by Gwen Moritz
Posted 7/12/2013 02:50 pm
Updated 8 months ago
A former security official for the Arkansas Scholarship Lottery pleaded guilty in federal court Friday afternoon to wire fraud and money laundering for stealing and cashing lottery tickets worth close to half a million dollars.
Remmele Mazyck, 34, represented by Little Rock defense attorney John Wesley Hall, admitted that he stole and cashed tickets in a scheme that began shortly after he was hired in 2009 and escalated until he was caught and fired in late 2012.
According to the information presented in court, Mazyck's fraudulent winnings were $546 in December 2009; $24,862 in 2010; $189,135 in 2011; and $263,350 in 2012.
More: Read government's allegations against Remmele Mazyck (PDF).
Prosecutors, therefore, calculated the size of the crime at $477,893. Mazyck agreed to pay restitution of $482,672, which includes commissions due to retailers, but he has asked U.S. District Judge Susan Webber Wright to independently determine the actual loss to the lottery when considering his sentence. He also agreed to amend his income tax returns.
Although the statutory maximum sentence for money laundering is 20 years, federal sentencing guidelines for a first offender like Mazyck suggest a sentence of between two and a half and four years, depending on the loss amount assessed by the judge. The judge is not bound by the sentencing guidelines.
No sentencing date was set, and Judge Wright permitted Mazyck to return to his home state of South Carolina, where he recently moved. He is currently unemployed, he told Wright, and his wife is due to give birth in the next few days.
Mazyck's scam exploited a weakness in the lottery security system that he had personally helped set up when he was hired in July 2009 to help launch the Arkansas lottery, Lottery Director Bishop Woosley told reporters at a press conference following the plea hearing. He suggested that Mazyck, who had been a security manager at the South Carolina Education Lottery, may have sought out the job at the new Arkansas lottery in order to steal "given the fact that he stole from the very beginning."
Specifically, Mazyck stole $300 packets of scratch-off tickets from a lottery warehouse and used his computer clearance to give them a "promotional" status, indicating that they were to be given away free at events like fairs and festivals. Then he would go to various retailers to redeem winning tickets valued at less than $500. He did not cash larger winning tickets because those claims have to be made in person at a lottery redemption center.
"It took a lot of time," Woosley said of Mazyck's system.
Woosley said Mazyck began stealing tickets on Oct. 31, 2009, barely a month after the lottery launched. But the facts presented at court on Friday indicated that the scheme began in December 2009.
The scam was first brought to lottery managers' attention last October by a Jonesboro ticket retailer who had been asked to cash unactivated tickets. Within 24 hours, a security sepecialist had determined that the man who tried to cash the tickets was Mazyck.
The discovery infuriated Woosley. "I was mortified. I was angry," he said, describing Mazyck as "a fairly congenial guy" who was well-liked by his colleagues. When confronted, Mazyck's reaction was "calm denial," Woosley said. Mazyck initially claimed that the tickets he attempted to cash in Jonesboro were tickets he had purchased.
The lottery immediately ceased giving away promotional tickets and removed that status from its computerized record keeping to prevent anyone else from exploiting the same weakness in the system.
No other lottery employees have been fired for theft, Woosley said, and Mazyck's thefts had not compromised the games themselves. "This is simple theft of lottery tickets," he said, while acknowledging that the case might damage the lottery's reputation.
Ernie Passailaigue, the South Carolina lottery official hired to launch Arkansas' first state lottery, hired Mazyck, his former South Carolina colleague, as security deputy. Mazyck, who reported to Security Director Lance Huey, was placed on administrative leave on Oct. 26, according to personnel records obtained under the state Freedom of Information Act. He was fired on Nov. 14 after failing to show up for a meeting with Woosley. Woosley succeeded the controverial Passailaigue, who resigned under pressure in September 2011.
Mazyck was paid $76,500 a year.
In a news release, the Arkansas Scholarship Lottery said it is "fully insured for the amount of the theft" and that "retailers sustained no loss as a result of the action of Mazyck."