Code let lottery vendor predict winning numbers, police say

This May 9, 2011, file photo provided by the Iowa Lottery shows Larry Dawson and his wife, Kathy, claiming their $9.09 million Hot Lotto jackpot in Des Moines. A group of state lotteries is asking a judge to dismiss a lawsuit filed by Dawson who argues he was shortchanged by millions of dollars because the prior drawing was rigged by one of its employees. A lottery vendor for years manipulated drawings to enrich himself and associates by installing software code that allowed him to predict winning numbers on specific days of the year, Iowa investigators alleged Wednesday. AP

IOWA CITY, Iowa, United States — A lottery vendor for years manipulated drawings to enrich himself and associates by installing software code that allowed him to predict winning numbers on specific days of the year, Iowa investigators alleged Wednesday.

Authorities called the newly obtained forensic evidence a breakthrough in the investigation of alleged jackpot-fixing scheme by Eddie Tipton, former security director of the Multi-State Lottery Association. A jury convicted him last year of rigging a $16.5 million jackpot, and he’s awaiting trial on charges linking him to prizes in Colorado, Wisconsin, Oklahoma and Kansas.

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Prosecutors filed charges Wednesday against his younger brother, Tommy Tipton, a former justice of the peace and reserve police officer in Texas. He surrendered to authorities and was released on bond. He’s charged with ongoing criminal conduct related to his role in securing the Colorado and Oklahoma jackpots, which allegedly netted him $1.2 million in cash.

The case has rocked the Multi-State Lottery Association, an Iowa-based nonprofit that administers Powerball and other games for states.

Prosecutors had alleged Eddie Tipton tampered with random number generators that were used by the association and state lotteries to pick jackpot winners. But their case had been based on circumstantial evidence because the generators had been erased or destroyed. Tipton’s defense has cited the lack of evidence as a reason charges should be dismissed.

Documents filed Wednesday show Wisconsin authorities recovered the random number generator used for a $2 million Megabucks jackpot claimed in 2008 by Tipton’s friend, Robert Rhodes. He is fighting extradition from Texas to Iowa, where he faces charges.

A forensic examination found that the generator had code that was installed after the machine had been audited by a security firm that directed the generator not to produce random numbers on three particular days of the year if two other conditions were met. Numbers on those days would be drawn by an algorithm that Tipton could predict, Iowa Division of Criminal Investigation agent Don Smith wrote in an affidavit.

All six prizes linked to Tipton were drawn on either Nov. 23 or Dec. 29 between 2005 and 2011.

Investigators were able to recreate the draws and produce “the very same ‘winning numbers’ from the program that was supposed to produce random numbers,” Smith wrote

Eddie Tipton was charged last year after authorities released surveillance footage of a person buying the winning ticket for a $16.5 million Hot Lotto jackpot and hot dogs at a Des Moines gas station in 2010. Colleagues identified the buyer as Tipton, a computer whiz who had unparalleled access to lottery software.

Tommy Tipton, 51, testified at his brother’s trial, saying the buyer looked nothing like his sibling. Besides, he said, Eddie doesn’t like hot dogs.

But months later, Tommy Tipton resigned his elected judicial position in Flatonia, Texas, after his brother was convicted and his name surfaced in the case.

The complaint filed Wednesday says that Tommy Tipton came under scrutiny in 2006, when Texas investigators received a tip that the judge had $500,000 in cash in consecutively marked bills.

He told them he got the money after winning a share of a $4.5 million Colorado Lotto jackpot, saying he recruited a friend to claim the $569,000 cash payout because he didn’t want his wife to know about it while they were considering divorce.

Investigators didn’t know then that Tipton’s brother wrote and installed the program that Colorado Lottery officials used to draw the numbers.

In 2011, Tommy Tipton purchased numbers that would win a $1.2 million Hot Lotto jackpot while traveling in Oklahoma, the complaint said. A relative of one of Tipton’s friends claimed the $644,000 prize, which was returned to him.

Tipton’s attorney, Randy Schaffer, said he was reviewing the allegations and didn’t want to address their merits. But he said he “took the high road” by surrendering rather than fighting extradition.

“This is a guy who, until a few months ago, was a judge,” he said. “He’s going to hopefully … be professional and responsible in his dealings.”