Brazilian police dismantle $31 million lottery fraud

SAO PAULO Sat Jan 18, 2014 12:47pm EST

Related Topics

SAO PAULO Jan 18 (Reuters) - Brazilian police said on Saturday that they had broken up a bank robbery scheme that had diverted 73 million reais ($31 million) from a lottery run by state-owned lender Caixa Econômica Federal.

The operation, which spanned three states, was the largest fraud in Caixa Econômica's history, according to a statement from the federal police. The statement said 70 percent of the stolen funds had been recovered.

The money was diverted from Caixa by forging a winning ticket to the Mega-Sena lottery late last year, police said. The diverted cash was deposited in a bank account that had been opened in the name of a made-up person at a Caixa branch in Tocantins state and quickly dispersed to other accounts.

The Caixa branch manager in Tocantins has been arrested and charged with participating in the scheme, police said.

Caixa said in a statement that it had informed the police as soon as it discovered the fraud and would continue to cooperate with law enforcement as needed. Efforts to identify and contact the branch manager for comment were unsuccessful.

The reported crime comes a week after magazine Istoé reported that Caixa had violated financial regulations by taking control of proceeds from about 496,000 inactive accounts in 2012. Bank executives told Reuters on Monday that Caixa would follow central bank orders to correct procedures for how it books such accounts on its balance sheet.

($1 = 2.34 reais) (Reporting by Caroline Stauffer and Guillermo Parra Bernal; Editing by Lisa Von Ahn)

FILED UNDER: