Computer Fraud. The District of Columbia Lottery Board licensed Soo Young Bae, a Washington, D.C., merchant, to operate a terminal that prints and dispenses lottery tickets for sale. Bae used the terminal to generate tickets with a face value of
$525,586, for which he did not pay. The winning tickets among these had a total redemption value of $296,153, of which Bae successfully obtained all but $72,000. Bae pleaded guilty to computer fraud, and the court sentenced him to eighteen months in prison. In sentencing a defendant for fraud, a federal court must make a reasonable estimate of the victim's loss. The court determined that the value of the loss due to the fraud was $503,650—the market value of the tickets less the commission Bae would have received from the lottery board had he sold those tickets. Bae appealed, arguing that "
Computer fraud
The U.S. Court of Appeals for the District of Columbia Circuit affirmed the sentence. The court stated that Bae's "approach misconceives the probabilistic nature of the lottery ticket." The court noted, "[T]he value of the ticket is the value of a chance to win." The court reasoned that lottery "[t]ickets are indistinguishable—and each has an equal probability of winning—until the drawing determines the winner(s). Prior to that time, all tickets have the same market value because they all have the same chance of winning a prize, which is why they all sell at the same price. A ticket's market value, moreover, always exceeds its expected payoff, because the ticket is priced at a level that also reflects some of the value consumers derive from playing the odds." The court admitted that "[a] ticket's value changes with the drawing, of course: once the lucky numbers are announced, the value of the winning tickets rises to the value of the prize money while the value of the losing tickets goes to zero. Numerous goods, however—from automobiles to common stocks—may change in value soon after they are purchased. Nonetheless, for the purpose of sentencing, the loss associated with their fraudulent procurement is equal to the value of the goods at the time of the offense."
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