Three participants in a Burlington variety store lotto scam have been convicted in connection with a scheme that allowed one of them to fraudulently cash in a winning ticket worth $12.5 million.

Kenneth Chung, who at the time, managed Variety Plus in Burlington, and his father, Jun-Chul who regularly worked there, were found guilty this month of stealing tickets during an eight-month period that ended in February, 2004.

One of those stolen tickets turned out to be a Super 7 lottery winner worth $12.5 million.

Jun-Chul has been found guilty of stealing the winning ticket. He, along with his daughter Kathleen, have also been convicted of possessing the stolen ticket and defrauding the OLG.

All three family members were cleared of a charge alleging they tried to hide the money in South Korean bank accounts.

The case of Kathleen Chung, who cashed the winning ticket at her brother's convenience store in Burlington in early 2004, was profiled by the CBC's Fifth Estate, triggering a report by the Ontario ombudsman. ((CBC))

The Chung case was profiled by the CBC's The Fifth Estate and highlighted as the most shocking example in a slew of so-called insider wins examined by former Ontario Ombudsman André Marin after a 2007 report that accused Ontario's lottery agency of turning a blind eye to unscrupulous retailers claiming stolen prizes.

Following the searing report, provincial police launched an investigation and arrested the Chungs in 2010.

Provincial police also seized many of the family's assets, including bank accounts, five luxury vehicles, two homes, three commercial properties, and other personal property such as jewlery and electronics, which police said were purchased after the win.

Lawyer already planning appeal

In his decision, Justice Douglas Gray said investigation by the OLG showed there is "no doubt whatsoever" the same person, probably a man named Daniel Campbell, purchased all four lottery tickets in St. Catharines on Dec. 19, 2003.

Based on evidence from the OLG, all four tickets were validated at Chung's store in Burlington just three days later — resulting in five free play tickets.

But, according to the decision, Campbell was only given four of the tickets. He validated those tickets in St. Catharines, but that fifth ticket, which proved to be the winner, was checked in Chung's store.

7 Ont. men each collected cheques for more than $2M Thursday, their share of a lottery win originally awarded to a woman now facing fraud charges, the CBC's Melanie Nagy reports 2:57

"It is clear, in my view, that there is only one reasonable conclusion: the winning free play ticket was kept by Jun-Chul Chung for himself after he validated all of the tickets on December 22, 2003," wrote the judge. "In so doing, he stole that ticket from its rightful owner."

When reached by phone, Jacqueline An, Jun-Chul's lawyer, said she plans to appeal the verdict, but declined to say more.

Claimant couldn't remember where ticket was bought

Kathleen went to the OLG prize office in Toronto to claim the prize on Feb. 5, 2004, but was unable to tell staff where or when she had purchased the winning ticket

When asked to sign a declaration saying she didn't know Kenneth Chung, the man who managed the store where the winning ticket was bought and checked, she broke down crying and admitted he was her brother.

But, she maintained, she may have purchased the ticket somewhere in St. Catharines while doing deliveries for her father's male health products business.

Kathleen Chung has lied throughout about her purchase of the original ticket and the validation of the winning ticket. - Superior Court of Ontario Justice Douglas Gray

In December 2004, the OLG decided to pay out Kathleen Chung's claim, despite suspicions her claim was fraudulent.

It's believed she used part of the winnings to "purchase of an expensive home and some cars," according to the judge.

"Kathleen Chung has lied throughout about her purchase of the original ticket and the validation of the winning ticket," Gray stated. The OLG's computer records, along with her cellphone and banking records show she could not have been where she said she was when the ticket was purchased and validated.

"She knew the ticket was stolen."

Simon King, Kathleen's lawyer, declined to comment on the case.

Meanwhile, Kenneth Chung, who was convicted of running the insider scam, was acquitted of all charges connected to the winning $12.5 million ticket, after the judge ruled the Crown had not proven beyond a reasonable doubt he knew the ticket was stolen.

Rightful winners paid out years later

In 2011, Daniel Campbell and six former coworkers from a Burlington-area trenching company, each received $2.1 million — plus another $2.3 million in interest — for a total of $14.8 million split seven ways.

The controversial $12.5-million Super 7 lottery jackpot was eventually paid out to Joseph Reaman, James Reaman, Mike Maddocks, Daniel MacGregor, Jason Dykema, Daniel Campbell and Adam Barnett. They also got interest. (CBC News)

The payout came seven years after Kathleen cashed in the winning ticket.

"I'm just really happy," said Campbell during a press conference at the time. "It's a big deal for myself and my family and I can maybe help them out and take care of them. I'm a little overwhelmed; a lot overwhelmed."

OLG suing for lost millions

The OLG declined to comment on the case as "it has entered the sentencing phase," according to spokesperson Tony Bitoni.

The gaming agency would also not comment on its lawsuit to regain the $12.5 million as it is currently before the courts.

Sentencing is scheduled to begin on September 4.