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3 Jul

Court orders SEC whistleblower evidence on JP Morgan Hedge Fund fraud released

I’m on RT’s top financial show, Keiser Report, today talking about JP Morgan and the cascade of fraud the bank keeps trying to cover up. We learned last week Jamie Dimon had model the bank’s whale trade loss at a possible $9 billion but didn’t mention this when congress asked him to come in for an explainer on how he massively screwed up the bank’s risk management. JPM’s shareholders aren’t getting a lot of transparency from the bank’s leadership and I’ve learned there is another little problem coming to forefront.

A Connecticut state court judge has ordered whistleblower documents and internal emails sent to the SEC last year turned over to UBS who’s suing a JP Morgan owned hedge fund. According to a suit filed by ex-JPM’er Kevin Dillon the secret documents allegedly show JP Morgan’s back office trading administration worked with a Hedge Fund, Texas-based Highland Capital, to manipulate the net asset value of their fund’s assets. Court filings claim this was all done to get the Swiss banking giant, UBS, to lend them more money when they were in a performance death spiral and not let on to their investors that trouble was brewing in an effort to starve off redemptions.

The UBS lawsuit shows a complicated financial restructuring of a mega-million security by JPM’s staff to cover up the assets that likely should have failed sooner than they did. There are allegations of amping up the NAV to attract more investor money until the financial crisis whipped them into a tail spin they couldn’t recover from. Until a low-level internal whistleblower started gathering docs and complaining to his superiors we might have never known how deep the alleged deception was. Dillon was fired, sued, got some cash from JP Morgan in a private settlement but now UBS plans to reopen the wound and not let JP Morgan hide their bad behavior.

When UBS, who claims to have lost near $700mn on the Highland fraud, gets the whistleblower documents from Dillon’s Greenwich attorney Mark Sherman we could see all kinds of nasty emails exposing illegal acts like: back dating cross-trades between funds, applying trade-date accounting to up the NAV without settling trades, and moving crap assets out of one fund into another fund while making it look nice and rosy so UBS wouldn’t slam them with margin calls. Sherman said in CT state court filings last month there are actually 36,000 whistleblower documents he sent the SEC but since his whistleblower client, Dillon, signed a settlement with JP Morgan he won’t give them up for public viewing until the court orders it. Well, that’s happen now and when UBS gets their hands on the docs I’d expect the Swiss bank to file more evidence or claims attached to their fraudulent conveyance lawsuit that will basically outline a securities fraud case for the SEC against Highland and JP Morgan. If Sherman doesn’t request a protective order then the public will get a view of what kind of dirt the SEC has against JP Morgan/Highland.

Sherman’s used the new Dodd-Frank whistleblower law to score the largest reward for a client in the Art Samberg / Pequot Capital SEC settlement and it’s clear he’s hoping the SEC wakes up to the shenanigans at JP Morgan and files suit soon or moves right to a financial settlement with Highland/JPM. I realize it’s a big non US bank suing a big US bank for fraud so the case isn’t high on the SEC’s list but if we are seeing asset value manipulation within JP Morgan’s own hedge fund you have to wonder what other hedge funds JP Morgan has aided and abetted securities fraud with.

Highland Capital was run by James Dondero and became insolvent during the financial crises four years ago. The UBS lawsuit is FST-CV12-6013682-S and can found in Stamford, CT State Court.

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12 Jun

Spongetech Fraudster Moskowitz makes SEC Plea Deal

Nearly six months after Steven Moskowitz plead guilty of one criminal count in the Spongetech pump and dump stock scheme the Securities and Exchange Commission got him to settle their securities fraud suit. On May 30th court filings show Moskowitz, co-conspirator of one of the most audacious penny stock frauds that cheated thousands of regular Joe’s out of life savings, agreed to be permanently banned from the industry and payback any profits and bonus he earned while President of Spongetech.

The number of millions Moskowitz will be ordered in restitution is still to be determined by New York Federal Judge Irizarry. The government’s suit, filed in May 2010, claimed the company controlled by Moskowitz and Michael Metter made $52 million in ill-gotten gains. Moskowitz doesn’t admit or deny guilt in the regulators settlement but then the SEC throws in this special condition that he can’t publicly deny he didn’t do any of the securities violations, which included fraud, that they sued him for. This of course could be a boost for the shareholder class action civil suits that are moving forward in New York Federal Court but considering Moskowitz has plead poor to the courts since his arrest we still don’t know how in the heck the SEC is going collect their financial judgment. Remember Moskowitz’s partner and Greenwich Radio station owner Michael Metter is still fighting the DOJ and SEC fraud charges and has yet to admit any wrong doing. And court records don’t exactly show either men have double-digit millions sitting in banks accounts waiting to be seized.

