NEW ULM — A 56-year-old New Ulm man faces a felony State Lottery fraud charge for allegedly paying a local lottery winner the improper amount of money and collecting the full amount for himself on Dec. 18, 2021.

The charge was filed Brown County District Court Dec. 23, 2021 against Dwayne Smith, 712 Front St.. New Ulm. Bail without conditions was set at $10,000; no bail with conditions including no contact with witnesses and not entering the alleged victim’s residence. A court appearance was set for 8:30 a.m. Jan. 4, 2022.

According to court documents, New Ulm Police were called by the alleged victim about a possible theft at the Holiday gas station in New Ulm on Dec. 18, 2021.

The caller said she went to a self-service machine in the store to check the status of the scratch off ticket. She said said received a message to see “State Office.”

The alleged victim said she talked to a store worker about the ticket and he got the same message she did. The victim said the worker, an older man named Dwayne, scanned the ticket again and told her the ticket was a $25 winner.

Police went to the Holiday station and talked to Dwayne who said “the ticket said 25 dollars, I gave her 25 dollars.”

Police asked him why the self-service machine gave the see state office message and he said because “the ticket could not (be) programmed” or “didn’t turn it all the way on” referring to the self-service machine.

Officers asked Smith what happened to winning tickets that are turned in and he said “they go in the trash.”

Police asked Smith how documentation works for reviewing winning pay outs and if it has to be requested through the State Lottery Office, which he said “yeah.”

Smith told police the store manager would return and provide more assistance at 5 a.m. Dec. 21, 2021.

The store manager called police and said store security video from Dec. 18, 2021 showed the victim go to the self-service machine, then the cash register. She said she saw Smith scan the scratch off a few times before the register opened and he handed money to the victim.

In addition, she said the video showed Smith placing the scratch off on the counter under a stapler. After the victim left the store, the video showed Smith grabbing the scratch off and putting it in his pocket.

On Dec. 21, 2021, New Ulm Police Investigator Eric Gramentz contacted the State of Minnesota Lottery Office and talked to investigator John Grove, explaining what was alleged to have taken place. Gramentz said security video showed the suspect, Smith, pocketing the lottery ticket after reporting to the customer it was a winning ticket valued at $25.

The lottery game was identified as a $2 scratcher ticket called a “Stocking Stuffer.” Grove said when a ticket is scanned and exceeds a $500 winning prize, it notifies the ticket holder to see the state lottery office.

Gramentz talked with the victim who said she bought the “Stocking Stuffer” lottery ticket at Kwik Trip in New Ulm on Dec. 18, 2021 and that she received a lottery ticket as a Christmas gift and it was a $7 winner.

The victim said she cashed the ticket in for two more lottery tickets, a $5 scratcher ticket and a $2 “Stocking Stuffer” scratch ticket. She said she found symbols on the “Stocking Stuffer” ticket and thought she won but was unsure, so she stopped at the Holiday station, scanned the tickets minutes after leaving Kwik Trip and got the same message to “see state lottery office.”

Grove told Gramentz that if a winning ticket valued at under $500 was scanned the terminal would ask the employee if they have enough cash to pay the winning ticket. If they did, the machine would produce two receipts. If the winning ticket is valued over $500, it would notify the clerk to direct the customer to the lottery office.

Security video with audio showed Smith telling the victim it was a wininng ticket valued at $25. She questioned him if the amount was right, he confirmed it was and paid her $25 from the cash register and put the ticket on the counter, then in his back pants pocket.

The Holiday manager told Gramentz the cash register and lottery machine reconciliation on Dec. 19, 2021 for Dec. 18, 2021 to show payouts, showed the cash register was $25 short compared to what the lottery machine said should have been paid out.

Grove provided lottery office data showing the winning ticket from the “Stocking Stuffer” game was sold at a New Ulm Kwik Trip and scanned at the Holiday store multiple times on Dec. 18, 2021.

Smith went to the Owatonna regional lottery office on Dec. 21, identified himself as the winner of the “Stocking Stuffer” game and presented identification. The ticket was determined to be a winning ticket valued at $1,000 and that was the amount he was paid out by the lottery office.

On Dec. 22, 201, police went to 712 Front St. S., Smith answered the door and Gramentz told him he was under arrest for lottery fraud. When taken into custody, Smith wore the same hoodie sweatshirt he was seen wearing at the Owatonna lottery office.

(Fritz Busch can be emailed at fbusch@nujournal.com).