Investigators continue to follow Hot Lotto mystery leads

Officials declined to pay the prize because of concerns about the legality of the purchase

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CEDAR RAPIDS – New pages continue to be written in Hot Lotto mystery nearly two years after the ticket, valued at a $7.5 million cash payout after taxes, was drawn by the Iowa Lottery.

Although a New York attorney acting on behalf of a Belize-based investment trust filed paperwork for the $16.5 million prize less than two hours before the jackpot was slated to expire a year ago, the claim was withdrawn after Lottery officials said they would not pay the money unless he answered their questions.

Now, as the anniversary of the Dec. 29, 2010, drawing approaches, Lottery Vice President Mary Neubauer says it appears the Division of Criminal Investigation and the Iowa Attorney General’s Office “have active leads they are following.”

And just like members of the public who continue to offer theories and discuss the mystery on the Internet, Neubauer said Lottery officials “as curious as the next person to find out what really went on there.”

“I would really love to have the person who bought the ticket step forward,” Lottery Director Terry Rich said after a budget hearing in Des Moines Dec. 13. “That would ultimately tell us what’s going on.”

The most popular theory about the ticket is that the winner was involved in some illegal activity and tried to “sell” the ticket to someone else to claim the jackpot, Neubauer said.

Another view, Rich said, is it was syndicate of people from outside the U.S. who bought the winning ticket but couldn’t redeem it, so it was illegally sold for more than the $1 ticket was worth. Again, Iowa law does not allow lottery ticket scalping.

In either case, the Lottery would not pay the prize because Iowa law disallows lottery ticket scalping, Rich said.

Neubauer is encouraged that the DCI is finding new leads.

“As long as it’s an active case, then I think that’s good because there is information the investigators are finding they can continue to follow,” she said.

Whether or not the mystery is solved – and Neubauer has her doubts, she believes that through due diligence “we stopped something that definitely appeared to be untoward from happening.”

“Bottom line,” Rich said, “we got to keep the money, and we got to redistribute it back to our players, and the integrity of the game was kept intact.”

The money was distributed through the Lottery’s Mystery Millionaire promotion earlier this year.

Gov. Terry Branstad praised Rich for protecting the integrity of the state’s gaming enterprise by standing up to “this individual that basically gave up on trying to cheat. At least that’s the way it looked.”

The way things look to Rich, the Lottery expects to be able to provide a minimum of $60 million annually in profits to the state treasury. Last year, it generated $78 million in proceeds thanks to some large jackpots. A record $587.5 million Powerball jackpot in November generated $10 million worth of sales in Iowa alone -- doubling the $5 million in Powerball proceeds in November 2011.

Also at the budget hearing, Rich said the Iowa Lottery is in conversation with other Multi-State Lottery members on a $5 lottery game with multi-million dollar prizes. It may debut in late 2013 or 2014.

“A lot of research needs to be done, we’ve got to make sure that the states agree when you have a national lottery like this,” he said.

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