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Iowa court reverses part of Tipton's lottery fraud conviction

Jul 28, 2016, 8:23 am

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An Iowa appeals court on Wednesday upheld a former lottery employee's conviction for rigging the computer system to generate the winning ticket in a $16 million jackpot, but reversed a conviction for attempting to cash in on the ticket.

The conviction stems from Eddie Tipton's work for the Iowa-based Multi-State Lottery Association, or MSLA, which produces computers that generate random numbers for lotteries in multiple states. As an employee of the association, Tipton was barred from playing the lottery.

But in December of 2010, the winning ticket for a $16 million dollar Hot Lotto jackpot was drawn in Iowa, according to an overview of the case written by Iowa Court of Appeals Judge Anuradha Vaitheswaran. A Canadian man and, later an attorney for an anonymous client, both attempted to redeem the ticket, but they were turned away because they did not look like the man caught in a surveillance video of the purchase.

Four years later, the state released the video to the public in hopes of identifying the purchaser. Another MSLA employee recognized Tipton.

The state charged Tipton with two felonies: passing or attempting to redeem a lottery ticket with the specific intent to defraud, and tampering with lottery equipment with the intent to influence winnings.

A jury convicted Tipton on both charges in early 2015.

Tipton appealed, arguing that the state's charges were barred by the three-year statute of limitations. Tipton purchased the ticket in 2010, but did not face charges for it until five years later.

The state claimed that the statute of limitations did not apply to the charge of attempting to redeem the lottery ticket because the crime was "ongoing," but the appeals court didn't buy it.

"[T]he purchase [of the winning ticket] itself was not a crime," Vaitheswaran wrote for a three-judge panel in her 16-page opinion. "Certainly, the inference could be drawn that the ticket was passed to someone, because at least two people attempted to redeem it. But the minutes do not disclose when, if at all, Tipton acted after the ticket was purchased."

The judge added that the latest date he could have acted was Dec. 29, 2011, the last date to redeem the ticket. After that, the state took custody of it.
However, the tampering charge qualified for an extension of the statute of limitations because the state did not suspect the crime until the video of Tipton purchasing the winning ticket was released in 2014.

Whereas the state suspected some kind of fraud as soon as someone tried to redeem the ticket, "the State could not have known the fraud included tampering with lottery equipment until Tipton was identified as the purchaser," Vaitheswaran said.

The appeals court also found sufficient evidence to support the tampering conviction. While Tipton worked for the MSLA from 2003 up until his arrest in 2015, he was in charge of information technology, had a hand in writing the number-generating software and participated in drafting the computer's security policies.

Surveillance footage showed Tipton entering the "draw room," which housed the two number-generating computers, one month before the winning numbers were drawn, allegedly to update the dates on the computers. The next month, both computers were wiped, according to court records.

"The jury reasonably could have inferred from Tipton's position in the organization and his knowledge of security protocols that he was aware of this upcoming event when he entered the draw room in November 2010," Vaitheswaran wrote.

In addition, the ticket's first attempted claimant chose to fill in the winning numbers himself rather than accept random, computer-generated numbers. He also submitted two sets of numbers, since the winning string could come from either of the computers.

"Based on this circumstantial evidence, the jury reasonably could have found that Tipton tampered with the random number generator computers with the intent to influence the lottery winnings," Vaitheswaran concluded.

The case will now go back to the district court for sentencing on the remaining charge. The court initially sentenced Tipton to 10 years in prison, but he has been free while his appeal was pending, according to an Associated Press report.

Neither the Iowa Attorney General's Office, which prosecuted the case, nor Tipton's attorney Dean Stowers responded to voicemail messages requesting comment Wednesday.

However, according to the AP, both Stowers and the Iowa Attorney General's Office are considering appealing to the Iowa Supreme Court.

In February, Tipton will face a second trial in Iowa on charges related to his alleged manipulation of lottery computers for Colorado, Kansas, Oklahoma and Wisconsin jackpots.

Iowa's $16 million jackpot was never redeemed because lottery officials were unable to verify the authenticity of the winning tickets.

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.







Thanks to ckrakowski for the tip.

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