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Lottery losers could get paid after lottery scam lawsuit settles for $4.3 million

Jul 22, 2019, 6:43 pm

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A class-action lawsuit to benefit potentially millions of owners of losing tickets linked to the largest lottery scam in U.S. history has been settled for $4.3 million, according to a statement sent by an attorney in the case.

The settlement will refund the cost of tickets purchased in nine specific drawings dates for games sold in 33 states, the Virgin Islands, Puerto Rico and Washington, D.C., between Nov. 23, 2005 and May 23, 2013. A settlement website will be set up to assist people who seek refunds.

Proof of purchase — primarily, copies of losing tickets — is not required to submit a claim for up to 10 non-winning tickets but settlement administrators have the right to request verification to prevent fraud. The cash refund will vary based on value of the ticket, whether someone has proof of purchase and the number of valid claims submitted, the Register was told by attorneys in the case. Online court documents were not filed as of Monday at noon.

The settlement is a coda to the decade-long saga springing from a computer-assisted scam Eddie Tipton, the former IT director for the Multi-State Lottery Association in Urbandale, ran with the national lottery. Tipton added a secret code to "random" number-generating computer software in 2005 that allowed him to narrow drawing winning odds in multiple games from as great as 5 million to 1 down to 200 to 1.

Tipton's scam went undetected for years and the code was replicated in lottery computer software across the nation. He hijacked at least five winning drawings totaling more than $24 million in prizes in Colorado, Wisconsin, Iowa, Kansas and Oklahoma, court records show.

In 2017, he was sentenced in 2017 to up to 25 years in prison.

The lottery association — commonly referenced as MUSL — is an umbrella organization that is owned and operated by 36-member lotteries, including the Iowa Lottery. Its executives previously have said they no longer use computer programs Tipton designed.

Iowa man who spent $63 on tickets filed lawsuit

Burlington resident Dale Culler is among at least three people who have filed lawsuits naming MUSL in connection with the rigged games. Polk County District Court Judge Michael Huppert in January granted Culler's effort to seek damages on behalf of potentially hundreds of thousands of players.

MUSL has denied and continues to deny any gaming wrongdoing, according to the settlement statement sent to the Register by Blake Hanson, an attorney for Culler. The association chose to settle based on expected litigation expenses and uncertain risks should the lawsuit go to trial, according to information shared with the Register.

Court documents show Culler spent $63 to purchase tickets in two games he believes were affected by Tipton's scam. MUSL has agreed not to oppose paying 30 percent of the settlement — $1.29 million — for Culler's legal fees as well as a $20,000 "incentive award" for spearheading the lawsuit. Those payments will be deducted from the $4.3 million available for refunds.

The class-action lawsuit was initially linked to at least 7.2 million lottery tickets but some of the games were removed from the list because they did not use Tipton's software. The settlement agreements do not indicate how many losing tickets remain eligible for refunds.

The statement issued by Hanson on Monday offered no further comment other than: "MUSL remains committed to the integrity and fairness of the multi-jurisdictional and state lottery games that its members offer."

Both parties declined further comment.

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

2019

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