Point: Will the Attorney Client Privilege Void the Winning Iowa Lottery Ticket?

This is really turning into a good story, one that has plenty of intrigue to it. As lawyers we sometimes get thrust into the middle of controversy and because of the attorney-client privilege are bound to remain silent. I’ve seldom played the lottery, because I value my privacy more than I do money. As a lawyer I’ve even considered what steps I’d advise clients to take if they ever won big. The underlying theme being how to remain a private person who wins and can still know who his friends are and who is just being friendly.

Counter Point: Must the Lottery Winner be identified? Following the trail, video.

The $16.5 million Iowa Lottery story took another twist and turn this past week as more information is becoming known about the man who signed the ticket and had it delivered by FedEx to attorneys in Iowa who then turned in the ticket to the Iowa Lottery HQ. According to the Des Moines Register the ticket signer is a lawyer by the name of Crawford Shaw. The reported story is “Trustee in jackpot case is defendant in Delaware lawsuit” published on January 19, 2011 by Daniel P. Finney. The facts as set forth by the Des Moines Register include that Shaw, who is an attorney out of New York, represents Hexam Investment Trust, the alleged winner. But of course a trust is a fictious person and can’t walk into a convenience store in Iowa and buy a ticket. So who is the human that did? And this seems to be the question of the day?

Who is this very interesting lawyer? Who is Crawford Shaw?

Bloomberg Businessweek published a story on January 12, 2012 linking Extensions Inc (EXTI: OTC US) with one Crawford Shaw, Esq. His background is described in detail. Other companies include Industrial Enterprises of America, Inc. (IEAM: OTC US, Crawford Shaw, Esq. shown as a consultant), Advanced Bio/Chem. Inc., Crown Medical Systems, Inc. (out of Scottsdale, Arizona) (OTCBB:CWME), Paper Free Medical Solutions (PFMS: OTC US), EZ Lease’s CEO and Editor of A Lawyers Guide to International Business Transactions (WorldCat lists the book co-written with Walter Sterling Surrey, Joint Committee on Continued Legal Education, 1963; there are other publications Mr. Shaw has authored.).

Yale College Class of 1957 link does display two photographs of a Crawford Shaw on page 12.

Probably the most interesting position noted by Attorney Shaw is the one he lists as having served as the Assistant Secretary of the Treasury in the Kennedy Administration. C. Douglas Dillion served at U.S. Secretary of the Treasury from January 21, 1961 to November 22, 1963 under Kennedy; Dillion then served until April 1, 1965 Under President Johnson. Attorney Shaw is a graduate of Yale College and Yale Law School. He’s an interesting guy, a lawyer having no obvious connection to Iowa that I can find.

Will the Real Iowa Lottery Winner Please Step Forward?

This may be the first time the Iowa Lottery Commission is forced to decide if a person can be compelled to disclose details of how they acquired the ticket. In this instance the person on the hot seat is an attorney with a legal privilege that allows him to do only what his client permits. The attorney-client privilege is one as old as the law. To quote the General Counsel of Dartmouth, “Since the days of Elizabethan England, the Attorney-Client privilege has preserved the confidentiality of communications between lawyers and their clients. The privilege is based on several closely-related policy considerations:

• clients should be encouraged to be completely truthful with their attorneys, so that the attorney's legal advice can be based on all relevant facts;
• clients will be reluctant to seek an attorney's advice if they fear that their communications will be revealed to others; and
• by encouraging clients' communications with their attorneys, the privilege promotes voluntary compliance with laws and regulations.”

Unless Attorney Shaw’s client gives him permission he can not disclose the identity of this client or how they acquired the winning ticket. That places the Iowa Lottery officials in a quandary.

The lottery will be forced to decide whether they can void the ticket on the assumption the ticket is void for any one of its statutory reasons (IAC Chapter 11, Prizes, stolen, lost or acquired by fraud.), based solely on the failure to disclose intimate details about acquisition. Does the law allow the Iowa Lottery to say “no joy” and to assume there is fraud, theft or some other legitimate reason to refuse payment?

Here is a quote from The Gazette.

“Shaw, 76, of Bedford, N.Y., met Tuesday with Iowa Lottery officials, but would not say who bought the ticket or who the winner is, Spokeswoman Mary Neubauer said. Lottery officials won’t release the cash until they have that information.” See the story in The Republic, dated January 19, 2012.

As judges in Iowa are fond of saying to me, “This isn’t about fairness, it’s about justice; applying the facts to the law.”

Clash of the Titans: The Attorney-Client Privilege Collides with the Iowa Lottery

As I said earlier this is going to get interesting and I suspect the Iowa Attorney General’s Office may be litigating this for years to come, but then again, maybe not. This lawsuit may be what the Iowa Lottery is setting up. A civil lawsuit would allow the Lottery the opportunity to question the winner and those associated with Hexum under oath. Either that or they will have to forego the claim. It’s a multimillion dollar choice. But Hexum may be coming up with its own strategy. What if Hexum sold or otherwise assigned the ticket to an unrelated and disinterested person? Rule 531-11.5 sets out rules for valid assignments and the right to control receipt of a lottery prize is substantially limited. (See previous link.) But what if done in a legally recognized manner, and they having purchased this chose or bearer instrument then pursued the lawsuit on their own behalf saying I bought the ticket from Attorney Shaw. What then? It’s a dead end for the Iowa Lottery and they are then forced to make the same exact decision in the blind.

