|
We've learned $622K was written off.
We don't
know where it went nor do we
know just
exactly how much was
"really" missing to begin with ....
AND what's worse, neither does anyone else ....
|
As you will see in the
- Official Findings -
"Based on the results of our review, Internal
Audit, could not determine whether
the Prize Payment account is accurate
and fairly presented, confirm the
amount of the discrepancy noted in
the reconciliation, or determine
the reason for the variance in
the Prize Payment account."
("variance" means shortage)
"2012 Prize Payment Account Review"
(A report that took 2 years to complete)
|
As you just read, there are unanswered questions
and we, the
People of Texas, deserve answers.
Now let's get started so you can see what
has transpired at lottery headquarters ...
------------------------------------------------------
|
First & Foremost ...
Before reading anything - I think you need to know what
the Texas Lottery claims
to be of utmost importance to
them ... their CORE VALUES ... Please keep these
values
in mind as you read this entire story and believe me
when I tell you that
if you go to Austin and attend any of
the meetings, you will most likely hear
someone say
how important "integrity" and "public trust" is to the agency.
Again, DO NOT FORGET the values as you read ...
I believe in the end you will conclude, as I have,
that the
Lottery's values aren't
worth the
paper they were written on ...
|
(Taken From Texas Lottery Website - Not Complete)
Core Values
Integrity and Responsibility — The Commission works hard to maintain the public trust by protecting and ensuring the security of our lottery games, systems, drawings and operational facilities. We value and require ethical behavior by our employees, licensees and vendors.
Fiscal Accountability — We emphasize fiscal accountability by ensuring that all expenditures directly or indirectly generate revenue, enhance security, fulfill regulatory requirements, improve customer service and/or boost productivity.
Excellence — We strive for excellence by taking a position of leadership on issues that impact the Commission and achieve challenging goals by focusing on our core values.
Lottery Mission – The Texas Lottery is committed to generating revenue for the State of Texas through the responsible management and sale of entertaining lottery products. The Texas Lottery will incorporate the highest standards of security and integrity, set and achieve challenging goals, provide quality customer service and utilize a TEAM approach.
|
-------------------------------------
In Dedication To ...
The MANY outstanding, honest and hard working
Texas Lottery employees - both current and former -
who have shown real integrity in light of extreme
adversity. Knowing that you know right from wrong
and what's appropriate and not appropriate
behavior and actions is truly appreciated.
May your workplace enviornment improve
as a direct result of this investigative story.
--------------------------------
The Purpose of This Story ...
Hopefully it will be the first step of many
that will be
needed to bring this problem to the attention of our
State
Government regulatory agencies, authorities, and to the public.
If all goes well, the critical issues exposed will be investigated by
outside
sources and steps will be taken to prevent its reoccurrence.
Those
persons involved will be held responsible for not only their violations
of
"Core Values" but for failing to adhere to laws set forth in this great state.
-----------------------
What The Story is About ...
In a nutshell, this is a true story about one of the Texas Lottery
checking accounts -
specifically - the prize payment account. For
some unknown reason,
Texas Lottery staff failed to reconcile
this account for years and a great deal of money was lost.
In the end, after you have reviewed overwhelming evidence,
I believe you will agree
when I
conclude that an inexcusable
amount of money was either
lost to fraud,
stolen or embezzled
and that management failed to perform the duties they
were hired to perform and failed to protect state assets.
(By the way, the reason to suspect theft and
embezzlement is
because they failed to take action to
protect state assets
which could be construed
as an indication of foul play.
All they had to do was simply close this checking
account in 2006 - an action NOT recognized nor taken)
Let me define "reconcile"
This means the Texas Lottery and their bank
disagreed on how
much money was in their checking account. The Texas Lottery's
"check register" [ledger] was showing they had more money
than the bank
said they had. When this happens, one needs to
determine real fast what the problem is.
This is a very serious issue - especially when the
differences
[shortage]
started out in March 2005 at <$187,521> and grew
to well over
<$1 million> over a period of 5 YEARS (2010).
