Plea deal reached in lottery scam that included Iowa, other states

By Rod Boshart, Gazette Des Moines Bureau

DES MOINES — Accused multistate lottery fraudster Eddie Tipton pleaded guilty Monday to Wisconsin felony charges he rigged a lottery there in 2007 and agreed to plead guilty in Iowa to the felony of ongoing criminal conduct, officials said, ending a bizarre case that came to light with a mysterious 2010 Hot Lotto drawing.

Tipton, 54, a former information security director for the Multi-State Lottery Association, an Urbandale nonprofit that distributes lottery games nationwide, was convicted in 2015 in Iowa of two fraud counts. A prosecutor argued Tipton tampered with what are supposed to be random number generators to try to win a $14.3 million Hot Lotto prize in 2010.

It was Tipton's job to write software that would pick numbers — ostensibly by random — for computers used for various games by 37 state and territorial lotteries.

After Tipton's conviction in Iowa, investigators linked him, his brother, Tommy, and a longtime friend, Robert Rhodes, to suspicious jackpots in Colorado, Oklahoma, Wisconsin and Kansas.

Monday, Wisconsin Attorney General Brad Schimel announced Eddie Tipton pleaded guilty to theft by fraud and computer crime for his role in defrauding the Wisconsin Lottery. He faces 13.5 years in prison and $35,000 in fines.

'Mr. Tipton's actions defrauding the lottery were a gross violation of the public's trust and confidence and I'm grateful to the coalition of state entities and law enforcement agencies that spanned multiple states for their efforts to find truth and seek justice,' Schimel stated.

In a plea agreement, Tipton also will plead guilty to a felony count of ongoing criminal conduct in Iowa. The agreement shows the state will recommend a maximum sentence of up to 25 years, which would run concurrently with the prison time he receives in Wisconsin.

Colorado has agreed to file no criminal charges against Tipton, the plea deal shows, but Tipton has agreed to pay hundreds of thousands of dollars in restitution to Wisconsin, Colorado, Oklahoma and Kansas.

According to court documents, the Tipton brothers will be required to pay back a total of $3 million in states where they collected jackpots, with Eddie Tipton agreeing to pay more than $2.2 million in restitution for seven winning tickets in five states while Tommy Tipton, a former Texas justice of the peace, agreeing to pay more than $800,000.

The winning $14.3 million Hot Lotto prize in Iowa was claimed, but no money was ever paid out. As a lottery official, Tipton was not allowed to play the game.

'All of the states that have signed onto this agreement think that it's a good resolution to the matter,' said Rob Sand, a prosecutor in the Iowa Attorney General's Office who was guardedly optimistic Monday that an Iowa judge would accept elements of the plea deal for crimes alleged to have occurred here.

Sand called the lottery case 'the most interesting' he has handled in his career but 'we're not quite finished yet.'

'We have some procedures that we have yet to get through here in Iowa and until he is in court and does that here, at this point the charges in Iowa are still accusations and he still has the presumption of innocence in the state of Iowa,' Sand said in an afternoon briefing. 'We won't count our chickens until they hatch, and until all of our proceedings are finished in Iowa we won't call anything the end of the road.'

Sands said Eddie Tipton's next scheduled court hearing in Iowa is June 29. Under the arrangement, Tipton's previous criminal convictions would be dismissed contingent on his guilty plea to a Class B felony.

According to the multistate plea agreement filed in Polk County District Court, Tommy Tipton of Texas will plead guilty to a felony and a serious misdemeanor charge in Iowa. In return, lawyers agreed to recommend a sentence of 75 days in jail on the misdemeanor charge and a deferred judgment on the felony charge.

Rhodes, 49, of Sugar Land, Texas, a former business partner of Eddie Tipton, previously pleaded guilty in Iowa to a felony charge and agreed to cooperate with authorities. He has not yet been sentenced.

'I do think that Robert Rhodes provided us with some excellent evidence through his cooperation,' Sand said.

The deal also requires Eddie Tipton to give truthful testimony about the fixing and claiming of lottery tickets and to cooperate in any additional related proceedings.

'There's no doubt that there are people who are always trying to undermine a system, whether it's the lottery or any other business.' said Iowa Lottery Chief Executive Officer Terry Rich. 'That's why we have the checks and balances and why you have separations of duties and strong layers of security. ... Our goal in all of this is always to try to be one step ahead of them.'

l Comments: (515) 243-7220; rod.boshart@thegazette.com