Now we see even though the DOJ got 6 guilty pleas in the case they have a serious evidence problem in their case against the last holdout – Mr. Metter. Aaron Elstein of Crain’s New York reported last month the DOJ got slapped in the face by the judge in Metter’s case when she denied their ability to use any electronic info they got off seized personal computers of Metter because they took too damn long to get through discovery and show Metter’s attorney what they had. If this sounds like a rookie legal mistake let’s not forget this is the same DOJ office that lost the case against the Bear Stearns Hedge Fund managers. Maybe the DOJ found some hidden emails on Metter’s computer showing millions hidden in off-shore bank accounts in Israel (both men are Jewish) and can tell the SEC where to get their recovery from but that’s a long shot.

The SEC made some progress this spring in getting the assets of Biztalkradio.net, which owns the local Greenwich radio station and three other stations, added as a relief defending in their suit. Metter has been a partial owner and chairman of this legitimate business for years. But the SEC added on claims that the Spongetech duo used the Radio biz to embezzle money via Spongetech stock. So the regulator has forced Metter to sell the stations and if there is a buyer the profits go to the SEC. No decent offers have come in yet and it’s highly doubtful they’d get the $1mn asking price on the Greenwich station. On top of that, in February we saw an upstate New York secured lender, Solution Funding, magically pop up and claim if the stations sell they are owed a few million also so that asset isn’t likely to produced real dollars for aggrieved shareholders or the SEC.

Court records show Metter is still getting paid around $6,800 bi-weekly by the radio biz although the SEC controls how he can spend it. Since his May 2010 arrest two years ago that means he’s been able to earn a few hundred thousand dollars off a company that alleged was money laundering about $5 million for Spongetech and its affiliates. He also still gets to live in his $2 million mid-county Greenwich home but hey at least the SEC took his yacht away. The only ray of hope for shareholders is that a letter filed by the SEC in court says a receiver should be appointed soon for Biztalkradio.net and we can assume the receiver would oust Metter from his current $100k+ job and move the stations sell along.

A total of seven people from lawyers to men who helped move money around for Metter and Moskowitz were arrested in the Spongetech securities fraud case and 6 have them have now plead guilty to criminal charges (3 of the 6 have been sentenced to jail time). The Spongetech duo has been charged with fraud, conspiracy, obstruction of justice, money-laundering and perjury in the DOJ’s case but Moskowitz and Metter the masterminds behind the scheme are still not locked up. Remember this was company New York Post trained investigative reporters Roddy Boyd and Kaja Whitehouse warned was a fraud a year before there were any arrests. I even reported for Greenwich Time three months before his arrest that Metter could lose the radio station if the SEC charged him. Metter even tried to sue the three reporters outing his fraud for defamation before his arrest which was of course tossed out. The SEC can fine and ban Wall Street criminals all day long but when it happens so late after the financial crime has been committed collection efforts become that much harder and the legal impact that much softer.

2 Comments
3 Feb

NIR’s Ribotsky Pigged Out on Fees while Investor Cash was Frozen

NIR Group’s court appointed liquidators, PricewaterhouseCoopers, have discovered Corey Ribotsky pigged out on fees while hundreds of mom and pop investors had their pension investments frozen. I reported this week for Long Island Business News, Ribotsky’s hometown paper, that the alleged hedgie fraudster is set to reap a whopping $52 million in fees. On top of that he had to resign from the fund after PwC and a group of US investors pressured him to quit after they realized the broker dealer market won’t do business with him because of reputation risk and his ‘management’ skills were not effective any longer.

There is a ton of detail on how investor cash was used while the funds were gated since late 2008 in the LIBN story so click here to read it. I will note that Ribotsky’s pressman Brad Gerstman told me this week Ribotsky has always told investors he reinvested his fees into the fund. But the PwC cash flow report shows only $300,000 was invested since November 2008. Hummm something doesn’t add up.

