(Texas Scorecard) – A case involving a lottery winner who claims his jackpot should have been $95 million higher due to a rigging scandal is being heard in the new Texas Business Court, after the court asserted jurisdiction.
Jerry Reed won a $7.5 million Lotto Texas jackpot in May 2023—just one month after Rook TX—a New Jersey-based company—claimed a $95 million jackpot.
Reed alleges that Rook GP—the general partner of the limited partnership Rook TX—misrepresented Rook TX’s date of formation to the state of Texas when it claimed the $95 million jackpot.
He asserts that Rook GP “represented that Rook TX was formed on March 1, 2023, and received the winning lottery ticket on April 21, 2023, but Rook TX was not actually formed until June 15, 2023—after the April 2023 lottery drawing.”
Reed claims Rook TX violated Sections 466.307 and 466.308 of the Government Code, which make it a crime to “intentionally or knowingly influence or attempt to influence the selection of the winner of a lottery game” or to claim, or aid another in claiming, “a lottery prize or a share of a lottery prize by means of fraud, deceit, or misrepresentation.”
According to Reed’s allegations, Rook TX was created “to hide the identity of the defendant-conspirators who rigged the lottery.”
The business court granted a motion from Reed to compel corporate disclosure under Local Rule 4(b), which requires Rook TX to file an amended corporate disclosure statement that identifies “all individuals and entities” with a financial interest in the outcome of this case.
Reed originally filed the lawsuit in the 353rd District Court in Travis County. Rook removed the case to the Third Business Court Division by filing a notice of removal. Reed subsequently filed a motion to remand the case back to the district court but was denied.
Manfred Sternberg—Reed’s attorney—told Texas Scorecard that he did not want this case heard in the business court because it “is a newly created court of limited jurisdiction and its jurisdiction over the subject matter is not clear.”
The court’s reason for asserting jurisdiction is that the case involves a limited partnership’s “governance, governing documents, or affairs,” and thus falls within the court’s jurisdiction.
This sets a precedent that the business courts will assert jurisdiction over such cases, even when the internal governance of a business is not the primary focus.
Sternberg placed blame on the Texas Lottery Commission (TLC) for poor oversight by its Board of Commissioners.
“Without such oversight, the TLC Executive team allowed criminals to steal the Jackpot from legitimate players by presenting void winning tickets to the TLC, and the TLC honored those void tickets without any cursory investigation,” said Sternberg.
“The TLC allowed a foreign corporate entity to misrepresent easily verified information on the TLC claim form without disclosing Rook TX participated in an illegal lottery pool and that its owners bought the ticket on credit using unauthorized QR codes wirelessly attached to lottery terminals,” he continued.
“Nor did Rook TX disclose any of the real parties behind the Rook TX corporate entity nor the details of the illegal scheme it participated in with others, which included minors. To this day, Rook Tx LP steadfastly refuses to disclose its partners.”
Following the move to the Third Business Court, Rook TX filed a Rule 91a motion, which seeks to dismiss the lawsuit because it has no basis in law or fact. A hearing is scheduled for July 14 at 10 a.m. on this motion.
Reed filed a demand for a jury trial on June 21, and a pre-trial conference is scheduled for October 7.
A similar case—Kristen Moriarty v. Sergio Rey (the acting deputy executive director of the TLC)—is also working its way through the state courts. Moriarty is suing Rey for not paying out her $83.5 million jackpot three months after she reportedly filled out a winner’s claim with the TLC.
The TLC told Texas Scorecard that “The Texas Lottery Commission and its staff are not parties to the referenced lawsuit and do not comment on pending litigation.”
Rook TX did not respond to Texas Scorecard’s request for comment in time for publication.
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