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Investigation finds lottery scamming Tipton brothers have repaid virtually nothing

Dec 27, 2018, 8:52 am

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Insider BuzzInsider Buzz: Investigation finds lottery scamming Tipton brothers have repaid virtually nothingRating:

By Jason Clayworth and Rachel Denny Clow

Two brothers who spearheaded the biggest lottery scam in U.S. history have repaid less than $1,400 in restitution — despite owning property worth nearly $2 million, a Des Moines Register and Corpus Christi Caller Times investigation has found.

Between them, Eddie and Tommy Tipton have admitted rigging winning drawings in at least five states, including Iowa, worth a combined $24 million.

But they have barely made a dent in the more than $2.4 million they were ordered to pay in restitution, despite holding more than a half-dozen properties in Texas that are worth nearly as much as they owe, according to records obtained by the Register.

At their current rate of repayment, Oklahoma — one of the five state lotteries the brothers scammed — estimates it will be fully reimbursed in 190 years.

"How do these guys slip through the loop every damn time? They're like Teflon," said Allen Weise, a resident of Flatonia, Texas, who provided information about the brothers and their properties to Iowa prosecutors before their 2017 convictions.

A house with a pool in Texas

Eddie Tipton — the mastermind of the "random number" scam and former security chief of the Urbandale, Iowa-headquartered Multi-State Lottery Association — remains in prison serving a 2017 sentence that could last up to 25 years. 

His brother, Tommy Tipton — a former justice of the peace from Flatonia, Texas, who admitted helping his brother hijack the world's largest lottery network — served a 75-day jail sentence and has been off probation for 15 months.

Using "random" numbers generated from a computer program designed by his brother at the Multi-State Lottery Association, Tommy Tipton acknowledged he helped to claim prizes in at least two states: Colorado and Oklahoma.

Eddie Tipton was ordered to pay $1,653,874 in restitution, while Tommy Tipton was ordered to pay $804,095.

From prison, Eddie Tipton has paid almost $800, while his brother has repaid $587, court records show.

Yet, the brothers retain full or partial ownership in more than $1.8 million of property in Fayette County, Texas. 

Since Tommy Tipton's Sept. 15, 2017, release from jail and probation he has:

  • Sold at least two properties with a combined market value of more than $635,000.
  • Continued to own his longtime home with a pool valued at almost $780,000.
  • Remained the sole owner of at least five business or investment properties that have a combined market value of $572,950.
  • Continued as a joint owner with his still-imprisoned brother in at least two properties and mineral rights on a third valued at $105,420.

So far, no state has pursued the legal actions outlined in the Tiptons' plea deals that entitle the defrauded lotteries to lay claim to the brothers' property or to property the Tiptons placed in the names of associates and family members.

When the Register contacted Tommy Tipton, he declined to discuss his current work, income or properties. He said in that brief interview that his brother, Eddie, "ain't never done anything wrong in his life" and vowed the two would once again work together.

"It's hard. I'm a single dad raising three kids on a very limited income with lots of bills, and when Eddie gets home he probably will create something," Tommy Tipton said. "He's a smart, intelligent guy. Hopefully, the future will be better and we'll get all that stuff paid back."

Iowa collection efforts fail

In 2007, Eddie Tipton built a roughly 5,000-square-foot home at 2201 Coolidge St. in Norwalk.

That was two years after he embedded fraudulent computer code into random-number generating software distributed and used by several state lottery games.

The "random number" fraud allowed him to accurately predict at least five winning drawings that totaled more than $24 million in Iowa, Oklahoma, Colorado, Kansas and Wisconsin.

The multi-year scheme ultimately unraveled after a Des Moines convenience store video captured Eddie Tipton in 2010 purchasing a $16.5 million ticket. Iowa Lottery officials refused to cash that ticket after some of Tipton's associates tried on multiple occasions to anonymously redeem the ticket.

After years spent fighting criminal charges, Eddie Tipton pleaded guilty to "ongoing criminal conduct" in 2017.

