Another Arkansas lottery employee won’t be able to steal lottery tickets and collect nearly $500,000 in winnings as the lottery’s former deputy security director did, the lottery director told the Arkansas Lottery Commission on Monday.
On Friday, former Deputy Security Director Remmele Mazyck pleaded guilty in federal court in Little Rock to charges of wire fraud and money laundering, admitting that he stole lottery tickets and pocketed $477,893 in winnings from those tickets over three years, ending in October.
The Arkansas Lottery Commission met for more than an hour in a private executive session to consider employee discipline at the suggestion of Commissioner John C. “Smokey” Campbell of Hot Springs.
Lottery Director Bishop Woosley and Security Director Lance Huey, who supervised Mazyck, met with the commission for parts of the meeting.
Afterward, Chairman George Hammons of Pine Bluff said the commission took no action. He declined to elaborate on whatthe commission discussed during its executive session and which employee it discussed disciplining.
Huey - a former Grant County sheriff hired as the lottery’s security director by former Director Ernie Passailaigue in July 2009 - also declined to comment.
Woosley told reporters that he’s going to wait until he reviews documents from federal authorities before he makes a final decision about whether to discipline any employees in connection with Mazyck’s theft.
Earlier, Woosley told the commissioners that he wants to praise the lottery’s staff members for their many hours of work tied to the theft and their cooperation with federal law-enforcement authorities.
“I want to give assurances to the commissioners and the public that this is not something that will happen again,” he said.
“This is a theft by an individual who set out from the very beginning to steal. We have stopped it. We caught it. We made a mistake. [The system] worked it a little late, but it worked exactly like it was supposed to,” said Woosley, whom the commis-sion promoted from chief legal counsel to lottery director in February 2012.
Mazyck stole tickets from the lottery’s storage warehouse. Assistant U.S. Attorney Cameron McCree said Mazyck activated the tickets by logging into the system using his unique user identifier and changing the tickets in his possession from an “available-virgin” status ” to “promotional” status. McCree noted that the lottery gave away some tickets as a promotional tool at various large-scale events such as festivals, fairs and retailer rallies.
On Oct. 25, 2012, a manager at Cash Saver in Jonesboro called a lottery marketing sales representative to report suspicious scratch-off ticket cashings at his store, and a lottery security specialist informed Woosley the next day that Mazyck was involved in an effort to cash stolen lottery tickets, according to Woosley. Mazyck was placed on administrative leave on Oct. 26and terminated on Nov 14.
Mazyck’s “scheme came crashing down fairly quickly,” Woosley said.
“We have made some internal changes from a policy standpoint and a procedures standpoint to stop the [free] promotional ticket” on Oct. 30, he said. “We can revisit that after we get to see some of the information from the federal investigation, and you can make a decision as to whether or not we want to continue that or stop that at that point.”
Lottery officials have reviewed all of their internal security policies and procedures and “been as diligent as possible in determining whether or not anything else happened and have taken great steps to see where we fell short,” Woosleysaid.
“I feel confident that we have covered all of our bases here. We are a better agency for this having happened, and thankfully we have an insurance policy that you as a commission chose to procure early on,” he said “Ultimately, the students of Arkansas are not going to lose out.”
Hammons, the commission’s chairman, told the commission that “this is an unfortunate event that occurred.”
“We want to express our appreciation to your staff,” he told Woosley.
Mazyck was one of several former South Carolina lottery employees Passaialigue hired after the Arkansas Lottery Commission hired Passailaigue in June 2009 to start Arkansas’ lottery. He resigned in September 2011 after two state audits were critical of his management. Passailaigue’s critics on the commission had tried and failed to fire him on two prior occasions.
In July 2009, Passailaigue said he hired Mazyck because the deputy security director at the Arkansas lottery needed lottery experience as he would train Huey and needed to understand the security for the multistate Powerball Game.
After the commission’s meeting on Monday, Woosley said Mazyck was able to steal lottery tickets for about three years largely because he was put in charge of developing security policies and procedures, and “a lot of the notifications about tickets being checked out [from the lottery’s scratch-off ticket warehouse] … went back to him …”
Hogan Brown, director of legal services at the South Carolina lottery, said South Carolina officials have reviewed whether Mazyck stole tickets at that lottery and “nothing was found.”
“We do not give away tickets, and our security department does not handle tickets,” Brown said.
Arkansas’ lottery ticket sales dropped in fiscal 2013 by $33 million to $440 million from fiscal 2012, and the amount it raised for college scholarship dipped by $7.6 million to $89.9million. The lottery started selling tickets on Sept. 28, 2009.
For fiscal 2014, Woosley has projected $459 million in ticket sales and $89.5 million in net proceeds for college scholarships.
The lottery has helped finance more than 30,000 Arkansas Academic Challenge scholarships during the past three school years.
Arkansas, Pages 7 on 07/16/2013