LITTLE ROCK — A former employee of the Arkansas Lottery Commission pleaded guilty Friday to federal charges of wire fraud and money laundering, Lottery Director Bishop Woosley said.
Remmele Mazyck, who worked as a deputy director of security from July 2009 to November 2012, admitted to cashing 22,171 lottery tickets for a total of $478,073 between November 2009 and last October, the lottery program said in a statement.
Woosley said in an interview Friday that he placed Mazyck on administrative leave on Oct. 26, 2012, after learning of the issue, and fired the deputy director of security on Nov. 14.
“We had a report from a retailer that there was an individual trying to cash a ticket that was not activated,” Woosley said. “Once we went back and looked at the ticket and followed it through the system it was determined it was entered under (Mazyck’s) user name and assigned to a terminated retailer.”
Woosley said the retailer who made the initial report later identified Mazyck as the person who had tried to cash the ticket.
Mazyck, who was hired as deputy director of security by former lottery director Ernie Passailaigue, had previously served as deputy director of security for the South Carolina Lottery, which Passailaigue directed before heading the Arkansas lottery program.
Mazyck faces up to 20 years in prison and a fine of up to $250,000 on the wire fraud conviction and up to 10 years and a $250,000 find on the money laundering conviction.
After an appearance before U.S. District Court Judge Susan Webber Wright, he was released on his own recognizance. A date for his sentencing will be set later.
In an e-mail sent to Lottery Commission employees Friday, Woosley said he notified the Arkansas State Police and the Division of Legislative Audit after placing Mazyck on administrative leave.
“From my discussions with (Lottery Commission) security staff it appeared that Mazyck’s thefts occurred as a result of a weakness in an internal security procedure regarding access to tickets which were normally given away at ALC promotional events,” Woosley wrote in the e-email. “The weakness allowed Mazyck unfettered access to the tickets which he obtained at the instant ticket warehouse, either in conjunction with an ALC event or under false pretense, activated using his user ID, then cash at an ALC retailer.”
Woosley said that on Oct. 20, 2012, he instructed ALC staff “to cease the practice of giving away tickets at ALC events, place all tickets in question in a status to prevent their being cashed and disable the promotional status option on our system.”
“From that point on no ticket could be placed in promotional status,” Woosley said in the e-mail. “The transition to this status remains disabled.”
Woosley said Mazyck was hired by Passailaigue specifically for his lottery experience and that he helped develop and implement ALC’s security procedures.
Woosley said the lottery program is fully insured for the amount of the theft through the Arkansas Fidelity Bond Trust Fund administered by the Arkansas Governmental Bonding Board and a supplemental insurance policy that ALC purchased following start-up.
Assuming the claim is approved under both policies, the ALC will sustain no monetary loss from the theft, Woosley said, adding that if approved, no Arkansas student will be denied the opportunity to have his or her college education paid for through use of Arkansas Scholarship Lottery funding.
In addition, no retailers sustained losses as the result of Mazyck’s action, according to lottery officials.
Officials said the program has evaluated and will continue to evaluate and strengthen its processes and procedures as necessary to prevent a repeat offense.