(For proof - see Exhibits 1 & 2 below)
To think that management of a Texas state agency would allow their
checking account to be so far off for so long is unbelievable. What's more
unbelievable is the fact that they failed to recognize what corrective steps
they should have taken immediately to protect State revenues.
The
solution - as taught in Accounting 101 - and is/was simple logic -
simply close the account and start over.
It is extremely important to tell you that no
one
has been held accountable for the huge losses incurred
and for the failure to perform what should be considered
mandatory duties.
If what I'm going to show you had happened
in the private sector,
I believe ... 1) criminal investigations would
have occurred and
2) employees would have found
themselves rightfully unemployed.
|
Exhibit 1
Note date of message is "Sept 28, 2005" & they are short by $187K in "March" ...
Exhibit 2
Excerpt From Nov 8, 2012 Commission Meeting - Now they are short by "well over a million"
COMMISSIONER KRAUSE: Didn't the variance
[fancy word for "shortage"] get smaller as you worked on it?
MS. PYKA:··It did.
COMMISSIONER KRAUSE:··It started out at
what, 620,000, and you got it down to what?
MS. PYKA:··Well, actually, the variance
[shortage] was well over a million.
COMMISSIONER KRAUSE:··Okay.
MS. PYKA: So we got it down to 800,000
and then, through the administrative check correction,
got it down to 622,000. When we closed out the account,
it was at $622,000.
COMMISSIONER KRAUSE:··And is there any way
to know, you know, which way that was going? Were we
short or were we over or --
MS. PYKA: Our general ledger account
balance was higher than the bank and treasury -- or
cash-in treasury account.
|
Two Comments - RE: Exhibit 2
1) Notice the Commissioner is confused - then realize that
he's
already heard staff's ENTIRE presentation - but obviously -
he still doesn't really understand what the real issue is.
(FYI - Commissioner Krause is a practicing lawyer and a
non-practicing accountant yet it's obvious throughout the testimony
that
he never fully understood what was actually being reported.)
2) Ms Pyka's last statement (bold/underlined) explains why anyone would
be confused.
It is definitely a play on words ... Had any staff member simply
stated,
"Commissioners, our checking account balance in our prize
payment
checking account does not agree with what our bank says we
have in
our account. The banks says we have less money than what we
thought we had. We were off by well over a million dollars."
Instead, as you will see ... 1) they'll use the word "variance" consistently in their
testimony and in the official investigative report which does nothing but confuse
everyone. (FYI - The use of the word
"variance" means "short" in this case.)
2) They'll use language that will confuse the
lay person resulting in not fully
comprehending the situation ... such as "our general
ledger account
balance was higher" which translated means "our check register
balance
was higher." 3) "higher than the bank and treasury -- or cash-in treasury
account" which translated to an understandable language would have been
stated,
"higher than the bank says we have in our account."
These are examples of what
I mean when I say "carefully worded
testimony and reports."
|
|
|
|
- Exhibit #3 -
RE: Reporting unclaimed properties to the Comptroller.
As you can see below, every year the Texas Lottery is
supposed to
turn money over that has been "abandoned"
(checks not cashed in last 3 years).
Banks also adhere to
these state mandated requirements.
Winners who fail to cash their prize checks is still due the
money. Their money is supposed to be turned over to the
Unclaimed Property Division at the Comptrollers
Office.
The Comptroller then tries to locate the people.
How do you suppose the Texas Lottery could
comply with this law when at times, they had no
idea what had been cashed and what hadn't?
One report indicates the only monies turned over were
monies sent by US mail and returned due to incorrect
addresses. Can you imagine how bad this is?
More on the failure of the Texas Lottery to
turn
unclaimed prize monies over to the
Controller
later. You will also see evidence where it appears
some unclaimed prize monies may have been used
to get that "variance" [shortage] down to the
$622K
as referenced above.
|
|
Exhibit #4
RE: TLC Procedures
|
As you can see, at least since 1998, Texas Lottery
procedures
says the account is to be reconciled monthly!
The
Texas Lottery is definitely in violation of failing to perform
this monthly duty - yet no one was held accountable.