The staggering amount of fees is not the only thing PwC found when they were given access to NIR’s books. According to a Dec 15th letter, the liquidator also told some investors that funds were comingled. You see in Ribotsky’s view, although he sold investors into separate onshore and offshore funds, all their money was one big pot to do what he wanted with.

Ian Stokoe of PwC wrote, “In practical terms, NIR confirmed that while each Fund held one or more bank accounts, cash was routinely allocated from the various bank accounts to which ever entity needed it at the time to discharge liabilities.”

The FBI’s Mike Ryan has interviewed NIR investors for over two years now, and while investors say it was a relief to see the SEC finally sue Ribotsky for investor fraud, they simple don’t get why the Feds didn’t step in earlier and prevent the cash bleed from what appears to be needless fees on inflated assets.

UPDATE 2.6.12: DealFlow Media got the PwC liquidator on the record to say he’ll be looking into the legitimacy of the fees Ribotsky/NIR took while the funds were gated. This was something Ian Stokoe hinted he’d do when I first reported PwC was taking over the offshore fund this summer. So it will be important to watch if Ian follows through or is throwing out ‘friendly PR quotes.”

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29 Dec

Barclays Accused of Criminal fraud for Golden Key in Geneva

A criminal complaint has been filed against Barclays in Geneva, Switzerland this week for its role in a $1.4 billion structured investment vehicle (SIV) called Golden Key. The Barclays arranged and structured SIV blew up in spectacular fashion in 2007 and a French asset management firm, Oddo, tried to sue the British bank for fraud in a New York court but got the motion tossed, in 2009, on a technicality. So now one independent investor from Geneva has foregone the US court system and filed his own criminal complaint against the bank and the collateral manager they hand picked — Avendis Capital a Swiss asset management company.

Golden Key was considered a SIV-lite, meaning it would raise an amount of capital, borrow money in the short-term commercial paper debt market, and then invest all of this money in higher interest rate bearing instruments such as mortgage-backed securities, in its strategy for high returns. Investors in Golden Key originally sued, in 2008, because they believed BarCap was sitting on a bucket of rmbs they needed to off-load and the bank arranged for the SIV-Lites to expand their size by increasing their borrowings and use these borrowing to take the toxic securities off Barclays’ hands. The idea was collateral managers like, Avendis, were buddy-buddy with BarCap executives who were in charge of selling and creating the SIV, and would basically let BarCap pick the collateral for the SIV.

This is a method we’ve seen before in CDO fraud cases brought against Goldman and Merrill Lynch. But in the Barclays suit they didn’t have any hard evidence like emails from Avendis and Barclays’ executive, Kelsey Burr, detailing their cozy relationship or plan to screw investors in the name of saving Barclays’ balance sheet. Well now they do.

The Geneva investor, Philippe Rebourg of Coficap, just happen to get a hold of some damaging internal Barclays comunication, which are now evidence in his criminal complaint. You see in some European countries citizens can file their own criminal complaints when the local D.A. or prosecutor doesn’t do it first. Then a judge will decide if the criminal complaint goes forward. While the complaint is filed if any of these BarCap executives named in the claim show up in town they can be arrested. Rebourg told me he expects it will take two to three weeks for the judge to rule and the suit is currently sealed. Luckily there is also a changing of the guards in the Geneva A.G. office and incoming Attorney General Michael Lauber has told local papers he is gun hoe to file claims against the banks for financial crimes.

I’ve seen emails between Barclays and Rebourg for months now and he’s warned them he is going to file a criminal complaint and expose the damaging emails if they don’t settle with him. Well he clearly got sick of their cat and mouse litigation game and apparently called their bluff by filing the criminal complaint. The veteran Barclay’s executive who worked out of the Chicago office for years, Kelsey Burr, suddenly resigned or took a buyout package this summer. BarCap’s Chicago office confirmed for me in August he was no longer with the firm and Burr has not responded to emails for a request for comment.

Another alleged bad actor from BarCap was John Parker. I’ve seen an email chain from April 2007 between Parker and Avendis executive Katy Huang explaining that Avendis as the collateral manager was worried about owning the riskiest shares (capital notes) in Golden Key and their plan was to sell off the risky capital notes to investors (high yield chasers) Parker and team had lined up. Avendis also had a hedge fund that bought a ton of Golden Key notes but there were restrictions in the fund’s offering memorandum regarding how much they could buy. BarCap allegedly solved that little problem for them by simply giving the fund more leverage (borrowed cash) to buy more Golden Key notes. Then Avendis got stuck with all that Golden Key toxic paper, while the rest of The Street was shunning buying any SIVs in mid to late 07. The result was Golden Key investors lost their investment and Avendis got this neat loan from Barclays to cover it’s losses in 2007 but the hedge fund still ended up filing for bankruptcy. Ouch.

