Good Luck May End In Court Lottery Winner Faces Tax Fraud Charges
Phillip W. Cappella won a $2.7 million lottery jackpot. Apparently it wasn’t enough, prosecutors say.
How to get more? Cappella allegedly “rented” 200,000 losing lottery tickets from a man who collects them as a hobby, and then claimed a phony $65,000 in gambling losses to reduce the tax bite on the jackpot.
Now he’s one of the richest men awaiting trial in New England.
“The one consistent theme in virtually all white-collar criminal cases is greed, and it’s my view that this case is well within that theme,” said Mark Pearlstein, chief of the U.S. Attorney’s Office Economic Crimes Unit.
Cappella, 34, a house painter from Pelham, N.H., and his tax preparer, 47-year-old Henry Daneault, a former IRS employee from Lowell, were indicted Wednesday on conspiracy charges.
Cappella won $2.7 million in 1985, receiving $135,000 annually before taxes. In 1989, Cappella reported $135,716 in gambling winnings - and claimed a $65,000 deduction for gambling losses, saving himself about $20,150 in federal taxes, Pearlstein said.
Taxpayers can claim gambling losses up to the amount of their winnings. If audited, however, they must document the losses with gambling logs, casino receipts or other evidence.
When Cappella was audited, he produced 200,000 losing scratchoff tickets. That means he bought - and scratched off - about 550 tickets a day.
Prosecutors say Cappella actually got them all at once, for $500 and a promise to return them in a month, from William Jenner, a retiree who collected them from many sources, including the trash.
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