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Iowa Lottery retail check finds no cheating

Mar 13, 2009, 9:13 am

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Iowa Lottery

The Iowa Lottery said today it found no evidence that lottery ticket winners were cheated when it conducted security checks last month at 120 retail sites statewide.

Three lottery underecover investigators posed as customers and visited 126 randomly-selected Iowa retail locations on Feb. 24 and 25, said Iowa Lottery Vice President Mary Neubauer. They presented 128 winning tickets with cash prizes ranging from $1 to $100.

In every instance, the retailer paid the correct amount, Neubauer said.

Iowa Lottery Chief Executive Officer Terry Rich issued a statement saying the results show that Iowa's retailers are honest, hard-working people who are the lifeblood of their communities. "But there have been problems involving lottery-ticket redemption outside Iowa, and we thought it was important to double check the process here," he said.

The Iowa Lottery's checks were conducted as Iowa Citizens'Aide/Ombudsman William Angrick is finishing work on an independent investigation of the Iowa Lottery's security procedures. Angrick's investigation began last year after questions arose about one Iowa store clerk who won the lottery six times over a 12-month period, collecting $264,000.

Angrick declined comment today on his findings, but he said he expects to offer his report to Iowa Lottery officials soon for their review. His report won't be made public until Iowa Lottery officials have an opportunity to respond to his investigation.

Neubauer said the Iowa Lottery's checks were in response to cases involving retailer fraud at some of the lotteries in Canada in recent years and recent fraud investigations in California. More than two dozen people working at retail outlets in California have been arrested for grand theft of winning lottery tickets as part of checks by the California Lottery.

"While these crimes involve only a small number of our more than 20,000 authorized retailers, we demand that all of our retailers be fair and honest," said California Lottery Director Joan Borucki in a press release.

In a Santa Clara County, Calif., sting operation, undercover investigators posing as customers handed clerks decoy winning tickets and asked if they had won. In some instances, the clerks told investigators their ticket was not a winner. The suspects then went on to file a claim with the lottery as if the winning tickets was theirs, California Lottery officials said. The suspects face felony charges that include possible fines and prison terms.

The Iowa Lottery is not immune to crime, state officials acknowledge. State lottery security investigators periodically learn of stolen Iowa Lottery tickets, Neubauer said. Most of the theft of Iowa Lottery tickets involves theft by retail employees, although there are occasional instances of burglaries involving lottery tickets, she added.

Most cases of stolen Iowa Lottery tickets are quickly solved because the tickets can be easily traced, Neubauer said.

The only problem surfacing from the recent checks of Iowa Lottery retailers is that about half of the store clerks didn't require that winning lottery tickets be signed before they were cashed, Neubauer said. The lottery will remind retailers about the importance of obtaining signatures, and will inform them that ongoing violations won't be tolerated.

Neubauer said the Iowa Lottery has increased its focus on lottery security over the past few years, warning the public of lottery scams and offering more player security information on its Web site.

Last year, the Iowa Lottery began requiring that tickets be signed before they can be checked or cashed, and that receipts be printed for all lotto and scratch tickets that are checked or cashed.

The recent checks by Iowa Lottery investigators occurred in 76 Iowa cities located in 54 counties, including Polk County, Neubauer said.

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