Posted: Wednesday, July 30, 2003

Related Stories
More About The Cheated Winners, Click here
July 2006 - San Antonio Express News -
"Willy-Nilly" Lotto Prizes Spur Audit, Click here.

Update: Feb 4, 2005
TLC denies cheating Lotto Texas winners. The whole story
including excerpts disputing the TLC's denial, a spreadsheet
that includes the rates and a winners complaint letter
sent to the District Attorney. Click here

Update: July 18, 2004
I testified at the Licensing and Administration hearing
on July 14, 2004 about the cheated winners. The
TLC is now responding at the urging of the Texas
Legislature. The TLC is "suppose" to get with me
next week with an answer as to how they plan to
settle this issue. By all rights, the cheated winners are
entitled to interest compounded quarterly on the principle
and a "failure to pay" penalty as set forth by the US Congress.
I will be working up those figures next week.

If you are listed below and I have not already spoken with you,
please call me so I can explain everything to you. I also have
a spread sheet - one that is easy to understand - and my written
testimony that I can send to you. My number is (972) 686-0660.



See documents that substantiate this story ... click here

Lottery integrity compromised
50 lotto winners cheated between 1997 - 2000

In early 2001, I discovered that between Feb 1997 and Feb 2000, the Texas Lottery cheated 50 players out of their prize winnings. Back then, when a player won the lotto jackpot, they were entitled to the full amount allotted from "roll" sales (32%). My finding revealed that some winners received exactly 32%, many received more than 32% but then, some received less than 32%.

Because of my formal allegations on Sept 28, 2001, the Texas Lottery began an "investigation." They released their findings one year later. The investigative report confirmed my findings but it concluded that staff had varying interpretations and used various methodologies in calculating the amounts due the winners. The report additionally stated that the staff, at all times, believed they were following the administrative rules.

Hogwash! They knew exactly what they were doing when they figured those prize amounts and it was, without a doubt - intentional. Texas was simply following suit with other states pay procedures even though it was not in the Texas rule. This makes it a crime. The Texas lottery never anticipated getting caught much like they never anticipated getting caught buying equipment for a game before the comment period ever began or was even over - obviously, they never intended to consider comment.

The alleged cover up?
My allegations were brought to the attention of the Texas Lottery Commission during a comment hearing on Sept 28, 2001. The TLC web site lists the transcripts from all public meetings but the transcript for Sept. 28, 2001 was not (and is still not) included in the list of public meetings.

The reason the transcript is not posted is because the TLC doesn’t want anyone to know they cheated the players and I spelled it out clearly that day. I made the discovery accidentally as I was attempting to figure out how much the Texas Lottery had overpaid lotto winners.

Between Sept. 11, 1996 thru Feb 9, 2000, there were 114 jackpots won consisting of 141 players that held winning tickets. Of those, 102 winners were paid more than 32% of sales, [the percentage the rule allocates for the pari-mutuel 6 of 6 prize] totaling overpayments of $39,580,885.

Twelve winners received exactly 32% of sales and 8 were promotional wins. However, nineteen wins, consisting of 50 players, received less than the allocated 32% resulting in a transfer of $2,841,699.99 to the reserve fund.

The Lotto Texas rule did not say the lottery could decrease the percentage paid to the 6 of 6 winners nor did it say they were guaranteeing the advertised amount.

If you can remember back to Feb 1997, that's when the winners began receiving exactly $4 million or exactly $45 million. I knew it was impossible to have the exact amount needed that would bring a return of the exact amount advertised. I was also aware that the lotto Texas rule said nothing about guaranteeing the amount advertised. The rule clearly stated that the winners share "may be 64%" of the prize pool [or 32% of total sales]. Further, it stated the executive director "may increase" the amount paid to the winners, but nowhere, did it say the lottery "may decrease" the amount paid to the winner.

It wasn’t until after the lottery added those 4 balls to Lotto Texas that I began tracking the monies. On the first win after adding the 4 balls, in July 2000, Professor Gerald Busald of San Antonio discovered that the TLC had overpaid the winner in excess of $1.9 million. It made headlines across the state. This was the day I set out to find out where the money was coming from and what allowed the Texas Lottery to pay lotto winners - "differently" - from win to win.

The first thing ...
I discovered was that the Texas Lottery had changed the verbiage in their request to the comptroller to obtain investment costs. By law, for every lotto win, the TLC must obtain bids from the comptroller’s office to establish the "true value" of the win.

Up until 1997, the lottery’s request stated how much was in the prize pool then asked the comptroller how much the return would be based on that amount. But in early 1997, the question to the comptroller became, ‘how much is needed to get a return of $4 million, $10 million, etc.

That proved “intent.”

The first winner I found who had been cheated was Juan Rodriguez from Charlotte. When I saw the figures, I was determined to get to the bottom of this fraudulent act.

The Texas Lottery was less than co-operative in my quest to obtain " investment costs" for each win. They knew I knew so they made made my work a living nightmare. As a result, I obtained most of the documents directly from the comptroller. The lottery tried to bill me nearly $400 to obtain their documents, then they claimed they didn’t have the information.