Barclay’s was smart in setting up the whole thing in offshore llc’s etc… to advert US securities laws thus the failed US lawsuits. The last time Barclays got caught up in a criminal complaint is when the US DOJ was not happy about them doing banking with countries the US had sanctioned and they paid the US a $300 million fine for their ‘special relationships’. But it will be interesting to see how the Swiss handle this new evidence and if other investors ,like Union Mutal Pension fund who sued BarCap in a French court this year, will join with Rebourg to file more suits given the nugget of internal emails he has. You see since bad faith has already been ascertained in September against Barclays by a Canadian judge in a similar situation (the Devonshire Trust case), Coficap hopes that the Swiss judge will recognize this time the criminal nature of Barclays’ misconducts under Swiss criminal law.

Stay tuned — once the case is unsealed I’ll be able to detail more on how the alleged plan by Barclays to screw their investors went down. Until then if you ever did deals with Barclays’ John Parker or Kelsey Burr I’d love to hear from you. I’m also interested in hearing from Golden Key investors regarding Jerry del Missier’s possible role in BarCap’s SIV strategy.

UPDATE 1/2/2012: John Ward a UK blogger has written an opinion piece on the news I broke. He details more about the history of the Avendis managers and points out one of them already went to jail for investor fraud.

14 Comments
22 Dec

SEC Gets Spongetech fraudster to pay $1.3 million

The SEC scored its first victory in their case against the penny stock scam at Spongetech. Last spring Greenwich radio station owner (WGCH) Michael Metter and his pal from Queens, Steven Moskowitz, were arrested at their homes by the FBI for interfering in a SEC investigation and slew of investor fraud claims. The SEC sued a long time friend of Moskowitz last month, Myron Weiner, for selling unregistered shares of Spongetech and basically laundering the cash for Moskowitz and Metter. Well it looks like Weiner folded pretty fast because yesterday the SEC said he agreed to pay a hefty fine of $1.3 million. Weiner’s civil penalty was only $50,000 and he doesn’t have to admit to wrong doing.

The SEC says Weiner lives in Hoboken, owns a restaurant in New York City, is 69, and had this little problem with manipulating the price of certain stock back in the early 70’s. The complaint goes on to claim Moskowitz and Weiner met in 1970 while working at Kenneth Bove (the firm where the stock manipulation went down so many years ago). Weiner became a shareholder of RM Enterprises, the firm Metter and Moskowitz allegedly used to funnel Spongetech stock sales through, when he was gifted shares in 2001. Then in 2009 he got a bucket of Spongetech shares for 5 cents and sold them for 20 cents. To whom those profits went is still in question and I have some doubts that Weiner actually has $1.3 million to pay the SEC fine. So while this is a win for the SEC because Weiner likely spilled some dirt on Metter and Moskowitz to get a deal with the SEC; defrauded investors in Spongetech shouldn’t count it as a big score until we see the SEC actually collect the dollars.

As Aaron Elstein at Crain’s New York first reported, Moskowitz made a plea deal with the DOJ a few months ago, and the SEC has finally released a little money for him to live on. But we still have no plea deal with Moskowitz and the SEC, nor do we have a sentencing date for Moskowitz in his DOJ case. Legal filings in the SEC v. Metter case show he’s still fighting the charges tooth and nail. As I reported earlier Metter also still reaps a decent salary from his Greenwich Radio station; although the station’s assets and spending are being monitored by the SEC.

A few lawyers representing Spongetech investors have said they filed motions to get the SEC to share discovery with them, which could help their civil investor fraud suits against Metter and Moskowitz, but the SEC just blows them off; so for now it’s still a bit of a clusterfuck. If the SEC figures out the Spongetech founders funneled money to Israel or Switzerland then they could sue the banks holding the cash under the Hauge Convention but that takes at least a year. So with all the parties involved flipping to get deals with the DOJ I’d imagine we’ll see Metter pleading to something in the new year.