Advice to consumers ... if you cannot reconcile your acct to agree
with the banks balance within a reasonable length of time - say 3 months -
then it is best to close that acct and start over. By doing this, you will only
have to deal with past transactions to find your problem - not past,
current and future transactions such as the lottery foolishly chose to do.
The Texas Lottery failed in this area with horrible end results.
It appears to me
they are/were lacking in plane ole common sense, judgment and they failed
to
show good faith/intent by claiming to have spent 6 years trying to reconcile
an account rather
than placing a call for help. Bottom line, if you are
unable to solve a problem
or incapable of solving a problem, you get
help from someone who can help rather
than failing and making
excuses 6 years later which is exactly what happened.
Experts have told me - the account should have been closed
back in 2006.
Not closing it could be an indication of embezzlement.
OK ... enough about the importance & requirements of reconciling a checking acct!
|
|
A little background info for you ...
The Texas Lottery has three checking accounts - they have a petty cash account,
a travel account then they have the prize payment account. The petty cash and
travel accounts are relatively small but the prize payment account is huge
as it's the account they pay all prizes from. (The Comptroller pays
their bills including payroll.)
Imagine, the Texas Lottery sells $3 billion a year in lottery products ...
supposedly they return 50% to the players in way of prizes ...
so it stands to reason that this one checking account
would handle in excess of $1.5 billion per year in activity.
It was reported that they write roughly 5000 checks per month.
You can clearly see the importance of NEVER getting
behind in reconciling an acct with this kind of activity!
But the Texas Lottery did. It is my opinion and my findings
that they actually ignored the situation for two years.
I will be showing you in detail why I make these allegations.
--------------------------------
What you will be reading ...
I will be taking excerpts from various documents, reports, emails and
transcripts to support my current and previous statements (banners)
that was posted in announcing this story was coming. I will show
you exactly what I meant when alleging ... "carefully
worded
reports & testimony, failure to comply with statutes, poor
management decisions, failure to perform required duties, fraud,
embezzlement" - whatever it is that I've said, I will support
in this series.
---------------------------------------
In Concluding Part 1 ...
The Texas Lottery has a problem that they've actually swept under
the
carpet. As I write this in July 2013, no one was fired or reprimanded
and the missing money that was written off was never accounted for.
The Commissioners simply accepted the "theory" that it must have
been an honest mistake and no further action was necessary.
I say, BALONEY.
Coming in Part 2 ... The Complaint ...
On Nov 4, 2010, an anonymous complaint was filed with the
State Auditors Office - Special Investigations Unit - claiming that staff
at the lottery lost $600,000 during
a "change of bank accounts." Fraud
and the potential for embezzlement and theft by lottery staff was alleged
in the
complaint as well as
unfair merit raises and promotions plus
there was allegations that executive management failed
to perform their job duties.
You will be both amazed and disappointed when you see how the
the State Auditors Office as well as the Texas Lottery responded
to the complaint that was filed and exposed this situation.
The Complaint will be covered extensively in Part 2.
Do Know That ...
had this Complaint never been filed, we probably would have never
known that the Texas Lottery had FAILED to protect state assets.
-----------------
Series Began: Intro - August 1, 2013
Part 1: Posted August 1, 2013 - Below
Part 2: Posted August 4, 2013
Part 3: Posted August 7, 2013
Part 4: Posted August 13, 2013
Part 5: Posted August 20, 2013
Part 6: Posted Oct 22, 2013
Part 7: Posted March 13, 2014
Part 8: Posted April 6, 2014
Part 9: Posted ??, 2014
Part 10: Posted ??, 2014
----------------------------------
Texas Lottery Commissioners
Chair J Winston Krause (Appointed March 2009)
Jodie Baggett (Appointed Sept 2013)
Katie Stavinoha (Appointed Sept 2013)
John W Townes (Appointed Dec 2013)
Mary Ann Williamson (Resigned 8/16/13 - Re-appointed 3/11/14)
Commissioner Veronica Edwards (Resigned 2/13/14 - Effective 3/31/14)
|
|
