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Jackpot-fixing investigation expands to more state lotteries

Insider BuzzInsider Buzz: Jackpot-fixing investigation expands to more state lotteries
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DES MOINES, Iowa — The allegations read like a movie plot: a lottery industry insider installs an undetectable software program in the computers that pick winning numbers so he can know them in advance. He enlists accomplices to play those numbers and collect the jackpots. And they enrich themselves for years until a misstep unravels their high-tech scheme.

Eddie Tipton, former security director of the Multi-State Lottery Association, has been accused of tampering with drawings in four states over a six-year period, and investigators are now expanding the inquiry nationwide to determine if the number could be larger.

State lotteries in Colorado, Wisconsin, and Oklahoma have confirmed they paid jackpots worth $8 million to Tipton associates, including his old college roommate, Robert Rhodes. Investigators are looking at payouts in the other 37 states and U.S. territories that used random-number generators from the Iowa-based association, which administers games and distributes prizes for the lottery consortium.

The inquiry is sending a chill through state governments that receive $20 billion annually in lottery revenue, and that depend on public confidence in the contests. Tipton installed software or had access to machines for national games such as Hot Lotto and some state-based games. The most lucrative ones, Powerball and scratch tickets, weren't part of the scheme, according to lottery officials.

"It would be pretty naive to believe they are the only four" jackpots involved, said now-retired Iowa deputy attorney general Thomas H. Miller, who oversaw the investigation for 2½ years. "If you find one cockroach, you have to assume there are 100 more you haven't found."

Tipton, 52, was convicted in July of fraud in the attempt to claim a $16.5 million jackpot in Iowa. He was sentenced to 10 years but is free pending appeal. He is also charged with ongoing criminal conduct and money laundering involving the other three state lotteries. Rhodes, a businessman from Sugar Land, Texas, is charged with fraud in connection with the Iowa jackpot, and is under investigation in Wisconsin.

Tommy Tipton, Eddie's brother, who bought a winning Colorado Lotto ticket in 2005, resigned his position last month as a justice of the peace in Flatonia, Texas, 100 miles west of Houston, but hasn't been charged. Colorado authorities are investigating.

Eddie Tipton's attorney, Dean Stowers, says his client is innocent.

"There's just absolutely no evidence whatsoever that he did anything to alter the proper operations of the computers that were used to pick those numbers, absolutely no evidence. It's just all speculation," Stowers said.

Rhodes' attorney did not respond to messages and Tommy Tipton did not return calls.

The scheme allegedly continued for years. Prosecutors say Eddie Tipton installed software known as a root kit that enabled him to manipulate numbers without a trace. Tipton was tripped up, investigators say, by the audacious move of buying the winning ticket himself at a service station near where he worked in Des Moines.

"This is kind of an eye opener," said Oklahoma Lottery director Rollo Redburn. "It reaffirms the fact that we've got to be constantly vigilant against people trying to defraud the system."

Iowa launched the investigation in 2012 after a lawyer representing a trust tried to claim the $16.5 million Hot Lotto jackpot, turning in the ticket hours before a one-year deadline. The trust — which said it benefited a corporation in Belize — eventually withdrew the claim rather than identify who purchased the ticket. Investigators initially suspected it was merely someone trying to hide winnings from a creditor.

The case took a dramatic twist when authorities released surveillance footage from the service station showing a stocky, hooded man buying the winning ticket and hot dogs in December 2010. Stunned lottery colleagues stepped forward to say the man looked and sounded like Tipton — a man with access to their computers.

Eddie Tipton had worked at the association since 2003, after a career in information technology, including at a Rhodes-owned firm in Houston called Systems Evolution. He was promoted to lottery security director in 2013.

Investigators allege that he passed the winning ticket to Rhodes, his University of Houston classmate, who then worked with associates to try to collect.

At Eddie's trial in July, brother Tommy insisted the man on the video wasn't his sibling, who he said was larger than the person shown.

In the Wisconsin case, authorities said, Rhodes hired a law firm to claim a $2 million Megabucks jackpot for him in 2008, and took legal action so the $783,000 cash payout could go to his limited liability corporation instead of him. Wisconsin Lottery spokeswoman Stephanie Marquis said nothing seemed suspicious and that other winners have done the same.

In Oklahoma, investigators have alleged a $1.2 million Hot Lotto jackpot claimed in 2011 is linked to Tipton but haven't spelled out details.

Miller praised the Iowa lottery's skepticism about the suspicious jackpot but wonders whether other lotteries would have been as careful.

Prosecutor Rob Sand, who is now leading the case, said investigators want to talk to anyone who has been asked to claim a prize on behalf of someone else. They are focusing on jackpots that involve tickets in which the numbers were specifically requested by winners rather than chosen randomly.

News story photo(Click to display full-size in gallery)

Thanks to sandia for the tip.

AP

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22 comments. Last comment 12 months ago by KY Floyd.
Page 1 of 2
mypiemaster's avatar - 2015021003pileofcash
JACKPOT HUNTER

United States
Member #141034
April 2, 2013
1408 Posts
Offline
Posted: December 18, 2015, 5:10 pm - IP Logged

Hate to bust your bubble but you can never catch them all. GREED, GREED AND MORE GREED.

Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

    jarasan's avatar - new patrick.gif
    Harbinger
    D.C./MD.
    United States
    Member #44103
    July 30, 2006
    5583 Posts
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    Posted: December 18, 2015, 5:37 pm - IP Logged

    RNG Really Not Good.  Balls are better,  harder to rig them up,  has to be a conspiracy of more than one criminal.  We've been correct all along.

    Here is a ball to enhance your holiday spirit.

      TnTicketlosers's avatar - Lottery-065.jpg

      United States
      Member #71120
      February 19, 2009
      1209 Posts
      Offline
      Posted: December 18, 2015, 6:27 pm - IP Logged

      I agree 100% with you..

        rcbbuckeye's avatar - Lottery-043.jpg
        Texas
        United States
        Member #55889
        October 23, 2007
        5611 Posts
        Offline
        Posted: December 18, 2015, 7:28 pm - IP Logged

        I had to laugh about OK's lottery director saying they have to be constantly vigilant.

        Well, get rid of the RNG draws and that will make it a lot easier to be vigilant.

        It's hard to understand why any lottery commission would want to keep using computers to draw numbers after this.

        CAN'T WIN IF YOU'RE NOT IN

        A DOLLAR AND A DREAM (OR $2)

          Avatar
          Kentucky
          United States
          Member #32652
          February 14, 2006
          7314 Posts
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          Posted: December 19, 2015, 12:05 am - IP Logged

          State lotteries in Colorado, Wisconsin, and Oklahoma have confirmed they paid jackpots worth $8 million to Tipton associates, including his old college roommate, Robert Rhodes.

          They said Tipton rigged the Hot Lotto drawing in Iowa that could result in his buddies winning a Hot Lotto jackpot in another state, but Colorado and Wisconsin are not Hot Lotto state. There is a very serious problem if Tipton is rigging jackpot game drawings in several states. One would think if they proved he rigged even one RNG drawing, it's time to go back to ball drawings if for nothing more than the integrity of the games.

            Tialuvslotto's avatar - Jailin
            Texas
            United States
            Member #150797
            December 31, 2013
            815 Posts
            Offline
            Posted: December 19, 2015, 7:38 am - IP Logged

            "The inquiry is sending a chill through state governments that receive $20 billion annually in lottery revenue, and that depend on public confidence in the contests."

            Simple solution.  Bring back the ball machines!

            "There is no such thing as luck; only adequate or inadequate preparation to cope with a statistical universe."

            ~Robert A. Heinlein

              sully16's avatar - sharan
              Ringleader
              Michigan
              United States
              Member #81740
              October 28, 2009
              40550 Posts
              Offline
              Posted: December 19, 2015, 8:00 am - IP Logged

              Be nice to find out if Michigan games were involved.

              Did you exchange a walk on part in the war ?

              For a lead role in a cage?

               

                                                          From Pink Floyd's " Wish you were here"

                Avatar
                Maryland
                United States
                Member #162434
                January 2, 2015
                891 Posts
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                Posted: December 19, 2015, 9:02 am - IP Logged

                HAHAHA.... you are assuming a government agency would do something which the public wanted and made sense. 

                  Coin Toss's avatar - shape barbed.jpg
                  Zeta Reticuli Star System
                  United States
                  Member #30470
                  January 17, 2006
                  10353 Posts
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                  Posted: December 19, 2015, 11:19 am - IP Logged

                  I know at least two people that will play no matter what. No one can tell them a thing about not-so-legit lotteries.

                  Bang Head

                  Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                  Lep

                  There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                    sunsine's avatar - praying hands.jpg
                    Florida
                    United States
                    Member #144291
                    June 30, 2013
                    713 Posts
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                    Posted: December 19, 2015, 11:47 am - IP Logged

                    What a great movie this will make is right. Will be inte3rsting to see how this fans out. Thanks for posting the article. Good read. Pretty amazing...I guess you say ..Developing,,,,,

                      Artist77's avatar - batman14

                      United States
                      Member #121745
                      January 16, 2012
                      4792 Posts
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                      Posted: December 19, 2015, 5:56 pm - IP Logged

                      Maybe if one of us win a major jackpot, it would be great to comment on RNG games. The average player has no clue.

                      J'aime La France.

                        Avatar
                        Kentucky
                        United States
                        Member #32652
                        February 14, 2006
                        7314 Posts
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                        Posted: December 19, 2015, 7:59 pm - IP Logged

                        Maybe if one of us win a major jackpot, it would be great to comment on RNG games. The average player has no clue.

                        I Agree! but with our collective luck, one of us will win a RNG drawn jackpot.

                          Avatar
                          Simpsonville
                          United States
                          Member #163189
                          January 22, 2015
                          677 Posts
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                          Posted: December 20, 2015, 7:53 am - IP Logged

                          What a great movie this will make is right. Will be inte3rsting to see how this fans out. Thanks for posting the article. Good read. Pretty amazing...I guess you say ..Developing,,,,,

                          It would seem the feds would get involved since it had occurred over several state lines.  The IRS will probably catch wind of this and go over years worth of tax returns.  You get greedy and you get stupid.

                            Avatar
                            Simpsonville
                            United States
                            Member #163189
                            January 22, 2015
                            677 Posts
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                            Posted: December 20, 2015, 6:04 pm - IP Logged

                            ABC NEWS going to have a story on this shortly, said it may be up to 30 states.  Can hardly wait for the story to come on.