Some Iowa Lottery retail employees win big, raising suspicions

Jason Clayworth , Jason Clayworth | The Des Moines Register

Show Caption Hide Caption Winners, losers and cheats. An investigation of the Iowa Lottery The Des Moines Register examines both crime and policies associated with Iowa and national lotteries.

Part of a series investigating the integrity of Iowa's lottery system.

© Copyright 2017, Des Moines Register and Tribune Co.

GLENWOOD, Ia. — Some of the Iowa Lottery's most frequent winners are the employees who sell scratch tickets at gas stations and convenience stores around the state.

In 41 stores, retail employees have won every large Iowa Lottery prize sold during the past five years, a Des Moines Register investigation shows. At four locations, the winning payouts to workers were $100,000 or more.

Lottery officials believe those employee wins are legitimate and legal. And there are no state rules prohibiting retail employees from playing.

But gambling watchdogs say the wins raise eyebrows, noting that some lottery retail employees have won more than a dozen times. And, in fact, several retail employees have been caught cheating the games in recent years.

Critics also point to a 2009 Iowa Ombudsman investigation that recommended retail employees be prohibited from playing at the stores where they work to ensure the integrity of the games isn't compromised.

The recommendation was among 60 fixes the ombudsman's office made after identifying weaknesses in the Iowa lottery system that could aid "large-scale fraud … without customers or the lottery realizing it."

But the Register found that, eight years later, many of those weaknesses remain, including potential problems surrounding employees who buy scratch tickets where they work.

By the nature of their jobs, employees of lottery retailers are in a position that would enable them to assist in fraud, with direct access to unsold tickets and control over the process to validate winning tickets and make payouts of most prizes, the ombudsman’s report noted.

Since 2015, a handful of retail clerks have been convicted of stealing lottery tickets or cherry-picking winning tickets.

Stricter rules on lottery outlet employees are a good idea, if for no other reason than to eliminate even the appearance of impropriety, reform advocates say.

“States should at least forbid store clerks from purchasing tickets in the store they work, but they don’t want to do that because it pushes their sales,” said Dawn Nettles, a Texas resident who advocates for lottery reform nationally and runs lottoreport.com, a website that monitors her state’s program.

Determining precisely how many store owners, retail clerks or other employees have been Iowa Lottery winners is impossible to assess. The lottery winner database tracks only those prizes worth $600 or more.

But data from those wins shows that since July 1, 2013, retail lottery employees across Iowa have collected at least 736 of the games' largest prizes — 4 percent of the $110.8 million in prizes of $600 or more.

Lottery officials say retail employees have a right to purchase tickets, just as they have a right to purchase anything else for sale at the stores where they work, whether it be food or gas.

“Should they (retail employees) also not be able to buy beer?” Lottery CEO Terry Rich asked. “I think it’s a question of employee rights.”

Sen. Herman Quirmbach, D-Ames, an associate economics professor at Iowa State University, said some of the prizes won by employees do raise questions.

Quirmbach previously has pushed the state to study the socioeconomic impacts of the lottery on Iowa’s poor.

“Convenience store clerks are people too," he said. "If there is a pattern like that, then perhaps a safeguard needs to be in place."

The Glenwood phenomenon

The Register found that at 35 of the 41 Iowa locations where retail employees won all of the lottery prizes over $600, it was the retailer's only large payout.

Five of those payouts were for $50,000 or more each.

Six of the 41 locations recorded as many as five large wins — all by employees.

At other stores where both customers and employees won large prizes, retail lottery employees collectively won as many as 19 wins, data shows.

Three of the five stores in Iowa with the most large wins by employees were in Glenwood, where six people employed by lottery retailers have collected 56 prizes worth more than $106,000.

Iowa Lottery investigators review all employee wins and say the Glenwood prizes appear legitimate.

Most are driven by one player, Jared Newman, who won at least 53 prizes of $600 or more during a period that ended April 6, the date the Register obtained a database of lottery winners.

Since his streak began in September 2014, Newman has won large payouts totaling $102,350. Thirty-nine of those winning tickets were purchased at the three Glenwood stores that were among the top five in Iowa for employee wins.

Five were at his family’s grocery store in Glenwood, Newman’s Thriftway, where he works. The rest of the wins were at three other stores in western Iowa. Newman said his father has barred him and other employees from playing at the family store.

Newman told the Register he plays $100 to $300 a day on the Iowa Lottery's "Pick 3" and "Pick 4" drawings.

Eduardo Duenez of the University of Texas at San Antonio, an associate mathematics professor who reviewed Newman’s lottery winnings at the Register’s request, said Newman's luck is "statistically quite conceivable."

But Duenez said he also believes it is statistically impossible for Newman to have come out ahead. His "inescapable conclusion," given the rules of the games, is Newman's $102,000 in winnings would "correspond to an amount quite close to $170,000 paid to play.”

Newman, a father of four children from Elkhorn, Neb., said lottery officials know him well.

"I go to the lottery office, and they already have my name printed off on tax sheets," Newman said. "I just have to go in and sign."

Only one player, Marian Powers of Arnolds Park, has won more large payouts than Newman in the Register’s review of Iowa lottery winners since 2012. Powers, who is not a retail lottery employee, won $261,275 in 56 wins of $600 or more.

Attempts to reach Powers were unsuccessful.





Winners, losers and cheats. An investigation of the Iowa Lottery

Lottery cites security precautions

The success of the Iowa Lottery can be found in retailers across the state.

Iowa has more than 2,400 lottery retailers. Those businesses have sold more than $4.8 billion in lottery products and have been paid $379 million since the Iowa Lottery began in 1985.

Iowa Lottery officials say they believe virtually all those transactions were handled legally, citing the number of “contacts” with the agency — mostly inquiries about possible improprieties from retailers and customers — as evidence.