Iowa prosecutors were aware of his Norwalk home that contained a movie theater and gym, overlooked a pond and sat on nearly 23 acres that he sold in July 2015 for $590,000.

But at the time Tipton sold his home, prosecutors only knew about the Iowa Hot Lotto ticket, which state officials had refused to cash.

In late 2015, prosecutors learned that Tipton had rigged winning lottery drawings in other states.

As a result, Iowa Attorney General Tom Miller's office in March 2016 attempted to gain access to Tipton's Norwalk home; office equipment; multiple vehicles; along with his checking, savings and futures trading accounts.

Eddie Tipton argued in court filings that the lien was unconstitutional because it would interfere with his constitutional right to counsel and result in a deprivation of property without due process. Polk County District Court Judge Brad McCall agreed and dismissed the state's attempt to place liens against the property.

Some of the money Tipton scammed in rigged drawings was acquired a decade before his arrest, records show.

Many banks and financial institutions are not required to maintain records that old, which made it difficult for prosecutors to directly link Eddie Tipton's assets with the winnings, said Rob Sand, a former attorney for the Iowa Attorney General's Office who helped prosecute the Tipton cases.

"Unless we could very specifically and very clearly show that the money he was paying for them (properties) with was stolen money, we couldn't do anything about it," said Sand, who in November was elected as Iowa's state auditor.

Other states stymied

It's "absurd" that states and their lotteries have not taken further action to claim restitution from the Tiptons, Judge Ed Janecka of Fayette County, Texas, told the Register.

Janecka said that in 2015 he successfully urged Tommy Tipton to resign from his elected judicial position because of Tipton's involvement in the lottery fraud.

"This is just wrong, and the states need to come back with a vengeance," Janecka said.

The Register contacted the lotteries and attorney general offices in each state where Tommy Tipton or Eddie Tipton owe restitution: Oklahoma, Colorado, Kansas and Wisconsin.

Conversation is ongoing about which state should take the lead on actions that could result in seizing property, said Jay Finks, a spokesman for the Oklahoma Lottery. Some of the games fraudulently won in the scandal were part of multi-state networks, he noted.

"It kind of creates a layer of complication we're trying to navigate," Finks said.

Sand said the land records the Register obtained should alert states to take further action.

"Our law enforcement team in Iowa did not work hard for three years to now see other states make a minimum effort to collect," Sand said. "Hopefully this is a wake-up call."

What the Tipton brothers owe

Here is what Eddie and Tommy Tipton owe and each state's response to the Register's inquiries.

In Oklahoma and Colorado, portions of the restitution are considered joint payments owed by both brothers, instead of individually. The amounts listed for those states are total amounts owed.

Oklahoma

  • Amount ordered to be repaid: $644,478 by Eddie and Tommy Tipton
  • State response: Conversation continues about which states should take the lead on actions that could result in seizing property, said Jay Finks, a spokesman for the Oklahoma Lottery.

Colorado

  • Amount ordered to be repaid: $1,137,980 by Eddie and Tommy Tipton
  • State response: The state received slightly less than $400 of the restitution, said Annie Skinner of the Colorado Attorney General's Office. The office did not respond to questions about why they haven't tried to seize the Tiptons' properties.

Kansas

  • Amount ordered to be repaid: $30,805.60 by Eddie Tipton
  • State response: The state has received no payment, said Jennifer Montgomery, a spokeswoman for the Kansas Attorney General's Office. Iowa records indicate Eddie Tipton has paid the state $14.89. Montgomery did not respond to questions about why the state hasn't tried to seize properties.

Wisconsin

  • Amount ordered to be repaid: $409,600 by Eddie Tipton
  • State response: The state has received $198.12, said Patricia Mayers, a spokeswoman for the Wisconsin Lottery. The state did not respond to interview requests to the lottery and the state's attorney general about why haven't sought further court action.

