Two Waterloo residents charged last week with lottery fraud highlight a national scam in which lottery winners ask someone else to redeem their jackpots to avoid court fines, back taxes, or child support.
Natasha A. Nieman, 34, and Samuel W. Hirsch, 40, were charged with fraudulent practices, a Class D felony punishable by up to five years in prison.
They are accused of fraudulently redeeming a lottery ticket June 16 in Cedar Rapids.
Nieman bought a $3 Crossword scratch ticket from a Casey’s in Waterloo on June 14, the criminal complaint states. The ticket was a $30,000 winner, but because Nieman owes money to the state, she could not redeem the jackpot without having some of the money confiscated, the complaint states.
A review of Iowa Courts Online shows Nieman has more than $1,100 in outstanding fines or surcharges for criminal and civil cases. She may owe other amounts to the state.
Hirsch, Nieman, and her boyfriend drove to Cedar Rapids, where Hirsch redeemed the ticket, saying it was his own, the complaint states. Hirsch later told the Iowa Division of Criminal Investigation (DCI) he gave the winnings to Nieman, with the provision her boyfriend would use part of the money to repay a debt he owed Hirsch.
This type of scheme, known nationally as ten-percenting or ticket discounting, involves a person redeeming a winning ticket for someone else who owes back taxes or child support — debts ordinarily deducted from lottery winnings. The redeemer usually keeps a cut of the jackpot.
The Boston Globe in July profiled one family that claimed 340 $1,000-plus jackpots worth a total $440,000 — a feat that would require spending $1 million or more on tickets, according to a statistician.
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To make sure Iowa Lottery winners are paying their debts first, lottery officials match the Social Security number of each $600-plus winner with an Iowa Department of Revenue list of people who owe money.
“If you owe back taxes, child support or fines of any kind, those are withheld,” Steve Bogle, the Iowa Lottery’s vice president for security, told The Gazette last month. “Sometimes they (the winners) aren’t very happy about it.”
Lottery officials compare the signature of the person redeeming the prize to the signature on the ticket, if there is one. If the store that sold the ticket has video surveillance, officials can see whether the person buying the ticket is the one redeeming the prize, Bogle said last month.
Patrick Townsend, DCI special agent in charge, said Nieman’s and Hirsch’s arrests came after a “concerned citizen” reported the possibility of fraud to the Iowa Lottery. He declined to say whether the Iowa Lottery’s security procedures caught the alleged fraud.