Iowa Legislative Ombudsman Produces Honest Lottery Report
How 'Bout That - There's A First Time For Everything ...
No Cover Up On This One!

About store clerks who check your tickets and those terminals that err ...

Lotteries are losing more than sales — they're losing credibility
& integrity is questionable at best


Posted: Thursday, January 31, 2008 - 4 PM
Revised: Feb 1, 2008 - 9:30 AM

First, Comments by Dawn Nettles ...
I'm posting several news stories (below) regarding the problems encountered
by the Iowa Ombudsman regarding his investigations and "true" findings
concerning store clerks stealing players winnings, terminals erring, plus other things.

As you read these stories, please pay special attention to the problems the Ombudsman
encountered with the Iowa Lottery in obtaining information for their investigation. These problems
are the same identical problems I have with the Texas Lottery. Be that as it may, let's move on.

The same thing that may be occurring in Iowa & Canada, occurs here and everywhere else.
But the Texas Lottery doesn't care if store clerks steal/lie to you. You see, the TLC says that's
it's the players responsibility to know if they have a winning ticket PRIOR to asking a clerk to
check their tickets. So if they steal from you, it's your own fault. There is no consideration
given for those players who do not have a computer, take a newspaper, or are smart
enough to know that they should check their own tickets.

As for the TLC's excuse regarding the terminals that err when tickets are
scanned, they still believe it's the players responsibility to know if the ticket is a winner
PRIOR to having the ticket scanned. What you don't know, won't hurt you - is their attitude.

So, this leads me to a very important "integrity" question. Why is the TLC purchasing 10,000
self serve terminals so players can check their tickets when the TLC knows that terminals ARE
computers that CAN & DO err? Do they not care to take every precaution to ensure that
we do, in fact, receive our prize money? Why are there any flaws at all?

The answer is very simple - because they want to increase the unclaimed prize fund - this
is money that the state keeps. They are purposely giving you an "easy way to check
your tickets" so if the terminal errs and you don't know it, it's their financial gain.

Since inception of the lottery, almost $700 million has gone unclaimed and only $25 million
is from large jackpots. Did the terminals err checking these jackpot tickets? We'll never know.

Now I feel privileged that I can SHOW you the Confidential Report completed by the Iowa Ombudsman.
I encourage EVERY one of you to read it in its entirety. Believe it or not, it's actually written in
a way that you will REALLY understand what I've been trying to tell you for years. Not only that,
but they even quote me several times through out the report. If I had known they were reading my
stuff, I would have at least given them the dates that I originally reported the problem! Either way,
I don't care - they've investigated my reporting and found that I might be right. And in Iowa, they
ARE fighting for some serious changes to PROTECT the People of Iowa. Iowans are quite lucky!

The Iowa Ombudsman is standing up to the Lottery - and not covering up their findings.
Something we do NOT have here in Texas. Believe me, the AG, the State Auditors Office and
the Governor of Texas covers up things here in Texas not to mention the staff and commissioners
who cover up by omission during public meetings.

(Paragraph Revised 2/1/08)
- Read this report. It is their preliminary findings - now they want to investigate
further but are encountering problems from the Iowa lottery in obtaining the information
they need to complete their investigation. You'll be glad that you read it as it covers
much more than clerks stealing players winnings and terminals erring.
Iowa Ombudsman Lottery Report
- a pdf.
(To save this file to your computer, just open the file,
select save and tell it where to go and name it.

May I also suggest that you go to the Iowa website and read some more.
Click here
to read other findings that should be of great interest to all players.

It's Time To Ask Your Legislators ...
Why Texas doesn't have an independent Legislative Ombudsman that can't be bullied. We do
NOT want an Ombudsman that is Appointed by the Governor - we want one that is governed
by the Legislature. This way, it would take 2/3 vote to get rid of them and I personally don't believe that
2/3 of our legislators would vote for a "cover up." If an Ombudsman is appointed by the Governor, then the
Governor can fire him any time he wants. Sure hope ya'll follow my reasoning!
Wonder WHY it is that only 5 states have Independent Ombudsmen?
Click here to find your legislator

It's Time To DEMAND ...
that the STATE of TEXAS protect us. Quit allowing clerks to check our tickets and don't buy
those 10,000 self serve terminals that CAN err when checking our tickets. Make players
check their own tickets - quit increasing the unclaimed prize fund because of computer errors.
Tell your legislators about this too.

