State unfairly recouping lottery winnings?

Eyewitness News Exclusive
February 15, 2008 10:54:33 AM PST
The Eyewitness News Investigators took a look into New York's efforts to recoup money from poor people who win the lottery.Each year, the state collects millions from lottery winners who once collected welfare.

But Eyewitness News has learned that even those who worked for their checks are being forced to give up their winnings.

Jim Hoffer has the exclusive story.

It's called lottery intercept, and it's a way for New York to collect millions owed from those on public assistance.

It sounds like a good way to collect on debt, but our investigation has found thousands of poor people who worked for their welfare checks now having to hand over their winnings to the state.

"I said thank God," Walter Carver said. "That's good. I'm happy."

Carver remembers the thrill of winning $10,000 in an instant scratch-off lottery game. But the thrill was gone minutes after he tried to claim his winnings.

"I heard a little giggle, and the clerk said wait a minute, there's a little red flag here," he said. "She says, wait a minute, were you on public assistance? I say yes. I says not public assistance, work. I worked for that."

It did not matter that Carver worked 36 hours a week cleaning the floors on the Staten Island Ferry in exchange for a welfare check of $220 a month. The state still claimed half of his lottery winnings, as payback for the public assistance he received from 1997 to 2000.

"I worked for services rendered," he said. "I worked, I put in my day's work. I can't see how they can ask for it again."

Carver isn't alone. Our investigation has found that, in the last five years, the state has intercepted nearly 24,000 lottery winners who were welfare recipients, taking from them more than $22 million even though most had to work for their welfare checks.

"To receive your benefits, you must show up at a work site," Carver said. "And if you missed, the benefits would be put on hold. You didn't get paid."

So now, this former sergeant in the Vietnam War has decided to fight back. He's hired an attorney to try and reclaim his lottery winnings, on the grounds that he worked for his welfare and doesn't owe the state a dime. One law professor agrees.

"The benefits he received during the years he was doing his workfare assignment have the legal status of wages earned," CUNY law professor Steve Loffredo said. "So the state could not, on that theory, lawfully turn around now and take those wages away from him."

The Office of Temporary and Disability Assistance declined an interview for this story, but a spokesman there says they are just following state law, which requires that anyone who has received public assistance and wins the lottery handover half their winnings as reimbursement to the state. But some legal experts we spoke to believe the policy violates labor laws.

"It would have the effect of retroactively compelling him work without compensation, which is a violation of federal and state minimum wage laws," Loffredo said.

Carver's case raises serious questions about fairness and civility. A state lures the poor to gamble on a dream, and when those who have been on workfare are lucky enough to win, the state steps in to take the dream away.

Hoffer: "Do you think that the state has a right to that money?" Carver: "No, not in my situation and thousands of other people out there." Hoffer: "Because?" Carver: "Because we worked for our benefits."

After Carver paid the state and the taxes, he was left with a little more than $1,000 from his $10,000 lottery winnings.

This investigation began with a tip, so if you have an issue you need investigated, please give our tip line a call at 1-877-TIP-NEWS or e-mail us at The.Investigators@ABC.com.