$1m the newsagency to pay.


Those that have been reading this blog will know the troubles of one of our clients Michael Pavellis from World Square Newsagency. I have never met him but our support staff in NSW who know him well say he is a nice guy.

Background for those not following the case: Two winners of the NSW lottery came into World Square Newsagency. There they were served by a trusted employee of the newsagency who filled out for them a claim form. Later he substituted their claim form for one of his own and sent this form with their winning ticket, to NSW Lotteries. 14 days later he was paid the $574,000. Then he disappeared, possibly to Indonesia.

A week later the rightful winners contact NSW Lotteries inquiring about their prize. After a legal battle, the NSW Lotteries paid the prize money again, this time to them.

Then the NSW Lotteries started proceedings against the newsagency owners saying they were negligent

Even though the judge stated there were faults in Lotto, the judge ruled the Newsagency was negligent. Since it was an employee fraud which is third party, the insurance does not cover it. World Square Newsagency owner Mr. Pavellis has to pay the NSW lottery $574,000 for the winnings, plus the NSW lottery legal fees, plus the costs of NSW lottery investigation, plus his own legal fees of about $200,000 and some other costs.

So this $574,000 fraud is going to cost Mr. Pavellis over a $1,000,000!

This is the biggest legal case in the Newsagency industry that I have ever seen.

As Mr. Pavellis states he does not have the money to pay, he is going to appeal. So it is not yet over. Still I don't like his chances as I remember a lawyer saying to me that most appeals are lost.

Since this decision, I recommend anyone that has lotteries to review how they handle customer claiming their winnings.

This could have happened to anyone that sells lotto as Mr. Pavellis is a good operator.

You can read about it here.