What the Tipton brothers own

Among Eddie and Tommy Tipton's properties and recent transactions identified in public records, the Register found:

  • HOME WITH A POOL: Tommy Tipton owns his longtime home with a pool in Flatonia, Texas, with a market value of $779,460. He and his now ex-wife, Pamela, in May 2013 transferred that property to a trust — a financial tool sometimes used to protect property from creditors — that remains in their names. The transfer occurred 15 months after the Iowa Division of Criminal Investigation and the Iowa Attorney General's Office announced they had launched an investigation into the lottery scam.
  • BUSINESS OR INVESTMENT PROPERTIES: Tommy Tipton owns at least five other properties in Fayette County, Texas, with a combined market value of $572,950. The most valuable parcel includes 100 acres of native pastureland with a market value of almost $401,000; others include a gas station, a house, a mobile home and a commercial building.
  • EDDIE'S HOME OWNERSHIP FROM PRISON: Eddie Tipton owns a 55-acre parcel with a home near Flatonia, Texas, with a current market value of $365,380.
  • JOINT OWNERSHIP: Tommy and Eddie Tipton jointly own two properties and mineral rights on a third valued at $105,420 in Fayette County, Texas. The most valuable property is 13 acres of land appraised at $80,750; the other property includes a mini-storage commercial site.
  • RECENTLY SOLD: Tommy Tipton sold at least two Fayette County, Texas, properties since his release from jail. In January he sold 102 acres of pasture, and in March he sold a 5.7-acre vacant residential plot. The market values of the properties are listed as $580,730 and $54,490, respectively.
  • RECENTLY PURCHASED: On March 25, 11 days after Tommy Tipton sold the 5.7-acre parcel, a home assessed at $36,240 was deeded to his daughter. The mailing address for the property remains the same address as Tommy Tipton's pool home. She did not return requests for an interview.

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

2018

Des Moines Register

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15 comments. Last comment 2 years ago by KY Floyd.
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Avatar

Zimbabwe
Member #21
December 7, 2001
4530 Posts
Offline
Posted: December 27, 2018, 9:14 am - IP Logged

Huh, funny.

If this was Taxes, they'd be all over it.

.

    Avatar
    Simpsonville
    United States
    Member #163184
    January 22, 2015
    2231 Posts
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    Posted: December 27, 2018, 11:25 am - IP Logged

    I'm sure the Federal laws of repossession are different for lottery crimes.  Too bad they weren't treated like drug king pins/money launderers.  That way their property and the like would be gone from their grubby little hands.  Obviously this isn't the case.  Well 25 years might make the big guy think about his crimes.

      music*'s avatar - DiscoBallGlowing
      Fresno, California
      United States
      Member #157851
      August 2, 2014
      3927 Posts
      Offline
      Posted: December 27, 2018, 11:30 am - IP Logged

      What would the next steps be after collecting this money? Who would have it and what would they do with it? Who is entitled to these funds? 

      No Pity!for the Tipton brothers.

       "We are all in this together!" 

        Avatar
        Simpsonville
        United States
        Member #163184
        January 22, 2015
        2231 Posts
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        Posted: December 27, 2018, 11:40 am - IP Logged

        What would the next steps be after collecting this money? Who would have it and what would they do with it? Who is entitled to these funds? 

        No Pity!for the Tipton brothers.

        One thing for sure, music*, the lottery folks certainly wouldn't do the right thing and have a special one time drawing to give the funds to the players.

          CDanaT's avatar - Nolz june15.jpg
          Central TN
          United States
          Member #121189
          January 4, 2012
          4672 Posts
          Offline
          Posted: December 27, 2018, 12:04 pm - IP Logged

          What      a      MESS !!!!!!!   All from people wanting the RNG & hiring an unethical person with a previous background of wrongdoing.... I have very limited sympathy for the folks in charge. You made a conscientious choice to hire Eddie Tipton Chair  How did that work out for you idiots ?

          RNG ought to stand for Rigged Not Genuine

          I truly feel sorry for the participants who paid in over those years, only to have opportunities completely squashed by 1 dirtbag and his associate(s)

          But yet, the RNG continues on...... Amazing   Bash   

          Remove the potential of a repeat and put the RNG in the graveyard.

          Integrity: There is just no substitute.

