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Scandal goes beyond jackpots to smaller prizes too

A friend of the former security director of the Multi-State Lottery Association who is implicated in a jackpot-fixing scandal was given a winning Kansas Lottery ticket worth $15,000 in 2011 as an engagement gift, she said Wednesday.

Iowa prosecutors had Amy DeMoney testify Wednesday in a hearing for Eddie Tipton, who faces trial in July for ongoing criminal conduct and money laundering charges for games he allegedly fixed in Colorado, Kansas, Oklahoma and Wisconsin. Separately, Tipton is appealing last year's fraud conviction related to a 2010 Iowa Hot Lotto ticket.

Iowa Assistant Attorney General Rob Sand alleges that Tipton installed software known as a root kit that enabled him to manipulate numbers in computers that were supposed to randomly generate number combinations for several lottery games. The program would then self-destruct leaving no trace. Tipton denies that allegation.

What tripped Tipton up, investigators say, was his decision to buy some of the winning tickets himself. Workers at the lottery association, which serves 37 states and U.S. territories, are prohibited from trying their luck.

In the case of the Kansas ticket, the state's lottery officials have previously said they believe Tipton bought two winning tickets for the "2by2" game at separate locations while driving through Kansas in December 2010. The Kansas Lottery said investigators believe the tickets were passed on to other individuals Tipton knew to be cashed.

DeMoney, a Waukee, Iowa, resident, said Wednesday that Tipton approached her in the spring of 2011 and told her he won some money in the lottery and he didn't want to turn in the ticket, worth about $15,000, because he could lose his job.

"He asked me if I would be willing to cash it in," she said. "He told me to consider it an engagement gift."

There was a catch, however. She had to drive to Kansas to cash in, and Tipton wanted $6,000 back in cash.

She said she cashed in the ticket sometime in May 2011 and contacted Tipton, who suggested they meet in the parking lot of a grocery store to hand off his share of the cash.

Court documents indicate that Sand plans on seeking restitution of nearly $2 million from Tipton if he's convicted at the upcoming trial scheduled for July 18. That's the accumulated estimate of jackpots paid out in the games Sand alleges were rigged.

Tipton faces 10 years for last year's fraud conviction, and his appeal is set for arguments before the Iowa Court of Appeals on June 16.

Tipton's attorney, Dean Stowers, says the state's evidence was insufficient to support the jury verdict, the judge should have dismissed the case because the statute of limitations had expired and the judge made several errors at trial regarding evidence and jury instructions.

Timeline of the biggest crime in US lottery history

The following is a compilation of Lottery Post news coverage chronicling the Hot Lotto mystery and subsequently discovered crime.

We start the timeline with a news story indicating that only 3 months remained for the $16 million Hot Lotto jackpot to be claimed.