Editors Note: Aaron Elstein of Crain’s New York has some more color on Weiner and reports Avi Tepfer has finally folded also declaring he plans to plead guilty in the DOJ’s case against him early next year. Unlike Metter’s home town paper, Greenwich Time, Elstein via Crain’s has done a bang up job of continuing to cover the Spongetech fraud. You can read more of his coverage here.

3 Comments
12 Dec

Why the SEC thinks Falcone was involved with Market Manipulation

The SEC has a bulls eye on Phil Falcone’s Harbinger Capital. On Friday the famed billionaire hedgie was forced to write investors explaining his publically traded Harbinger Group Inc is subject to a Wells Notice. This means the Securities and Exchange Commission, its regulator, has launched an official investigation into how the firm might have engaged in violations of federal securities laws and could bring an enforcement action.

This news sent nearly everyone of my finance jurno peers into speculation overload printing tales the SEC is really focused on unfair investor redemptions with Goldman (Falcone flat out denies this on the record and I believe him) to this continued wonderment over a $113 million loan Falcone took to pay off taxes. A loan he told me was paid back with a hard-money interest rate, in 2010, that delivered a profit to the fund he borrowed it from. But speculation is all my fellow jurnos have given the rarity of Falcone’s willingness to do interviews in the past. Instead all the ‘people familiar with the matter’ news leaks have come from a very few disgruntled Harbinger investors to a female ex-Harbinger employee (who use to work at Blackstone) that was asked to leave the firm last year.

I’ve been interviewing Falcone since we first met in early 2008 while I was reporting a story on the top 100 hedge fund income earners for Trader Monthly. I’ve written more exclusive, first to the story news, on the fund’s trades and Falcone than any other journalist for: New York Post, Forbes, Greenwich Time, Trader Monthly, DealFlow Media, FINalternatives and even Clusterstock. And I’ve watch some of my fellow journalist write blatantly inaccurate reports,mainly from Reuters, on the fund manager simply because I think they never had chance to interview Falcone and ask his version of the facts.

So to cut through all the chatter on what Falcone and his firm “could have” done wrong to garner this much heat from the SEC I’m going to you tell what I think is Falcone’s biggest worry: The Market Manipulation Investigation.

In 2010 Harbinger Group Inc had to disclose the SEC was looking over a bond trade. Falcone hasn’t disclosed which company this trade was in but I know it was one he went all in on. The problem was the broker he did the deal with didn’t have the borrow, yet still shorted more to Falcone. It’s my understanding this put Falcone in a position where he bought more of the deal than existed. When the broker had his ‘oh Shit’ moment and figured out he couldn’t get the borrow he got worried about his own rear and decided to call the SEC. Essentially setting up someone in this trade for a naked short – something the SEC is not fond of. It’s also possible while Falcone was moving fast to short the deal and the broker couldn’t find enough borrow he said “I don’t care, keep shorting it”. Then when other broker dealers found out his broker was naked short they told the SEC about it. Once the SEC came calling, Falcone’s broker dealer might have said “it’s not us, it’s our client.” So Falcone is left explaining to regulators why he thinks what happen in the trade isn’t his fault.

Falcone has stated he plans to fight any suit the SEC brings on and I expect he will. Of course knowing the SEC they’ll likely offer a slap on the hand with a small financial fine and Phil’s lawyer will suggest he settels. The question will be if this trader, who the New York Post once called Iron Man, will fold or finish this battle with the SEC and clear his name. I hope he does the later because a SEC v. Falcone trial (assuming they really sue him which isn’t a reality yet) would be a heck of a financial news show.

2 Comments
1 Dec

Greenwich Powerball Trustees Are Starting a Hedge Fund

It looks like the newly minted mega-millionaire Belpointe Boys are getting adventures with all their new found fame. Rop Copeland at AR Magazine pointed out this week they’ve hired a trader with a fancy euro name, Herve van Caloen, to raise money and start a long short international equity fund. Maybe some of those Powerball millions will go to helping them get it off the ground; although they haven’t bothered to register the fund with the SEC yet.

AR Mag didn’t exactly do any digging on the man Lacoff and Skidmore are entrusting their firm’s name with so I thought I’d check him out. Mr. van Caloen ran a small fund at international asset management firm, du Pasquier, where in February he boasted the fund was ‘just under 10 percent negative’. His fund, called The Caloen International Fund, published a four page letter commenting on market conditions in rambling one sentence statements. van Caloen in an effort to explain his investment strategy did offer this unique insight though – he was SHORTING the Brazilian market again. Why – well besides his view their currency was overvalued – he thought it was a good short because “even the manufacturing of bikinis has now been taken over by the Chinese”.

