The 'secret code' that two brothers used to carry out a daring $14.3 million lottery fraud
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In one of the most daring lottery frauds in U.S. history, Eddie Tipton, his brother Tommy, and associate Robert Rhodes pulled off a scheme that shook the lottery world.
Their ‘Hot Lotto’ scam from 2005 almost let them walk away with $14.3 million, except for one small detail–the store cameras.
Eddie Tipton's journey into the world of fraud began in 2005 when he was working for the Multi-State Lottery Association (MUSL) in Iowa.
As the Information Security Director, Tipton, then in his 40’s, had access to the lottery's inner workings, a privilege he would use to start his scam.
Secret Code Revealed
Tipton manipulated the lottery's random number generator, installing a rogue computer code that allowed him to predict winning numbers on certain dates.
This first came to light during the December 29, 2010, Hot Lotto draw, where a $14.3 million jackpot went unclaimed for nearly a year.
Investigations later revealed that Tipton had rigged this draw, among others, in Iowa, Colorado, Wisconsin, Kansas, and Oklahoma.
Tommy Tipton, Eddie's brother, also played a crucial role in the scam.
He had won a Colorado Lottery jackpot of $568,990 back in 2005, a win now linked to Eddie's tampering with Colorado's random number generator.
In 2006, the plot thickened around the Tipton brothers' lottery scam when Tommy Tipton, then a magistrate in Fayette County, Texas, raised eyebrows with his attempt to exchange $450,000 in sequentially marked bills.
This peculiar action drew the attention of investigators, yet Tommy had a story to tell.
He claimed to the FBI that he had won the Colorado lottery, an activity he couldn't share with his wife due to their Christian beliefs opposing gambling.
Suspecting that Tommy Tipton was money laundering, the FBI asked an agent to go undercover.
The man recorded a conversation in which Tommy Tipton claimed he won the lottery while in Colorado hunting for Bigfoot, a longtime hobby.
After interviewing people associated, the FBI closed the case.
His explanation, odd as it was, satisfied the FBI, and they stopped their investigation.
Following this encounter, Tommy Tipton was seen making some lavish purchases, including a new truck and various properties in Flatonia, a small town 110 miles west of Houston.
This incident is yet another piece in the jigsaw puzzle of the Tipton brothers' complex lottery fraud.
And it suggests that their scheme was not only technically sophisticated, it also briefly misled even the FBI.
The Scam Unfolds
The brothers' scheme involved creating winning lottery tickets and then attempting to claim the prizes through various means.
For the massive $14.3 million jackpot from the Hot Lotto draw in 2010, Eddie Tipton purchased the winning ticket himself.
However, he could not claim the prize directly due to his association with MUSL.
To get around this, a claim was made on behalf of an anonymous trust company based in Belize. But luckily the Iowa Lottery rejected this anonymous claim.
With the clock ticking towards the claim deadline, attempts to claim the prize under different attempts all failed, including a claim made just two hours before the deadline.
The Downfall
The unraveling of the scam began with the release of surveillance footage from a convenience store, which showed Eddie Tipton buying the winning ticket.
His arrest in January 2015 marked the beginning of the end for the elaborate scheme.
Both Eddie and Tommy Tipton, along with their associate Rhodes, faced numerous charges for their involvement in the scam.
The Trial and Sentencing
During his trial, evidence of Eddie Tipton's manipulation of the lottery system was presented, leading to his conviction on two counts of fraud in July 2015.
He was initially sentenced to 10 years in prison but later confessed to rigging lotteries in multiple states, leading to a 25-year sentence.
However, he was released on parole in July 2022.
The impact of the Tiptons' actions was far-reaching. One winner of a subsequent Hot Lotto draw even sued the Iowa Lottery and MUSL.
He claimed his winnings should have been higher as they were illegitimately reset after the rigged win.
As well, the scandal led to strengthened security measures in lottery systems to prevent such fraud in the future.
Scammer Fights Back
In a surprising twist, Eddie Tipton sued the state of Iowa in 2020, claiming he was pressured to plead guilty to crimes he did not commit.
This lawsuit looked to overturn his sentence–but was met with skepticism and requests for dismissal from state attorneys.
