Investigators took too long to file lottery charges, Iowa Supreme Court says

The Iowa Supreme Court has overturned the felony fraud conviction of a former lottery official, saying investigators took too long unraveling the case of who purchased a $14 million Hot Lotto ticket in 2010.

The 72-page ruling released Friday reversed Eddie Tipton's 2015 Polk County conviction for tampering with lottery equipment and vacated a second fraud conviction for fraudulently redeeming a lottery ticket, sending the case back to District Court.

The decision is not expected to affect a pending multistate plea agreement that could send Tipton to prison for up to 25 years and require him to repay states where he and his associates collected jackpots, according to Eric Tabor, chief deputy Iowa Attorney General.

The plea deal says if the Supreme Court remanded either of the earlier convictions back to District Court the state would not refile those charges, Tabor said.

Tipton, 54, a former information security director for the Multi-State Lottery Association, based in Urbandale, was convicted in 2015 of two fraud counts. Prosecutors argued Tipton tampered with what are supposed to be random number generators to try to win the Hot Lotto jackpot valued at $14.3 million.

It was Tipton's job to write software that would pick numbers 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.

Investigation delays

Much of Friday's Supreme Court decision dealt with whether the state was entitled to a one-year extension of the statute of limitations and when the clock started ticking.

The winning Hot Lotto ticket was purchased Dec. 29, 2010. Eleven months later, Phillip Johnston, of Quebec, called the Multistate Lottery claiming he had bought the ticket. On Dec. 29, 2011, hours shy of the one-year deadline for redeeming the $14.3 million jackpot, a New York attorney representing a Belizean blind trust tried to claim the prize.

'By January 2012, the state knew it had probable cause to believe someone was attempting to be paid who was not entitled to the proceeds,' the Iowa Supreme Court wrote in the decision.

After some delay finding Johnston -- the Royal Canadian Mounted Police first provided information about the wrong Johnston, then provided information French -- Iowa Division of Criminal Investigation Agent Matt Anderson interviewed the Quebec man in August 2013, the ruling stated.

Johnston's interview led Anderson to Houston, where he went in June 2014 to try to interview Rhodes and Robert Sonfield. The men were not available to be interviewed at that time, prosecutors said.

The case running cold, the DCI decided Oct. 9, 2014, to post a video of the man purchasing the Hot Lotto ticket in 2010 at a Des Moines convenience store. In less than a week, the DCI got a tip from an employee of the Main lottery that Tipton was the purchaser, the Supreme Court wrote.

Tipton was charged with fraud Jan. 15, 2015.

'The record shows the State encountered some unexpected obstacles that reasonably delayed its investigation for a brief period of time,' the Iowa Supreme Court wrote. 'Yet, these obstacles fail to account for the full length of the delay between the identification of Johnston in November 2011 as the claimant of the ticket and the release of the convenience store video in October 2014, almost three years later.'

Because the state did not show 'due dilligence' in pursuing the case, prosecutors are not entitled to a one-year extension of the statute of limitations, the court ruled.

The Iowa Department of Public Safety, which includes the DCI, released a statement Friday evening saying investigators deal with heavy case loads and often complex cases.

'Investigators may hope to reach conclusions quickly, but finding the truth is the goal,' DPS said.

The Supreme Court's ruling will cause the agency, in future cases, to have more discussions with prosecutors about making clear to judges what was involved in the investigations, the DPS said.

Pending plea deal

Tipton's next scheduled court hearing in Iowa is Thursday. Under the plea agreement announced earlier this month, Tipton would plead guilty to ongoing criminal conduct, a Class B felony, and serve up to 25 years in prison. This would be concurrent to the 13.5 years he's facing for fraud and computer crime convictions for his role in defrauding the Wisconsin Lottery.

Under the plea deal, 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, previously pleaded guilty in Iowa to a felony charge and agreed to cooperate with authorities. He has not yet been sentenced.

l Comments: (319) 339-3157; erin.jordan@thegazette.com