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FBI missed rigged jackpot in 2006 before lottery scheme grew

Jun 19, 2017, 8:51 am

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Insider BuzzInsider Buzz: FBI missed rigged jackpot in 2006 before lottery scheme grewRating:

IOWA CITY, Ia. — Investigators were suspicious in 2006 when they heard that a rural Texas judge was trying to exchange $450,000 in consecutively marked bills.

But Tommy Tipton, a Fayette County magistrate, told the FBI that his actions were innocent, if odd: He won the Colorado lottery but couldn't tell his wife because gambling was against their Christian faith. The FBI accepted the story and dropped its inquiry of Tipton, who soon bought a new truck and more property around the town of Flatonia, 110 miles (180 kilometers) west of Houston.

A decade later, the inquiry stands out as a missed chance to stop a jackpot rigging scandal that would corrupt the $70 billion lottery industry for years while enriching a tiny group of insiders. The FBI didn't uncover one fact that its informant knew but didn't see as significant: that Tipton's brother, Eddie Tipton, was a lottery industry employee. In fact, he'd built the machine that picked the winning combination for the Colorado Lotto game.

"I didn't add two and two together," said the informant, Tom Bargas, owner of Mr. B Fireworks in Schulenburg, Texas. "I don't think I mentioned it to the FBI. Had I, they probably would have been smart enough to know then. It was a missed opportunity. It should have been stopped immediately."

Bargas recalled a conversation months earlier in his warehouse in which someone joked to Eddie Tipton that he could use his job at the Multi-State Lottery Association in Urbandale, Iowa, to "rig up the lottery."

"He just laughed about it," Bargas said. "We didn't realize that he was actually thinking about doing it or had done it already."

Eddie Tipton, 54, admitted in a plea agreement with multiple states this month that he long profited off his position at the association, which helps run dozens of lotteries. Investigators say he designed and installed code that allowed him to predict winning numbers drawn every May 27, Nov. 23, and Dec. 29 of non-leap years. He conspired with his younger brother, friend Robert Rhodes and others to buy and claim winning tickets in five states between 2005 and 2011.

The brothers have agreed to tell investigators the full extent of their involvement in jackpot-fixing under the deal, which requires they pay back $3 million. Prosecutors will seek 25 years in an Iowa prison for Eddie and 75 days in a Texas jail for Tommy, who worked as a sheriff's deputy before being elected Justice of the Peace in 2002, presiding over traffic enforcement, misdemeanors and some civil disputes.

Tommy Tipton's lawyers argued that the FBI's old inquiry should bar his current prosecution because the statute of limitations had expired. But Iowa prosecutor Rob Sand responded that the FBI had no reason to think the lottery might have been rigged.

"Doing so would have seemed harebrained at the time," Sand wrote, adding that agents "had no knowledge of Eddie Tipton's existence."

The FBI's Houston office, which oversaw the inquiry, declined to comment.

The scandal has roiled state lotteries, which have vowed to tighten their security and face lawsuits from players claiming they were cheated.

The $4.5 million Colorado jackpot in late 2005 is the first prize suspected of being fixed.

Three came forward with winning tickets: Alexander Hicks, a friend of Tommy Tipton's whom he recruited to claim the prize in exchange for 10 percent; Texas lawyer Thad Whisenant, representing a newly formed Nevada limited liability corporation called Cuestion de Suerte; and a Colorado resident.

Hicks and Whisenant both had "manual play" tickets in which buyers select their own numbers — a statistical longshot. The third winner had the far more common "easy pick" ticket generated by a machine. The lottery paid each. Hicks took the $568,900 cash option, returning 90 percent to Tommy Tipton.

Bargas recalled Tommy showing him large piles of freshly printed bills on Dec. 31, 2005, and asking him to swap the money for cash his business brought in from New Year's fireworks sales. Bargas declined and reported the suspicious encounter to police, noting that Tommy Tipton wouldn't tell him where the money came from but insisted it was "legit."

Suspecting money laundering, the FBI asked Bargas to go undercover. He recorded a conversation in which Tommy Tipton claimed he won the lottery while in Colorado hunting for Bigfoot, a longtime hobby. Tipton told Bargas he wanted to hide the money from his wife because they were headed toward divorce. Bargas believed him. The FBI closed the matter after interviewing Tommy Tipton, Hicks and the lottery.

Investigators now suspect Whisenant is linked to the scheme. They note he and Tommy Tipton both have financial ties to Fayette County attorney Luis Vallejo, who tried to deposit $250,000 cash into anonymous corporate bank accounts in 2006. Whisenant and Vallejo haven't been charged. They didn't reply to phone messages seeking comment.