Out of roughly 129.8 million lottery transactions last year, lottery investigators were alerted 639 times to possible improprieties.

“In other words, 99.99999518 percent of those transactions had no security-related inquiry associated with them,” said Mary Neubauer, vice president of external relations with the Iowa Lottery.

Lottery investigators have electronically tracked all retail employee wins for four years.

That system was put in place after the 2009 Iowa Ombudsman’s report found the lottery had failed to investigate whether retail employee wins — some as large as $250,000 — were valid.

The ombudsman also said the lottery should adopt a more "proactive enforcement system" and recommended prohibiting retail employees from buying or redeeming tickets at their place of employment.

“Such a system can help ensure that customers’ interests are reasonably secure and that thieves are routinely held accountable, thereby promoting the Lottery’s integrity and dignity,” the report said.

While enforcement has been stepped up, the employee prohibition was never adopted.

Lottery investigators conduct 350 to 500 undercover retail security compliance checks each year but have never identified fraud, officials say.

Those checks are conducted day and night and involve ticket checks to see whether retail employers handle them appropriately. The checks were put in place after incidents around the country where retail employees stole tickets from consumers to later claim prizes, she said.

"We know this is an issue we also need to guard against here in Iowa, and we have taken steps to do so," Neubauer said

No one bans employee play

Iowa isn't the only state reluctant to curb employee play of the lottery.

Lottery officials from states surrounding Iowa — Missouri, Minnesota, Illinois, Wisconsin, South Dakota and Nebraska — said they do not restrict where retail employees play.

The North American Association of State and Provincial Lotteries, a group based in Ohio that represents the industry, has not issued recommendations to its members about the issue, said Kimberly Chopin, a spokeswoman for the group.

Iowa, like other states, does prohibit people who work directly for the lottery from playing, including employees of companies that print or supply tickets.

And some Iowa businesses have instituted their own retail employee ban on lottery sales, including Casey's, Hy-Vee, Kum & Go and Kwik Star, stores that make up almost 40 percent of Iowa Lottery retail locations.

Iowa Lottery officials say investigators review each retail lottery employee claim, including previous wins and the location where the ticket was purchased.

Banning retail employee play is unnecessary because the employees have no access to the confidential operations of the games, Iowa Lottery officials said.

"We believe that Iowa lawmakers made the appropriate call when they passed the legislation that bars anyone from playing the Iowa Lottery who may be able to influence the outcome of its games," Neubauer said.

A test of the system

The Iowa Lottery has set out specific recommendations and rules for how clerks should handle lottery tickets. But those procedures aren't always followed, the Register observed firsthand.

Here's the procedures, and what the Register observed at four stores where it asked a clerk to check a ticket.

Requirement: The clerk must require a signature on a ticket before checking to see if it is a winner, a guard against theft.

What we saw: None of the clerks required a signature before checking the ticket.

Recommendation: The clerk should provide a receipt showing a ticket was not a winner.

What we saw: Two clerks failed to provide receipts after scanning the ticket. Two other clerks did provide losing receipts.

Recommendation: The clerk should offer and return the losing ticket to the customer.

What we saw: Clerks at three stores offered and returned the losing ticket.

Dishonest clerks

Sarah Weesner

The Iowa Division of Criminal Investigation found that Sarah Weesner had scratched and scanned at least 409 lottery tickets over a month’s time while working at the former Valero Gas Station, 821 E. Euclid Ave., in Des Moines.

She paid for some of the tickets but shorted the store at least $315, according to a DCI report.

Weesner won at least $788 during the month of the DCI review, including at least one ticket that she cashed at another gas station, records show.

The 2014 investigation was launched after a Des Moines resident purchased a $20 book of tickets and alerted lottery officials that he believed he was defrauded.

Investigators concluded via in-store video that five days before Weesner sold the ticket to the customer, she had scratched and scanned the ticket before “promptly” putting it back into the display, knowing it was a loser.

Weesner, who is now 34, pleaded guilty to one of the counts and was sentenced to two years of probation in March 2015. She received a deferred judgment, which means the criminal judgment was never formally entered on her record following her completion of probation.

Weesner’s attorney, Nathan Mundy, said she paid for most of the tickets associated with the case.

Desteney Dawn Olson

Desteney Dawn Olson, a clerk at the Express Mart in Greene, scratched lottery tickets to see their security codes and manually entered their numbers in a lottery machine to determine winners at least 11 times last year, prosecutors allege.

Olson, now 36, returned the losing tickets to dispensers to be sold. She printed a receipt for winners and removed cash from the register, court documents show.

She pleaded guilty last year to a felony count of lottery forgery and was sentenced to two years of probation. She received deferred judgment, which means the criminal judgment will not be formally entered on her record if she successfully completes probation.

Multiple attempts to reach Olson were unsuccessful. Her attorney, William Nolte, declined to comment about the case.





Ashley Bosler and Johnny Long Jr.

Ashley Bosler, a clerk at a Casey’s General Store in Buena Vista County, scratched the corner of a lottery game and scanned a bar code that confirmed a $250,000 prize on a ticket she hadn’t purchased, prosecutors said.

Bosler, who was 20 at the time of her July 2016 arrest, was also too young to legally have purchased the ticket. Prosecutors allege her boyfriend, Johnny Long Jr., 26, attempted to cash the ticket.

Lottery officials refused to redeem the ticket after noticing scribbling on the back of the ticket.

Bosler and Long, both of Sioux Rapids, pleaded guilty to a felony count of lottery theft. They were each sentenced to two years of probation and fined $750. They were also given deferred judgments.

Efforts to reach Bosler and Long were unsuccessful.