
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 11, 1992                   TAG: 9203110191
SECTION: VIRGINIA                    PAGE: B-4   EDITION: METRO 
SOURCE: THOMAS HUANG LANDMARK NEWS SERVICE
DATELINE: NORFOLK                                LENGTH: Medium

AUSTRALIAN IS BIG LOTTO WINNER

The big winner in the Virginia lottery's $27 million payout is Stefan Mandel, the Australian lotteries wizard whose company took $1,500 (Australian) of every $4,000 invested in the scheme, documents show.

Mandel's Pacific Financial Resources, which helped an Australian syndicate corner the Virginia lottery, has made a profit of $2.3 million (Australian) - or $1.7 million U.S. - since the syndicate was established in 1989.

Meanwhile, the 2,500 investors who placed their money with the syndicate, the International Lotto Fund, won't see much profit at all from the Virginia lottery win.

Because the trustees of the fund can't sell the winning ticket for a quick face-value of $14 million, investors each will see a dribble of just $400 a year for 20 years, Lottery Director Kenneth Thorson said Tuesday.

The lottery will pay the Australians as soon as officials verify the identity of the syndicate and determine whether state and federal governments can withhold taxes from a foreign company, Thorson said.

Nevertheless, while the Australian syndicate won a tactical battle in Virginia, it may have lost the war, expending much of its capital without getting a quick return.

The goal of the syndicate has been to nourish its fund by winning a lottery, selling the winning ticket at a profit, then reinvesting in another lottery, Australian officials said.

Financial experts believe the Australians could have gotten up to $14 million for the ticket, because that's the present value of bonds that could generate $27 million over 20 years.

"Their interest is getting as much money now and reinvesting it," said an Australian official from Melbourne.

"The number of times they win [a lottery] will determine the final payback per unit in investment. To believe they are only seeking the cash flow from Virginia is to misunderstand the objective of the fund."

For about a week, the payoff to the Australians was in doubt, casting a shadow over the resale value of the winning ticket.

At issue was a game rule stating that a ticket must be paid for at the site where it is dispensed. There was evidence that the ticket was paid for at Farm Fresh's corporate headquarters instead of at the Chesapeake store where it was issued.

To make sure the ticket was valid, the Australians had to come forward.

by CNB