After Eddie Tipton was convicted of fraud in 2015 for buying the winning ticket for a $16.5 million Iowa jackpot, a tipster called investigators suggesting they revisit the jackpot his brother won a decade prior. Other rigged jackpots emerged. Tommy Tipton, who testified that his brother was innocent at the 2015 trial, resigned his judgeship and was charged.

Bargas called Tommy Tipton's plea deal — in which he'll be allowed to maintain employment as a firearms instructor — too lenient.

"He's a crook, period," he said. "Guys like him need to be punished."

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.

2011

2012

2013

2014

2015

2016

2017

AP, Lottery Post Staff

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8 comments. Last comment 3 years ago by HaveABall.
Page 1 of 1
rcbbuckeye's avatar - Lottery-062.jpg
Texas
United States
Member #55887
October 23, 2007
10367 Posts
Offline

If they hadn't gotten greedy with the $16 million Hot Lotto jackpot, they would have gotten away with the other draws they rigged.

CAN'T WIN IF YOU'RE NOT IN

A DOLLAR AND A DREAM (OR $2)

    Avatar

    United States
    Member #174652
    May 5, 2016
    1093 Posts
    Offline

    If they hadn't gotten greedy with the $16 million Hot Lotto jackpot, they would have gotten away with the other draws they rigged.

    If they simply found another accomplice to buy the 16 Mil ticket then they wouldn't have been caught either.

      dpoly1's avatar - driver
      PA
      United States
      Member #66139
      October 16, 2008
      1989 Posts
      Offline

      The FBI seems to miss a lot of things .............

      dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

       

      Eschew Poverty ........... Vote Conservative!

        Avatar
        Chasing $ Millions.
        White Shores- California
        United States
        Member #136473
        December 12, 2012
        6313 Posts
        Offline

        If they simply found another accomplice to buy the 16 Mil ticket then they wouldn't have been caught either.

        Right- That is why in the movie " Ocean's Eleven"  George* Danny & Brad * Rusty recruit eight others to pull their thing off. Eddie should have watched that movie, he could have learned something.Life does at times imitate art.

         * Voice of Reason *   

         

        People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

          psykomo's avatar - animal shark.jpg

          United States
          Member #4877
          May 30, 2004
          5289 Posts
          Offline

          If they hadn't gotten greedy with the $16 million Hot Lotto jackpot, they would have gotten away with the other draws they rigged.

             Thinking of... "CAVEAT EMPTOR" Thinking of...       $$$$$$$$$$$$$$$$$$$$$$$$

            Avatar

            United States
            Member #174652
            May 5, 2016
            1093 Posts
            Offline

            Right- That is why in the movie " Ocean's Eleven"  George* Danny & Brad * Rusty recruit eight others to pull their thing off. Eddie should have watched that movie, he could have learned something.Life does at times imitate art.

            They use a sibling to claim it in 2006: Put under investigation
            2010 jackpot: They decide to use the hacker himself to buy the ticket.
            They didn't even need to reveal their plans, all they needed to do was ask random people to buy them tickets and to claim any large winnings, then they'd never would have been caught.  I would say this is like a fictional crime drama, but some in-competencies can only truly happen in real life.

              Avatar
              Chasing $ Millions.
              White Shores- California
              United States
              Member #136473
              December 12, 2012
              6313 Posts
              Offline

              They use a sibling to claim it in 2006: Put under investigation
              2010 jackpot: They decide to use the hacker himself to buy the ticket.
              They didn't even need to reveal their plans, all they needed to do was ask random people to buy them tickets and to claim any large winnings, then they'd never would have been caught.  I would say this is like a fictional crime drama, but some in-competencies can only truly happen in real life.

              Sometimes, using siblings is detrimental to your health & safety. Cannot remember where l read or saw this but it goes something like this "When your friends betray you, the only ones left to turn to, are strangers."

              Eddie's friends rolled on him.

               * Voice of Reason *   

               

              People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                HaveABall's avatar - rocket

                United States
                Member #72446
                March 18, 2009
                1307 Posts
                Offline

                Todd, FYI ... in your home page's article link, the first time Tipton is spelled, it has a slight typo. Mail For You

                Everybody else, the more I read about Eddie and Tommy Tipton in this very good article, the more they appear to be very similar!  Both should have been sent to PRISON.  Why doesn't the FBI routinely quickly run an "employment check" before they perform interviews of accused folks?  Ugh.

                Having several millions of dollars in my financial accounts means receiving several valuable services each day!

                Disney