            TheMeatman2005's avatar - lightening
            Brooklyn, NY
            United States
            Member #169719
            October 29, 2015
            1485 Posts
            Offline
            Posted: December 27, 2018, 1:03 pm - IP Logged

            What would the next steps be after collecting this money? Who would have it and what would they do with it? Who is entitled to these funds? 

            No Pity!for the Tipton brothers.

            If my memory is correct, there is a law suit pending with the winner of the jackpot following the rigged one.

            He is suing for the money that the Tiptons won by rigging the drawing. He claimed that if they didn't win by cheating, it would have been included in his jackpot he won.

            I think he should get that money.

            The Meatman 🥩🍗🍔🍖🍤🌭

            “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

            Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

              duckman's avatar - ducklogodrake64x64
              Jacksonville Florida
              United States
              Member #23017
              October 6, 2005
              1082 Posts
              Offline
              Posted: December 27, 2018, 3:34 pm - IP Logged

              Huh, funny.

              If this was Taxes, they'd be all over it.

              Actually, money gained through illegal means is taxable income and I am betting they didn't report it on their tax forms. Hoping the IRS is following up on this.

                Avatar
                Chasing $ Millions.
                White Shores- California
                United States
                Member #136473
                December 12, 2012
                6275 Posts
                Offline
                Posted: December 27, 2018, 5:57 pm - IP Logged

                If my memory is correct, there is a law suit pending with the winner of the jackpot following the rigged one.

                He is suing for the money that the Tiptons won by rigging the drawing. He claimed that if they didn't win by cheating, it would have been included in his jackpot he won.

                I think he should get that money.

                You are correct, that lawsuit still hangs out there. 

                Btw MM- you wouldn't happen to be the winner  of last night's PB jackpot,would you? As they say: Come, satisfy the curiosity!

                 * 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
                  1303 Posts
                  Offline
                  Posted: December 27, 2018, 6:23 pm - IP Logged

                  Where oh where is a long,  incurable case of spontaneous syphilis for each of these two highly destructive, unpaying, and unrepentant brothers?

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

                  Disney

                    Tony Numbers's avatar - Lottery-022.jpg
                    Bronx ny
                    United States
                    Member #158512
                    August 25, 2014
                    446 Posts
                    Offline
                    Posted: December 27, 2018, 7:17 pm - IP Logged

                    CRIME PAYS

                      TheMeatman2005's avatar - lightening
                      Brooklyn, NY
                      United States
                      Member #169719
                      October 29, 2015
                      1485 Posts
                      Offline
                      Posted: December 27, 2018, 7:33 pm - IP Logged

                      You are correct, that lawsuit still hangs out there. 

                      Btw MM- you wouldn't happen to be the winner  of last night's PB jackpot,would you? As they say: Come, satisfy the curiosity!

                      Sorry noise. It's not me! Unhappy

                      The Meatman 🥩🍗🍔🍖🍤🌭

                      “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

                      Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

                        oate's avatar - AS5hcja

                        United States
                        Member #193172
                        October 22, 2018
                        491 Posts
                        Offline
                        Posted: December 27, 2018, 8:31 pm - IP Logged

                        I think these two are much better at hiding assets than anyone realizes.

                        Only my hairdresser knows for sure.

                          Coin Toss's avatar - shape barbed.jpg
                          100
                          Zeta Reticuli Star System
                          United States
                          Member #30469
                          January 17, 2006
                          11490 Posts
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                          Posted: December 28, 2018, 1:10 am - IP Logged

                          Too bad there's no insider trading type laws for situations like this and a lottery commission equivalent of the SEC.

                          This is actually 'insider trading' on steroids.......not only did they act on 'insider information' they created it.

                          Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 

                          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.

                            Avatar
                            Chasing $ Millions.
                            White Shores- California
                            United States
                            Member #136473
                            December 12, 2012
                            6275 Posts
                            Offline
                            Posted: December 28, 2018, 10:30 am - IP Logged

                            Sorry noise. It's not me! Unhappy

                            Next time big guy.Cool

                             * Voice of Reason *   

                             

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