Winning lottery ticket can bring riches — and scams

Hey, you never know … how a long-lost relative, investment scammer, or other unsavory character might try to finagle prize money out of a lottery winner.

Take the case of a Glen Cove man who last year scratched off the top prize of $1 million from a $5 Hold 'Em Poker card — only for his cousin from down South to allegedly steal nearly all the prize money and threaten to get him deported when he protested.

The episode — which unraveled last week with the cousin’s arrest — casts a spotlight on the dark side of hitting it big, and the ways winners try to avoid becoming victims of (good) luck.

"Unless you’re someone who wants to be famous — which some people do — there’s not many advantages to being public and standing in front of a press conference and holding a giant check. ... I always think of it as a bit of a bull's-eye," said Eric Jaffe, a Huntington-based lawyer who helps lottery winners stay anonymous by forming limited-liability corporations, known as LLCs, to accept the money.

Doing so skirts New York’s typical requirement, similar to rules in all but a half dozen or so states, that winners must agree to be publicly named, appear at a news conference, or both.

Jaffe represented a group of 23 co-workers at a still-anonymous small Long Island retail business who in 2019 won $437 million in the Mega Millions game — at the time the largest face-value jackpot in state history. The name of that legal entity: New Life 2019 LLC.

He said this anonymity avoids the hassle of friends, family and acquaintances seeking loans; stockbrokers, vendors and salesmen soliciting business; and the danger of identity thieves, blackmailers and hackers seeking to exploit the newfound fortune.

But under an arrangement like the one Jaffe set up, the lottery gives the LLC the money, which then goes to the winners through the LLC — with the attorney as the only public face.

In 2018, then-Gov. Andrew M. Cuomo vetoed legislation that would have allowed New York’s winners to stay anonymous. In a veto message, Cuomo argued that publicizing winners’ names provides a measure of public accountability — and said that those who really want privacy can always form LLCs.

Brad Maione, a spokesman for the New York State Gaming Commission, which runs the lottery, said last week that winners are forming trusts and limited-liability corporations.

"People are doing that more frequently," he said.

Of the 122 wins of $1 million and up in 2019, seven winners elected to set up LLCs for prize payment, he said in an email.

Most lottery winners end up having a better life, according to a study co-authored by David Cesarini, an associate professor of economics at New York University. But there can be downsides, research has found, at least anecdotally, he said.

"Shady financial advisers show up out of the woodwork and suddenly want to help you manage your money. But it turns out, of course, they have other agendas. There are some suspicious marriage proposals, and there are these distant cousins that you haven’t heard from for years who suddenly need money for surgery or something that sounds important," he said. "Dealing with those kinds of requests can be taxing psychologically."

Or worse.

In the summer of 2020, a self-described "Lottery Lawyer" named Jason Kurland, of Dix Hills, was charged in federal court in Brooklyn, along with co-defendants from Roslyn, Staten Island and Oyster Bay, with a $107 million scam to defraud his lottery-winning clients.

Over the years, Kurland has claimed to have represented dozens of people with winnings totaling about $3 billion, including a $1.5 billion Mega Millions prize, a $245 million Powerball jackpot, and another $150 million jackpot, according to the U.S. Department of Justice.

According to the department, the winner-victims each paid Kurland, a now-former partner at the law firm Rivkin Radler, hundreds of thousands of dollars, in part for advice on safe investments. He would later steer the clients to shaky investments, for which he got undisclosed kickbacks.

The defendants, who include a reputed soldier in the Genovese organized crime family, allegedly spent millions of dollars of the winners' money on expensive vacations, private jets, and luxury vehicles, including two yachts.

A cellphone listed on an archive of Kurland’s now-defunct website, thelotterylawyer.com, rang unanswered when dialed on Sunday night.

Telemachus P. Kasulis, one of Kurland’s attorneys, said his client has pleaded not guilty, and is innocent, and expects to prove it at trial.

In the case that unraveled last week, the Glen Cove man beat the Hold 'Em Poker lottery’s 1 in 4.2 million odds — and wanted to avoid publicity. So he asked his cousin to claim the ticket he bought the morning of Oct. 28, 2020, at a 7-Eleven convenience store on Glen Street.

The winner is an immigrant who is living in the United States illegally, and at the time, he was uncertain whether he could claim the prize, court records show. Thus he reached out to his cousin, then in Virginia, who agreed to claim the ticket for a $50,000 cut; she drove to Long Island, according to the court records.

(Maione, the lottery spokesman, said a winner doesn't need to be living in the country legally in order to claim prize money, and immigration status isn’t checked, although taxes are withheld regardless.)

In claiming the ticket, the cousin mailed it to the Gaming Commission, which on Nov. 30 wired her credit union account a post-tax total of $537,440, the court records show. (Opting for a one-time, lump-sum payment, rather than an annuity, reduces the face value of a winning ticket.)

But the cousin told the winner, whose name Newsday is withholding, that the prize was only $20,000, and that after taxes, he was due only $13,436, which she gave him in an envelope in cash, the court records show.

Over the following year, he grew suspicious: Within moments of winning, he had handed the scratch-off ticket to the 7-Eleven clerk, who scanned the ticket in the lottery computer, verified it was for $1 million, and provided instructions for how to claim it. And the winner later saw a news release on the lottery website saying that a $1 million winning ticket had been sold at the time and place he bought it.

When he confronted the cousin, she insisted there was no money remaining and "threatened to call immigration on the complainant and have him deported if he continued to call her," the court records show.

On Monday, the cousin, Iris Amador Argueta, 32, now of Houston, surrendered following a police investigation; she was arraigned and freed Tuesday. Her attorney, Lauriano Guzman, did not return a message seeking comment. She is charged with grand larceny of property worth more than $50,000, and possession of a forged instrument — a fake letter she allegedly gave the winner, ostensibly from the lottery office, saying the prize was $20,000.

Evidence against Argueta includes records from an AT&T cellphone connected to her showing she was in her former hometown of Herndon, Virginia, at the time the winning ticket was bought in Glen Cove, according to the court records.

About $300,000 has been recovered from Argueta’s bank account, and it is being held in escrow pending the disposition of the criminal case, Nicole Turso, a spokeswoman for the Nassau County district attorney’s office, said by email.

(In the district attorney office’s news release Tuesday about the case, the issue of the winner’s immigration status was not mentioned except to say that the cousin had threatened "legal consequences" for complaining.)

Glen Cove police Det. Lt. John Nagle, who oversees the force’s detectives, said he doesn't know what Argueta did with the more than $200,000 that hasn’t been recovered.

"I don’t know if she has that money in a shoe box — who knows?" he said, before lamenting: "You come to rely and trust your family. … The fact that it was a family member kind of makes you shake your head."

By Matthew Chayes

matthew.chayes@newsday.comchayesmatthew

Matthew Chayes, a Newsday reporter since 2007, covers New York City.