan" Lyons.
Francis' attorney, John Malik, said his client was "overcome by his tremendous luck" at winning the lottery but his enthusiasm "led to some very bad decisions" about trying to avoid his tax responsibility.
Malik said his client has hammered out an agreement with prosecutors and plans to plead guilty and accept responsibility for his actions.
A date for Francis to enter a plea has not yet been set.
Ughhhh
The Federal Government shouldn't be taxing Lottery Winnings...
EDIT: If I ever one 180 times straight and box on Pick 4... if there were no federal taxes- that'd be the day.
Although you can't go to a lottery website and find out where every winner was bought, the lotteries track every winner and 200 straight pick4 winners from one store is going to be noticed regardless of where they were cashed. Plus I thought any ticket worth more than $600 require the winner to fill out papers for a W-2G which means the folks who cashed those tickets may had paid some taxes too.
Great point!
Ah yes. Money does strange things to people.
I say take all the winnings away from the winner. Heck, I would be so happy just to win. Tax me away just let me win.
Curious if it might have gone unnoticed had it been won on bunch of pick 3 or scratchers instead. Probably not because there are camera and scanners everywhere.
LOL.... luisM I was thinking the same thing ..."tax me away just let me win"
Wow, he's in a world of hurt! How did he think he was going to get away with it, anyway? Since the government is hurting for money, and I'm not blaming him for trying to keep his, the government is attempting to squeaze every nickel and dime from its citizens to pay for 1) roads; 2) war; 3) building projects; 4) education; 5) loss revenues by the democrats and the republicans); 6) Obama's Wall Street bail out; and anything else the government can perceive as belonging to them.
Why do people think they can outwit the government with schemes of tax evasion at anytime. I sat on a Grand jury many years ago for a story involving a lottery winner very similar to this. The barcodes on the tickets have codes the feds follow. Series of winning tickets such as his 200 str8 and 100 or so boxed can easily be tracked. The time of the purchase, merchants special code, terminal that the ticket is generated from are all located in the barcodes.
It's best to buy the winning tickets and pay the taxes. Even the taxesyou pay is going to hurt, but, being a storyline whose story ends in jail hurts even more, for you and your family..
Tax away...tax away..as long as I win who cares?? also there's no state tax in Delaware which makes this story even worse
I really don't think they'd have come after him if he had say 30 box bets. But god , you can't skip on over 100,000 dollars worth of taxes. If he really had 90000 in Gambling losses - I'm pretty sure he could have put the 90000 against the (a little more than) 500000 and claim the taxes on the difference back. If my understanding of the federal taxing of lotteries is right, he could potentially have only owedabout 75000 in taxes.
It is just another case of greed and stupidity. The tickets are tracked to see where the winners are. Also, if he didn't pay for his tickets on the spot in cash but instead had some kind of "credit thing" with the merchant isn't that illegal, too? I thought you couldn't play on credit.
It'd have made no difference, even without video (with any printed-on-the-spot tickets, at least); when you buy tickets, the time of the purchase is one of many things encoded on them.
There's no way multiple real people could place a buy in the same location (and what are the odds of them all playing the same number) and complete their transaction in as short a space as it would take one person to buy the same quantity of tickets.
Minutes vs. milliseconds.
Any time some one buys 360 pick3 or pick4 tickets with the same numbers and win $516,000, it's going to be investigated for security reasons. When you consider the normal payouts amount for the whole state and one store sell 50% of the winning tickets in a period of 10 minutes, what do you think going to happen.
After paying his partner in crime a $50,000 fee and a fee to those who actually cashed the tickets he probably would have been ahead to have just cashed the tickets himself, claimed his losses of $90,000 from other drawings and paid the taxes.
heheh so max penaly is $100k then he getsa to pay taxes. oh wait he pays thax on the win then pays the fine double ouch!
yes lottery officials know when every ticket was bought and prob have video of the person buying them.
a very nice hit buying $180 worth on 1 srt of numbers, but such a sour taste being caught trying to rip of the tax man.
just remebr they didnt get al capone for rackettering, they got him for tax evasion.
Que the song..."another one bites the dust...! As long as we have the tax laws that reach into prize winner's pockets like this, we will continue to witness people like this guy run afoul of the big bad IRS while crooks like Charlie Rangel and other connected government "servants" avoid any serious criminal prosecution for their wrongdoing.
At this time, I really wish I were in the UK...with a chance to get on the "Who Wants To Be a Millionaire" (for us Americans, winning would make us $1.5 Millionaires or thereabouts.
