Lottery Winner Loses Freedom, Sentenced to Prison for Evading Taxes
PITTSBURGH - A resident of Fayette County has been sentenced in federal court to a year and a day of incarceration, a $3,000 fine, and full restitution of $132,445 on his conviction of tax evasion, United States Attorney David J. Hickton announced today.
United States District Judge Arthur J. Schwab imposed the sentence on Sherman W. Friend, of McClellandtown, Pa.
According to the information provided to the court, Friend, while driving his vehicle in southwestern Pennsylvania in December of 2009, happened to notice that a truck passed him at 11:27 a.m., and then noticed that another truck passed him that had "7211" on it. With $60 in cash in his pocket, he drove to West Virginia and hit for $1,600 on a slot machine. He decided that when he returned to Pennsylvania, he would play that number again. But how would he play that number? The answer came from a vow he made two years earlier in 2007, when Friend won yet another game of chance. In 2007 he entered a raffle sponsored by a Maryland fire department and won a new PT Cruiser convertible. From that raffle win he owed the IRS $8,000, but had to be chased to pay. When he finally settled with the IRS for $3,000, he vowed to never pay taxes on winnings again. So when Friend returned from West Virginia to play 1127, he purchased 208 fifty-cent lottery tickets, all betting on his new lucky number. It hit and he instantly won $520,000. Instead of simply claiming his winnings, Friend made good on his vow not to pay the IRS by not personally cashing in any of the 208 tickets. Instead he used about 40 people, most of whom were unemployed and destitute, to present the winning tickets for payment. He accompanied them to the lottery stations, waited outside and then paid most of them a fee of $250 per ticket. Many of these individuals, whose names were on record with the Pennsylvania Lottery as having received the lottery winnings, were later taxed in spite of having been told by Friend that they would suffer no consequences from "helping" him. Some of tickets were cashed in 2009 and the bulk of them were cashed in 2010. In 2009 Friend had $101,818 in income and owed $22,229 in taxes. In 2010 he had $378,779 in income and owed $110,216 in taxes.
Judge Schwab stated that even though Friend was 71 years-old and had health issues, his "criminal activity impacted others, and the sentence reflects the need for every citizen to pay their income taxes." Judge Schwab also stated that he had intended to fine Friend $30,000, but because Friend presented to the court at the sentencing hearing $93,981 in restitution, the fine imposed was $3000.
Assistant United States Attorney Nelson P. Cohen prosecuted this case on behalf of the government.
The Internal Revenue Service, Criminal Investigation conducted the investigation that led to the prosecution of Sherman W. Friend.