Iowa Lottery fraud case extends nationwide over several years

DES MOINES - The convicted mastermind of a failed 2010 Iowa lottery scam was arrested Friday on a new felony charge alleging he and his associates might have been involved in prior rigged jackpot drawings where lottery payouts topping $1.3 million were collected in Colorado and Wisconsin.

James Saunders of the Iowa Department of Public Safety said Edward Raymond 'Eddie” Tipton, 52, of Norwalk, a former security official with the Multi-State Lottery Association, turned himself in Friday.

Tipton was charged with ongoing criminal conduct in what was described as an ongoing national investigation. The charge is a Class B felony that carries a maximum penalty of 25 years in prison.

A criminal complaint filed in Polk County District Court alleged that Tipton tampered with 'manual play” lottery equipment to help his brother, Tommy Tipton, and associate Robert Rhodes each win lottery jackpots - Tommy Tipton in Colorado in 2005 and Rhodes in Wisconsin in 2007.

Eddie Tipton, former director of security for the Multi-State Lottery, which runs Hot Lotto, was convicted in September of two fraud charges in connection with a winning $14.3 million Hot Lotto ticket that was claimed but forfeited so no money was paid out. He was free on an appeals bond after being sentenced to a 10-year prison term. He was released Friday on a $25,000 cash bond.

In the Iowa case, prosecutors said Tipton tampered with lottery equipment by installing a self-deleting computer program that would enable him to manipulate the outcome of the Dec. 29, 2010, Hot Lotto drawing. As an employee of a lottery vendor, Tipton was prohibited from playing Iowa Lottery games.

As part of the ongoing investigation in that case, authorities learned that Tommy Tipton, a justice of the peace in Texas, was connected to a $568,990 prize claimed in Colorado in 2005.

That win involved a manual play game where the buyer picks the lottery numbers that are played, according to Saunders and the court affidavit. The winning numbers for the game in question were generated by random number generators built at Multi-State Lottery by staff that included Eddie Tipton.

Authorities also tied Eddie Tipton to a $783,257 prize that lottery officials in Wisconsin paid to a limited liability corporation traced to Rhodes for a winning ticket generated via the 'manual play” format.

In the Colorado case, Tommy Tipton had a friend claim the lottery winnings and paid him 10 percent for doing so, according to court

documents.

At a news conference Friday, Saunders called the unfolding case 'extremely intricate” and unique but not closed. He said it has expanded into a nationwide investigation that seeks to identify instances where individuals might have taken advantage of personal relationships to perpetrate lottery fraud. He said investigators are trying to determine whether more instances or more states are involved.

'We are asking anyone who is aware of someone claiming a lottery prize on behalf of another person to please let us know by taking a survey,” Saunders said.

'These charges stem from the actions of those who apparently were willing to risk the consequences of committing fraud in an attempt to secure a lottery prize,” said Iowa Lottery CEO Terry Rich, who noted that random number generator lottery technology has been used in 17 states, but ones created by Tipton are not being used by Multi-State Lottery or the Iowa Lottery.

'This is a breach of trust against lotteries, our players, our games and the billions of dollars at stake for the worthy causes that lotteries benefit,” he added.