I have been in constant touch with some of these cheated winners. They are upset, disappointed, angry and frustrated. The winners find themselves in a precarious position. Winners can’t file a consumer complaint with the Attorney General because the AG has no jurisdiction over a state agency. Some winners wanted this story turned over to the media and some didn’t. Some want to sue and some don’t.

They do have one thing in common - each one wants to know WHY they were selected to receive less than what was in the prize pool when other winners got at least that much if not more.

Cowsert Family Partner LTD, from San Antonio received $798,000 less than what was in the prize pool. Mr. Cowsert said to me, “it’s the principle of this thing that concerns me the most. I think that the Texas Lottery should just pay the players rather than to face the embarrassment of potential lawsuits and/or media coverage.”

Mr. Cowsert attended several commissioners meetings with the intent of speaking up on this issue. But each time, he had to leave before they called on him to address the commission. It's interesting - usually the TLC takes visitors comments first so they don't have to wait to speak. But each time Mr. Cowsert was present, they didn't do this in their meeting. Imagine that.

Mr. Cowsert also attended the Sunset hearing in Austin last September with the intent of addressing the issue then too. However, at 1 p.m. he was forced to leave due to previous engagements. He arrived at the capitol at 8:30 a.m. ready to speak. They would not allow me to deliver his message that day.

Another lotto winner, Paul Lombrano, Gas Meter Irrevocable Trust - San Antonio, explained that those in his group are not rich people even though they won the lottery. “Our yearly checks, after taxes, is only $28,000 per year. For me, that’s enabled my wife to be a stay at home mom which is very muchly appreciated.”

Gas Meter Irrevocable Trust held one of two winning tickets for the Aug 19, 1998, $33 million lotto drawing. The winners consisted of 17 players who divide a reported $660,000 per year - before taxes. Mr. Lombrano said, “We were so excited when we won. We never once thought we couldn’t trust the Texas Lottery when they had us signing all those papers. I can’t begin to tell you how I feel now. I say, turn this over to the media and let them have a field day. Maybe then somebody will make them pay us what we actually won.”

Another winner said, “I can’t understand why the lottery won’t or didn’t pay us what we won when we won. Each year I receive $15,000 and then I have to pay taxes on that income - we can’t afford legal fees and we can’t get everybody in our group to agree on a course of action to take. The lottery should have invested additional funds for us but they didn’t. It was disturbing to learn the allegations made two years ago were confirmed,” the winner said. He requested his name not be used in my story.

The TLC’s 2002-2 Investigative Internal Audit confirms that the Texas Lottery transferred into reserve, from the 6 of 6 prize pool, the following revenues from each of these wins:

2-26-97
1) J2KN Management Trust, Kathy Legg, San Antonio <$242,557.33>
2) Chaves Revocable Trust, Carlos Angel & Maria Mares, Dallas <$242,557.33>
3) The Wild Bunch (16 players), Corpus Christi <$242,557.33>

4-5-97
Woyton Family LTD, Henry Woyton, Houston - <$120,405>

5-17-97
1) Cho Van Le, Houston; <$35,707>
2) Bob D. Long, Houston; <$35,707>
3) Wallace Revocable Trust, Ann A. Wallace, Pasadena <$35,707>

2-4-98
Cowsert Family Partner LTD, Billy Cowsert, San Antonio <$798,144>

2-28-98
GIG Partners, Victor & Debroah Smith, Dallas <$14,790.60>

6-13-98
1) The Bluebonnet Trust, San Antonio <$54,509>
2) KV Investments LTD, Converse <$54,509>

7-18-98
Terry Hahne, Lawton, OK <$76,447.80>

8-19-98
1) Larry G. Wilkins Separate Property Trust, Houston <$112,797.60>
2) Gas Meter Irrevocable Trust (17 players), San Antonio <$112,797.60>

9-5-98
1) Judy & Jerry Mason, Nacogdoches <$44,393.60>
2) Medina Torres, Houston <$44,393.60>

11-7-98
Shirley Johnson-Schlabra, The Woodlands <354,001>

3-24-99
Anderson/Fredrick Lottery Trust,
Miller D. Summerour Jr., El Paso
- Investment Cost Reported in Question -

10-23-99
CSJ Family Partnership, Candelario & San Juanita Garcia, Victoria <$144,858>

2-9-00
Juan M. Rodriguez, Charolette <$74,860.80>

It’s hard for me to imagine that the TLC won’t undo this wrong, but it appears they have no intentions of paying these people what they rightfully won. If I were one of the cheated winners, I’d file a complaint with District Attorney in Travis County. He should assist them in collecting what they actually won. Then, if that didn’t work, I’d sue the TLC. After all, this is fraud coupled with discrimination.

See documents that substantiate this story ... click here

FYI - The Governor, the AG, the DA of Travis County and quite a
few legislators have been aware of this for at least 2 years. Yet no
one has never told the TLC to pay these people what they rightfully won.

Next ...
Does the TLC have two sets of records?

Related Stories
More About The Cheated Winners, Click here
July 2006 - San Antonio Express News -
"Willy-Nilly" Lotto Prizes Spur Audit, Click here.

The Lotto Report
Dawn Nettles
P. O. Box 495033
Garland, Texas 75049-5033
(972) 686-0660
(972) 681-1048 Fax
lottoreport@lottoreport.com



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