I called over to du Pasquier’s trading desk who quickly told me van Caloen took his fund when he left the firm a few months ago and they didn’t sound like they wanted to be associated with him. van Caloen has mysteriously left this job time off his LinkedIn profile but does remind viewers an investment letter (guessing this is for his new Belpointe fund called Mercator) is available upon request.

If you are seriously thinking about giving Team Belpointe any of your hard earned millions for their adventure in hedge fund investing you might want to take a look at van Caloen calling the Federal Reserve “an un-American institution, undemocratic, and elitist.” Hummm wondering how an all American U.S. Olympic sailor hopeful like Skidmore feels about that.

3 Comments
29 Nov

Did Belpointe Asset Managers Lie About Winning CT Powerball?

A London-owned newspaper broke news this morning that the Greenwich money managers who showed up to claim a $254 million Connecticut Powerball lotto ticket didn’t actually win the money. Instead, commercial real estate broker Tom Gladstone says Belpointe’s Brandon Lacoff told him they are just managing the money for a client. Daniel Bates of the DailyMail who beat the Greenwich Time to the news has the story here.

Yesterday, the trio from Greenwich-based Belpointe Asset Management showed up in Rocky Hill, CT for a press conference about the big score but left reporters frustrated when they wouldn’t answer detailed questions about how and why they teamed up to buy a single Quickpic ticket. The AP ran a story that Tim Davidson, a trader for Belpointe, said he bought the ticket but according to multiple people at the press conference Davidson only said “our ticket was bought at” the Shippan Point gas station. The emphasis is on the “OUR” here.

People involved with the CT lottery commission told me Lacoff, Skidmore, and Davidson all went through an ethics check before the discounted cash take home pay of $103.5 million was handed out. This means their individual names were checked to see if they had any liens or unpaid taxes against them and all three passed. The check was made out to the Putnam Avenue Family Trust (a street in downtown Greenwich) and it’s unclear when Team Belpointe set up this trust. Assuming Gladstone has his facts straight and the trio didn’t win the ticket this leaves the CT Lottery Commission with a challenge. They can’t check if there are liens or unpaid taxes against the real winner. So while it’s great the State made $14 million* off this Powerball run I’m still bothered that our system allows anonymity for lotto winners. How do we know they are even a US Citizen?

Another problem for the Belpointe boys, besides the fact they just appeared to have lied to press and the lotto commission about winning the ticket, is they might have gotten caught up in fraudulent conveyance. According to people who work with the commission if the real winner set up the Trust to hide incoming money that is owed or claimed by others then that’s a big NO-NO. But until we know the identity of the winner we might not ever get this answer. Of course the CT AG could encourage the Lotto Commission to look into this. The CT lotto President was in a closed door meeting when I called and has not responded to these questions yet but this situation reads like the Belpointe boys have some more explaining to do.

UPDATE 2:30pm: I learned from people involved with the CT Lotto Commision that the Belpointe Boys working as trustees for Putnam Aveune Family Trust have not actually gotten the funds from the lotto commision yet. This might be why the government officials were locked in closed doors late this morning and could still have a chance to show CT residents the money is going into clean hands.

UPDATE 11.30.11 – Team Belpointe has hired an expensive New York PR firm run by Howard Rubenstein and last night we get a carefully scripted statement denying there is an anonoymous fourth participant. My favorite (and informed) Greenwich blogger Chris Fountain has a few choice words on who is lying here and I have to agree with him. The PR firm has been crafty with their statement though and I’d like to see Team Belpointe deny there is another beneficiary of the trust, which in my book is different than a ‘participant’ or additional trustee. But until we see a copy of the trust agreement we’ll likely never know who really won the jackpot ticket. The CT Lotto Commision could ask for a copy and see who the beneficiary is so an unpaid taxes and liens check could be performed but I’m not counting on the State giving lotto winners a hard time. Why – well it’s bad PR for them to scare off all the illegal residents wasting their hard earned greenbacks betting on the easy money American dream. Or as Chris Fountain puts it: This is also known as “a regressive tax on stupid people“.

* Frank Farricker, Chairman of the CT Lottery, says $4 million was earned in additional sales after the Powerball went above $200 million and $10 million was collected in CT taxes. The $14 million goes into the general State budget fund.

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