But seriously, if and when I win the big one, I will have no problem paying Uncle Sam his due...let's just hope that Obama is in his last years in office and people with fiscal sense get into the presidency and Congress. Good step for the House of Representatives passing a repeal of ObamaCare...now if only that idiot in Nevada would come to his senses and push it through the Senate instead of vowing to kill it (yeah, I am talking about Harry Reid...who is so lucky to still be in office today...apparently he didn't get the message from this pass election that almost saw him ousted from the Senate).
sully16
I am just wondering what his LP user name is, or was.
RL
It is my dream that I will one day have a huge multi-million dollar tax bill resulting from a lottery win.
I'm wondering if he has tried the same thing since then and been more successful by distributing his ticket purchases.
The value of the each ticket was $2500 and the tax burden for the people cashing tickets could be around 10%. The tax percentage on $500,000 is over 30% so on paper they had an interesting but illegal idea. If the cashers were paid $1000, though probably less for the use of their SS number, he had a profit of $250,000 hoping it would be tax free. He also had 160 $200 tickets that wouldn't require a W-2G, but combined they were worth $32,000. His partner was charge for not claiming the $50,000 fee he charged for finding the ticket cashers.
They were caught because somebody noticed those 200 tickets were sold at one store in a short period of time.
The cashing scheme was probably hatched after he found out his tickets won. Maybe it didn't occur to him the lottery would know when and where the tickets were purchased.
It's ironic that it was in PA where infamous rigging of the pick-3 drawing was done and they too were caught when somebody noticed the extraordinary amount of ticket purchased on the winning number in a few locations.
He was fortunate to win but it was not enough. The whole pie was desired!
You would think any one buying that many tickets with the same combinations would have thought about the consequences of all those tickets winning before calling in an order for all of them at one store.
Although a few years ago a guy brought 20 Buckeye5 tickets with the same combination that matched all 5 winning numbers and expected $100K per ticket until he was made aware of the maximum payout limit of one million dollars per drawing that was printed on the back of each play slip. He sued the store and the state claiming some one should have told him that when he was buying his tickets. He lost his case and had to share the million dollars with another winner who had one ticket.
It's false advertisement on the Lottery's part to say you won $1MM on a scratch off but in reality you get only half of that after the lump sum fee and federal / state taxes. This pisses me off the most but I expect that before I play.
This guy from what I understand won $500 numerous times. You owe no taxes on this. $500K is A LOT but im sure there would of been a civil way out of taxes rather then just committing tax evasion. He could of sued and maybe one for example.
What's unfair? Everybody knows all lottery winnings are taxable regardless of the amounts and if you win a prize that's structured to be paid out over several years and you chose to take a one time cash payment instead you get a lot less. All the lottery advertisement that I've ever seen include that information.
so what's to stop someone from cashing 100 winning pick3 tixs at 100 different stores? You don't have to sign or show your id.
do you think he's a member?
I am just wondering if you win with 100 ticket on cash 3 and the pay out is 500 per ticket do you have to pay taxes on these tickets?
All lottery winnings are taxable. Usually people who win $500 once on a pick3 ticket has spent more than than that on losing tickets and the IRS has no way of knowing if they didn't include in on their 1040 unless someone brought it to their attention. Probably if a player let it be known he won $50,000 and didn't include it on his 1040, some one would tell the IRS.
Thats what I would do if I win $500 TAX FREE 100 times this is perfectly legal. Don't know if this particular guy won on Cash 3 or Pick 4 where prizes are over $500 ?
I think he won it all on pick 4 which is dumb because they check everything on those large payouts and he was real dumb to get other involved too. Should have just bit the bullet and pay the tax man!
With pick 3, they may not care as much as long as you are not greedy or brag about it. Can you imagine someone putting alot on a triple and it hits!!!
Stories like this seem to generate two main lines of responses:
a) Those that point out that every ticket is tracked in more ways than you can count.
AND
b) Those that propose things would have worked out differently if the "plan" had been carried out with some slight alterations.
I just want to know how the guy chose his numbers.
if he was allowed to " ring in his numbers " and pay later id say he wasa pretty heavy better, and prob put down a lot on a lot of numbers. so he should have had a fair tax deduction.
I wonder what would have happened if he didn't pick his tickets up in time and the store owner realized he had a small fortune?
People...pay your taxes!
I'm glad I live in Canada.... lottery winnings are tax free here
Good point sully.
That coulda got real interesting.
Sorry got busy with a customer, forgot to play them. hehehehehehe