For the Record ...
I seriously doubt that any Texas Legislator or any Texas reporter is aware of Iowa's findings.
Shoot, I'll bet the Lottery Commissioners don't even know about it. But you can rest assured that the
executive staff at the TLC is aware of it! May I also suggest that you send a copy of this report to
your State Representative and your State Senator. They really should know about this.

Now Read the News Stories ... Click or just scroll down ...
Official (Ombudsman) seeks leads on lottery problems
Below this story, I am asking for those of you who have/had a claim issue to tell me about it.

(Ombudsman) Investigation looks at lottery security

State Ombudsman threatens legal action against Iowa Lottery over investigation

Editorial - Lottery should release files to ombudsman

Official seeks leads on lottery problems

Des Moines Register
January 25, 2008

The state ombudsman's office wants to hear from people who have concerns about the Iowa Lottery and potential fraud. Iowa Citizens' Aide Ombudsman William Angrick is looking into the Iowa Lottery partly because of a major lottery scandal in Canada that has led to arrests and widespread reform. But Iowa Lottery officials are questioning Angrick's jurisdiction, and they have denied him access to their investigative files. With access to those records shut off, at least for now, Angrick is turning to the public for help.

"We'd welcome hearing from anyone who has a complaint or a concern about any problems they've experienced either with the lottery itself or with the way the Iowa Lottery has responded to complaints," Angrick said Thursday.

The Iowa ombudsman's office exists primarily to investigate complaints related to government operations. It has subpoena powers, and Angrick has indicated he is willing to subpoena the requested lottery records and go to court, if necessary.

According to Angrick, the Iowa Lottery is, in some respects, more vulnerable to fraud and theft than the system in Canada, where lottery retailers were found to be winning at much higher rates than the general population.

A series of investigations in Canada showed that store clerks were falsely telling customers their tickets weren't winners. The clerks would discard the tickets and then, once the customers left the store, they would retrieve the tickets and redeem them for prizes. In one case, an elderly man was cheated out of a $250,000 prize by a store clerk.

Similar types of theft have been reported in California, where a clerk attempted to steal a customer's winning ticket, worth $555,000, by telling the man he had won only $4. In Arizona, a store clerk tried to steal a winning ticket worth $1.4 million.

In some of the known theft cases, people gave store clerks their tickets for scanning into a terminal that alerts customers whether the tickets are winners. Just before scanning, the clerks - who typically worked behind a counter - would discreetly swap the customers' tickets for previously scanned losing tickets. The customers would see a message on the terminal saying their ticket wasn't a winner, and they would leave the store. The clerks would retain the potentially winning tickets.

Angrick is not accusing any Iowans of theft or fraud, and he has repeatedly said that his investigation could show that the Iowa Lottery is being properly administered. But he has also said that a preliminary investigation indicates there's cause for concern.

In Iowa, lottery tickets are considered "bearer instruments," which means that whoever holds the ticket is deemed the owner unless it has already been signed by someone else. In Canada, there was a tougher standard, with prize-winners required to state that they were the lawful owner of the ticket. Lottery officials there felt the "bearer instrument" standard would make the policing of "insider wins" more difficult.

Ten years ago, the Iowa Lottery attempted to address some of the ombudsman's long-standing concerns about potential theft by lottery retailers. At the time, the Iowa Lottery's chief executive officer, Ed Stanek, seemed to discourage players' reliance on ticket terminals to verify winnings, saying those who did so weren't "playing the game" correctly. Players can get the winning numbers from the newspaper, television or the Lottery's Web site and personally check their tickets.

Stanek agreed that informational stickers would be placed on the terminals, advising players that they were responsible for determining whether their tickets were winners. But Jeff Burnham, an investigator with the ombudsman's office, visited 15 Iowa Lottery retailers last fall and reported that the sticker was visible at only one of the 15 locations.

When Burnham asked the clerks how he should determine whether his Powerball ticket was a winner, all of the clerks offered to scan the ticket for him, he said.

Kenneth Brickman, the Iowa Lottery's chief operating officer, said lottery players have to assume some responsibility in protecting themselves from theft or fraud, just as they do in other endeavors.

"I think there are dishonest people in every walk of life," he said. "The question becomes, 'Is there reason to believe that Iowa's store clerks are somehow more dishonest than the average person?' I would say that, far and away, the vast majority of all the retail clerks in Iowa are honest, good people. Could you find a foul ball occasionally that would palm a lottery ticket? Sure."

Brickman said it's possible that at least some of the contents of the Iowa Lottery's investigative files will eventually be given to the ombudsman for review.

"We will look at those files," he said. "Some of those files would have exhibits, pieces of information, that would disclose how we catch crooks, how we protect our system, how our system operates internally. That information we can't disclose."

