Norwalk man charged in Hot Lotto mystery

DES MOINES - A Norwalk man was arrested Thursday afternoon and charged with two felonies as a result of a three-year investigation into the purchase of a winning Hot Lotto ticket that was claimed, but then forfeited.

Eddie Raymond Tipton, 51, of Norwalk was arrested by Division of Criminal Investigation agents and charged by the Attorney General's Office with two counts of fraud, Class D felonies, punishable by up to five years in prison.

Tipton is accused of 'attempting to influence the winning of a prize through the use of fraud or deception” and with 'the intent to attempt to defraud, attempted to falsely utter, pass or redeem a lottery ticket” in violation of Iowa law, according to a complaint filed in Polk County by Assistant Attorney General Robert Sand.

Tipton, according to the Iowa Lottery, worked as the director of security for the Multi-State Lottery, which runs Hot Lotto. As an employee of a lottery vendor, he was prohibited by law from playing Iowa Lottery games.

'This is truly one of the strangest situations in the history of lotteries,” Iowa Lottery CEO Terry Rich said at a Des Moines news conference Thursday. 'We believe this is the largest lottery jackpot ever to be claimed, only to have that claim later withdrawn.”

The mystery dates back to December 2010 when Tipton allegedly bought the winning Hot Lotto ticket with a face value of $16.5 million at a Quik Trip on Des Moines' near north side, according to DCI Assistant Director Dave Jobes.

In November 2011, the Lottery was contacted by Phillip Johnston, a Canadian who claimed to be the winner. Although he had the 15-digit security number, there were discrepancies in his story, such as his description of the purchaser's clothing.

He later advised the Lottery he was not the ticket owner, but was representing an anonymous party.

Investigators went to Quebec City, Canada, where Johnston said two men in Houston who he had worked with asked for help in claiming the winning ticket. One of those men had a 30-year professional relationship with New York attorney Crawford Shaw, according to the DCI. He sent the ticket to Shaw, who with Johnston's assistance, prepared the claim.

Less than two hours before the 2011 deadline for claiming the jackpot – worth about $7.5 million after taxes -- Shaw came forward to file paperwork with the Iowa Lottery to claim the prize. Shaw said he was acting on behalf of Hexam Investments -- a trust based in Belize, which is known as a tax haven.

However, Iowa Lottery officials refused to pay the prize because Shaw's documentation, without the identity of the purchaser, did not satisfy them the ticket and claim were valid. Shaw withdrew his claim in January 2012 and the prize money was ultimately forfeited.

Facing possible statute of limitations deadline, investigators released surveillance video showing a man purchasing the winning ticket. A tip from someone who watched the video led to Tipton, Jobes said. DCI agents interviewed Tipton in November 2014. Tipton claimed he did not buy the Hot Lotto ticket and claimed to be in Houston when it was bought. Using cell phone records and other information, investigators disproved that claim.

Eventually, investigators established a connection between two men in Houston and Tipton, who earned a degree from the University of Houston.

In December, one of Tipton's former co-workers said he had seen the video and believed Tipton was the man buying the ticket. Others said the voice on the video sounded like Tipton's. A friend of Tipton shared his own independent voice analysis that he made to prove the purchaser was not Tipton. However, based on his analysis, he concluded it was Tipton, the DCI said.

Jobes and Rich said they don't believe Tipton tried to manipulate the lottery game in any way, but was prohibited from playing or winning because he worked as a lottery vendor.

Jobes called the investigation 'ongoing and active” with many questions left unanswered.

For more, visit http://www.dps.state.ia.us/commis/pib/Releases/2015/1-15-2015_DCI_HotLottoArrest.html.