Lottery 'insider' jackpots hit $198 million
COLIN MCCONNELL/TORONTO STAR
Kelly McDougald, CEO of the Ontario Lottery and Gaming Corp., touts new anti-fraud measures at news conference where a forensic audit showing dramatic jump in insider winnings was released on Feb. 4, 2009.
Total is double the amount of early estimates, prompting gaming bosses to tighten security again
February 05, 2009
PAOLA LORIGGIO
STAFF REPORTER
A forensic audit has found that lottery retailers, employees and their families have taken home $198 million in prizes in the past 13 years, far beyond the $106 million previously estimated by the Ontario Lottery and Gaming Corp.
The dramatic jump in the dollar figure is due in part to the corporation's broadened definition of "insiders," which now includes family members and those living with OLG employees or lottery retailers, said the Crown corporation's CEO Kelly McDougald. The audit by Deloitte and Touche also counted data files that had been excluded in the initial tally, she said.
The lottery corporation has further tightened security to thwart "atypical behaviours" tied to insider fraud, such as retailers pocketing free Encore tickets won by customers or guessing the hidden four-digit validation codes on instant-win scratch tickets.
As a result, the OLG will discontinue free ticket prizes on Encore starting in April, and replace validation codes on scratch tickets with barcodes by next year.
Two years ago, the OLG responded to widespread criticism of its practices by launching a series of anti-fraud measures that included self-serve ticket checkers at most retail outlets and making it mandatory for customers to sign tickets before retailers validate them. They also instituted background checks for lottery retailers and automatic investigations of prize claims of $10,000 or more by retailers and other insiders.
"Today marks the next phase in the transformation of OLG's lottery operations," McDougald told a news conference where the audit was released yesterday.
Lawyer Greg Harris, who represents four Toronto school teachers defrauded of a $5.7 million win in 2004, said the report – and the OLG's readiness to share data – show the corporation has changed dramatically since the insider fraud scandal surfaced.
"They used to deal with (fraud complaints) in an adversarial manner," said Harris, whose clients received their prize in December 2007 after the retailer's arrest. "They realized the error of their ways."
"The new regime really seems to have the public's interest at heart."
Yesterday, the corporation also pledged to invest $3 million to keep its database updated in real time, allowing it to flag unusual patterns and shut down the related lottery terminals.
The audit and new initiatives follow two years of efforts by the corporation to curtail insider fraud, a practice thrown into the public eye in 2007 by the CBC's fifth estate. The program showed the OLG as unwilling to investigate insider fraud, even when it suspected a retailer of illegitimately claiming a $12.5 million Super Seven jackpot.
Ombudsman Andre Marin released a scathing report later that year denouncing the OLG's lax security measures and calling for increased protection for lottery players. The ombudsman is expected to comment on the OLG audit this morning. A spokesperson for the OLG would not say how many complaints of insider fraud are under investigation. McDougald said the audit shows the OLG has successfully reduced fraud since it implemented the ombudsman's recommendations. Now, thanks to the database, "we have the ability to predict fraudulent behaviour and mitigate against it," she said.
"We're building in smart, preventative measures that shut down terminals if the system sees anomalous behaviours."
Some 1,700 terminals were temporarily shut down due to atypical behaviours between April 2007 and last month, said Lenna Bradburn, chief security and compliance officer. In that same period, 38 employees were temporarily suspended and 17 contracts were terminated, although not necessarily in connection with fraud, she said.
McDougald said the entire database, which contains some 200 billion pieces of data, has been turned over to Ontario Provincial Police.
Dave Ross, spokesperson for the OPP, said a team of 14 officers is investigating insider and suspicious winnings. He would not specify how many cases are outstanding at this time, but said more charges could be laid once the OLG data has been reviewed.
The $750,000 study took five months, and is believed to be the largest analysis of its kind published by a lottery corporation in the world.
Click Here For The Best Investment You Can Make In A Recession!
Posts