Message from Dawn Nettles - The Lotto Report
Texas has a serious claims problem - I would like to hear from any player who has
a pending claim with the Texas Lottery or a claim that you feel was wrongly denied.
Send me an email and in the subject line please say, "Claim Problem." Then summarize
your story and please include your phone number.

Investigation looks at lottery security

Des Moines Register
January 24, 2008

Iowa Lottery officials are refusing to turn over records to state investigators who are looking into winnings claimed by lottery retailers. The conflict between the Iowa Lottery and Citizens' Aide Ombudsman William Angrick has been brewing for months. On Wednesday it spilled into the open during a meeting of state lawmakers.

Angrick said an investigator's work shows that one Iowa convenience store clerk claimed six Iowa Lottery prizes worth a total of $264,000 over a 12-month period. Two of the prizes were redeemed on the same day. Angrick said he wants to see the Iowa Lottery's investigative files on that case and others and is prepared to issue a subpoena and, if necessary, take his fight to the Iowa Supreme Court.

Kenneth Brickman, the Iowa Lottery's chief operating officer, is accusing Angrick of a "prosecutorial" approach to the ombudsman office's investigation and is alleging that the inquiry is "fraught with hearsay, innuendo, prejudice and preformed conclusions."

A broad investigation by the ombudsman's office comes in the wake of a major lottery scandal in Canada, where independent investigators found widespread evidence of fraud. Some Canadian store clerks were falsely telling customers their lottery tickets weren't winners. The clerks would discard the tickets and, after the customers left the store, retrieve the tickets, redeeming them for a prize.

The Ontario ombudsman investigated and found that clerks at authorized lottery retailers were winning prizes in disproportionate numbers. The investigation led to arrests and dozens of changes in the way lottery tickets are sold in Canada.

Angrick, whose office has been investigating the Iowa Lottery since last spring, said preliminary findings of investigator Jeff Burnham underscore the need for access to lottery records.

The ombudsman's office didn't identify the clerk with the lucky streak by name, but lottery records indicate she is Linda Rost, 56, of Lake Park. In early 2007, Rost claimed a $250,000 prize in the $35 Million Cash Spectacular instant-scratch game.

An Iowa Lottery newsletter sent to retailers said: "This is Rost's second big winner purchased from Stan's Corner in less than a month. On Dec. 29, 2006, she claimed a $10,000 prize in the same game from a ticket she also purchased at Stan's Corner!"

The newsletter did not mention that Rost worked at Stan's Corner, although that fact was disclosed in an earlier news release related to her initial $10,000 win.

In an interview Wednesday, Rost said she realizes she has been very lucky.

"Yes, they tell me it's very unusual for a person to win that often," she said. "And I only play about once or twice a week."

Iowa Lottery officials wrote to the ombudsman's office in November, saying they had investigated Rost's winning streak and found that she "generally buys tickets by the pack ($300 worth)" and made such purchases frequently.

"No, that's not right," Rost said Wednesday. "That's way too much money. I couldn't afford that, and I don't know who could. I buy one or two tickets at a time."

Rost said she has worked as a cashier and cook at Stan's Corner for about six years. She scans lottery tickets for customers who want to know if they have winning tickets. She said customers can see a screen that indicates whether their ticket is a winner. She said some of her winning tickets were bought at a store where she doesn't work.

Angrick and Burnham emphasize that they aren't accusing anyone of theft or fraud. But Burnham's written, preliminary assessment of the Iowa Lottery describes a system that is vulnerable to such abuses.

"A typical customer is largely on his own - and may not even know that," Burnham's report says. "A thieving store clerk seems to have every advantage."

Iowa Lottery officials say they have received no complaints about the sort of activity uncovered in Canada, and they say they go to great lengths to protect consumers.

Lottery Vice President Mary Neubauer said that other types of complaints are thoroughly investigated by lottery staffers who have training in law enforcement and that all retailers are subject to background checks.

However, background checks don't include the clerks who dispense tickets and verify winnings. And the lack of complaints could mean little since victims wouldn't necessarily know when a clerk has lied and stolen a winning ticket, ombudsman officials said.

In October, Angrick's office asked Iowa Lottery officials for access to two years of investigative files related to allegations against lottery retailers and their employees. In response, Brickman sent Angrick a pair of letters in which he questioned the ombudsman's jurisdictional authority as well as the cost to taxpayers for any investigation that might take place. Brickman also alleged that Angrick seemed to have concluded that "there is something sinister, not yet known, lurking and the Lottery is guilty of something unless proven innocent." He refused to provide access to the investigative files, saying they were confidential.