Until the winning ticket is signed it’s considered a bearer instrument; after being signed the person signing the ticket is thereafter considered the “owner”. So at this point is the owner Hexum or Shaw?

The prize shall be paid within a reasonable time after a claim is verified by the lottery and a winner is determined. I.A.C.531-11.7 Time of prize payment. What was signed on the winning ticket? Whose name appears there? From the KCCI video it appears the written and printed words on the back of the ticket are “Hexam Investments, Trustee, Crawford Shaw, Trustee”.

There are really three factual issues immediately in play here.

1. Can the Iowa Lottery refuse to pay the money if the person who bought the ticket is not identified?
2. Can the Iowa Lottery refuse to pay, if the human winners are not identified? (Who is the beneficiary of the Hexam Investments Trust?)
3. Does the Lottery have the right to know how the person who turned the ticket in for validation received it?

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Claiming prizes, IAC 531-11.1(99G)

 

Agency Listing  |  Lottery Authority, Iowa [531]

Chapter Listing  |  Chapter 11 PRIZES

Rule	PDF	RTF
531.11.1 Claiming prizes.	View	View
531.11.2 Claim period.	View	View
531.11.3 Invalid tickets not entitled to prize payment.	View	View
531.11.4 Ticket is a bearer instrument.	View	View
531.11.5 Assignment of prizes.	View	View
531.11.6 Prize payment to minors.	View	View
531.11.7 Time of prize payment.	View	View
531.11.8 Prizes payable for the life of the winner.	View	View
531.11.9 Prizes payable after death of winner.	View	View
531.11.10 Disability of prizewinner.	View	View
531.11.11 Stolen or lost tickets.	View	View
531.11.12 Effect of game rules.	View	View
531.11.13 Disputed prizes.	View	View
531.11.14 Prize payment for prizes paid over a term exceeding ten years.	View	View

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I’m curious as to what rule allows the Lottery to withhold the winnings when a presenter refuses or can’t discuss how he acquired the ticket?

I believe the Iowa Lottery rules are silent on this issue in that I see nothing in the rules requiring anyone to open up about the details of how they acquired the ticket. After all, what if the lotter winner died shortly after turning in the ticket, but before making any statements? What then?

Release the video recording of the person buying the ticket.

The Iowa Lottery should immediately release the video they have showing the person, the human, buying the winning ticket.

Who must prove the legal reasons why a ticket is considered invalid?

Is the burden on the Iowa Lottery to prove the ticket is invalid for one of the statutory reasons? I.A.C., 531-11.11(99G) Stolen or lost ticket. Curiosity aside where is the rule that precludes validation when a person won’t disclose how they acquired the ticket? The Iowa Lottery seems to be digging further for background information they allege may have some bearing on the validation process. It's pretty obvious they are stalling for time because something on the video recording is bothering them. What nationality is the person buying the ticket? Why won't that person come forward? What is the Iowa Lottery trying to prove? What in all the hundreds of claims made for the winnings or on the videotape is raising a red flag?

Lottery: Multiple People Claim Winning Ticket Was Stolen, November 3, 2011, KCCI-Channel 8

Did anyone think to process the ticket for fingerprints?

I have to wonder if the Iowa DCI processed the ticket for fingerprints. I see in the video from KCCI multiple people were handling the ticket as if it were some unimportant piece of evidence. It reminded me of a rugby match at a murder scene. Have they all unknowingly participated in the destruction of evidence? Could fingerprints have been identified and processed through the FBI database?

This ticket was validated at 2:10 pm with a deadline of 4:00 pm. The ticket holder was down to the 364^th day when it was turned in to Lottery headquarters. It's very odd that a person would sit back while the investment degraded by the millions. The underlying questions are whether the ticket was acquired in a legitimate manner. That leads Lottery HQ to want to ask questions about how Mr. Shaw acquired it. He can't tell them without his client giving him the go-ahead. That's not happening. There is a video recording of a person buying the ticket with the numbers 3-12-16-26-23 and Hot Ball 11 at the convenience store along I-80 and I-35 in Des Moines. Will the person who eventually steps forward as the 'winner' fit the description of the person shown in the video recording?

And what about the child support and back taxes issues? Those have yet to be determined.  

No matter what the outcome this is going to get more interesting as the cold days of winter mosey along towards the spring planting.

 

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RESOURCES

• See, Mystery $18.3m lotto claim just beats deadline, Ryan Foley out of New Zealand.
• Crawford Shaw, Attorney at Law website
• John F. Kennedy, Presidential Library And Museum, Officials of the Kennedy Administration
• Wikipedia, United States Secretary of the Treasury
• US Department of the Treasury website
• Iowa Department of Revenue, Why are my name and social security number required to collect winnings? Link.
• Iowa’s Child Support Recovery Unit
• 10 Steps to Claim a Winning Lottery Ticket, Lombardi, January 20, 2012