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June 29, 2017

Tipton Brothers Plead Guilty in Iowa to Lottery Rigging Scheme

Eddie & Tommy Tipton face incarceration and millions in restitution through multistate plea agreement

DES MOINES – Former Multistate Lottery Association (MUSL) security director Eddie Tipton pleaded guilty today in Polk County District Court to the felony charge of ongoing criminal conduct for his role in a multimillion-dollar lottery rigging scheme involving seven winning lottery tickets in five states.

Tipton, 54, who admitted in court today to manipulating computer coding used to generate winning lottery numbers, pleaded guilty to the Class B felony charge and faces up to 25 years in prison.

Tipton’s brother, Tommy Tipton, 53, pleaded guilty to conspiracy to commit theft, a Class D felony, and agreed to a state-recommended two and-a-half-month jail sentence on a serious misdemeanor theft charge.

The agreement with both brothers, who live in Flatonia, Texas, includes the states of Iowa, Wisconsin, Colorado, Oklahoma, Texas and Kansas.

Earlier this month, Eddie Tipton pleaded guilty in Wisconsin to theft by fraud and a computer crime charge for defrauding the Wisconsin Lottery in 2007. Tipton and an accomplice collected more than $783,000 for a Wisconsin Megabucks jackpot.

Investigation Began with $14.3M Hot Lotto Jackpot Claim
Tipton’s criminal case began in Iowa with a suspicious claim for the December 29, 2010 $14.3 million Hot Lotto jackpot. Iowa Lottery security officials never paid the jackpot amount after they questioned the legitimacy of the claim.

The Iowa Division of Criminal Investigation launched an investigation, in conjunction with the Office of the Attorney General’s Area Prosecutions Division, and security officials from the Iowa Lottery and MUSL. The probe eventually led authorities to Eddie Tipton, his brother, Tommy, other associates, and jackpots in other states, beginning in Colorado in 2005. As MUSL security director, Eddie Tipton designed, programmed and maintained software for computerized random number generators used to select winning lottery numbers in many states across the country.

Eddie Tipton Plea Agreement
With Tipton’s guilty plea to ongoing criminal conduct, the state agreed to dismiss a money laundering charge.

In accepting the plea, Eddie Tipton agreed to face up to 25 years in prison in Iowa and up to five and-a-half years in Wisconsin. Both states agreed to recommend that Tipton be able to serve both sentences simultaneously in Iowa.

Tommy Tipton Plea Agreement & Sentence
In exchange for Tommy Tipton’s guilty plea to the felony charge of conspiracy to commit theft and a misdemeanor theft charge, the state agreed to drop the felony charge of ongoing criminal conduct.

District Court Judge Brad McCall sentenced Tipton to a state-recommended 75-day jail sentence on the misdemeanor charge, and a deferred judgment on the felony charge. Tipton will serve his sentence at the Goliad County jail in Goliad, Texas.

Eddie Tipton’s Appeal
In 2015 a Polk County jury convicted Eddie Tipton of two counts of felony fraud—one charge for tampering with lottery equipment and one charge for fraudulently trying to redeem the winning ticket. A judge sentenced him to ten years in prison.

Tipton appealed both convictions. Last year, the Iowa Court of Appeals overturned the fraudulent attempted ticket redemption conviction, but affirmed the tampering conviction. Last week, the Iowa Supreme Court sent the attempted fraudulent redemption case back to District Court, and overturned the tampering conviction based on a statute of limitations issue.

Prior to last week’s ruling, the state had agreed to dismiss the fraudulent redemption charge to conclude litigation tied to Tipton’s criminal cases.

Also as part of the agreement, state prosecutors in Colorado, Kansas, Oklahoma, and Texas agree not to charge the Tipton brothers.

Robert Rhodes
Robert C. Rhodes II, 49, of Sugar Land, Texas, a former close friend and business partner of Eddie Tipton’s who attempted to redeem the $14.3 million Hot Lotto jackpot that Tipton fixed, previously pleaded guilty in Iowa to felony fraud, which is punishable by up to five years in prison. Rhodes agreed to cooperate with Iowa authorities by testifying against the Tiptons. Rhodes has not yet been sentenced.

Restitution & Repayment
The agreement requires the Tiptons to repay illegally collected lottery proceeds with interest. Eddie Tipton must repay more than $2.2 million for seven winning lottery tickets in five states. Tommy Tipton agrees to pay more than $800,000, which is joint and several with Eddie Tipton’s restitution—meaning money owed to the Oklahoma Lottery and a portion of money owed to the Colorado Lottery can be repaid by either defendant.

The remainder of the difference between the jackpots’ face value and payouts was previously withheld in taxes; in addition, Rhodes has already repaid one-half of the value of the losses to Wisconsin’s lottery.

Tiptons Agree to Cooperate
The multistate agreement requires both Tiptons to provide truthful testimony to authorities regarding the fixing and claiming of lottery tickets, and cooperate in any additional related proceedings.

Sentencing
Eddie Tipton’s sentencing hearing in Polk County has not been set.

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