Neubauer, in addressing the Legislature's Government Oversight Committee on Wednesday, suggested the records couldn't be shared without giving the ombudsman access to security codes and other information that would enable Angrick or someone in his office to rig a Lottery game in their favor.

Angrick told lawmakers he doesn't want any security codes and is only interested in the investigations into citizens' complaints of wrongdoing.

Sen. Mike Connolly, a Dubuque Democrat, told Angrick he's supportive of the inquiry given the ombudsman's role of investigating matters on behalf of the Legislature.

"I'm hoping you pursue the jurisdictional argument on our behalf," he said.

The committee is expected to discuss the matter again at a meeting next week.

State Ombudsman threatens legal action against Iowa Lottery over investigation

Radio Iowa
By Darwin Danielson
Wednesday, January 23, 2008

The state ombudsman is threatening legal action against the Iowa Lottery to obtain records in an investigation of the potential for fraud by retailers selling lottery games. Ombudsman William Angrick Wednesday told the Legislature's Government Oversight Committee that he wants to review consumer complaints after retailers themselves were Iowa lottery winners, a situation which was the subject of a recent scandal within the Canadian lottery.

"We want to see to what extent the Lottery has identified and reviewed multiple retailer wins," Angrick says, "is that something that they self initiate, is that something that turns on a lightbulb?" Angrick says the Lottery is withholding information that would help with his investigation.

Angrick says the lottery provided his office with a considerable amount of information, but specifically denied access to their investigative complaint files. Angrick says he has given the Iowa Lottery until January 28th to respond, or he will seek a subpoena.

Lottery Vice-President Mary Neubauer said opening up the files would threaten the integrity of the lottery. Neubauer says, "We have talked to the attorney general's office about this matter and are seeking consultation from them about access to these files and what we can do to protect the integrity of the lottery. That is our tantamount and foremost concern."

An ombudsman's deputy told lawmakers it would be naïve to believe that retailer fraud and theft have not occurred.

Lottery should release files to ombudsman

Des Moines Register
January 30, 2008

Here's a lesson for government workers in Iowa: If the state ombudsman sends you a letter asking for more information about your agency's operations, don't question the investigator's jurisdiction.

Don't respond that you have "serious concerns" about his intentions and find his approach "prosecutorial" and "fraught with hearsay." Don't tell him how to do his job - by suggesting he remove the lead investigator from the case. Don't refuse to turn over information needed to conduct a thorough investigation. It makes it look as though you have something to hide. It leads to stories on front pages of newspapers about your failure to release information. Your agency will appear uncooperative, as if staff members think the agency is above investigation. Which is exactly how the Iowa Lottery has looked after chief operating officer Kenneth Brickman's response to questions from Citizens' Aide/Ombudsman William Angrick. The Lottery did provide some requested documents and answers to Angrick's questions, but it has refused to this point to hand over investigative files.

Angrick is concerned that Iowa's lottery system might be vulnerable to a type of fraud exposed last year in Canada, where store clerks were falsely telling customers their tickets weren't winners. The clerks would keep the tickets to redeem. Similar types of theft have been reported in California. Angrick also has questions about an Iowa store clerk who won the lottery six times over a 12-month period.

Angrick isn't accusing the Iowa Lottery of doing anything wrong. He's doing his job - taking a closer look at the operation of government agencies. In the case of the lottery, that requires reviewing investigative files concerning reviews and complaints.

So in October, Angrick asked the Iowa Lottery for those files, other documents and answers to questions. Brickman responded that the lottery would cooperate to the best of its ability, but went on to question Angrick's jurisdiction and intentions and noted that no Iowan had filed a complaint with the ombudsman.

For the record, the ombudsman does not - and should not - need a complaint to conduct an investigation.

Since 1999, the ombudsman's office has conducted 150 self-initiated reviews and special projects that didn't begin as complaints. As an example, the office investigated when a city jail was noting the race of a prisoner only when that prisoner was African-American.

This week, the two sides have been talking in an effort to come to an agreement over release of the investigative files, and another legislative hearing on the matter will be held today.

Let's hope an agreement will be reached - one that ensures the ombudsman gets all the information needed to conduct a thorough evaluation. Iowans need to have confidence and assurances that the state lottery operation is working as it should work. One way to provide that assurance is for an outsider to take a comprehensive look at it.

Iowa Ombudsman Lottery Report - a pdf. A report everyone should read.

May I also suggest that you go to the Iowa website and read some more.
Click here
to read other findings that should be of great interest to all players.


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

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