Former lottery computer programmer Eddie Tipton, center, talks with his attorneys Dean Stowers, left, and Nicholas Sarcone, after his sentencing hearing, Tuesday, Aug. 22, 2017. Source: AAP
Former lottery computer programmer Eddie Tipton, center, talks with his attorneys Dean Stowers, left, and Nicholas Sarcone, after his sentencing hearing, Tuesday, Aug. 22, 2017. Source: AAP

Untold story behind $31M lotto scam

IN 2005, an offhand comment from a colleague set the wheels in motion for one of the biggest lotto scams the world has ever seen.

Dungeons and Dragons enthusiast Eddie Tipton was working at the Multi-State Lottery Association (MUSL) in Iowa in the US as a software programmer and head of IT security when he started chatting with colleague Gene Schaller, according to USA Today.

"Hey, did you put your secret numbers in there?" Mr Schaller, the company's accountant, reportedly asked Mr Tipton.

The comment may have been intended as a joke - but it made Mr Tipton realise he could easily write code which would rig the lottery draw in his favour.

Mr Tipton, described by his brother Tommy as "very large" and "kind of lonesome", got to work that very night.

And before his arrest for fraud in 2015, Mr Tipton had scammed his way into a $AU31,340,400 fortune, courtesy of at least five separate lottery wins.

They were achieved thanks to code, which allowed Eddie Tipton to boost his winning odds to 200 to one, compared with the usual odds of five million to one.

The Tipton brothers won five separate lottery draws before their elaborate scheme was foiled. Picture: iStock
The Tipton brothers won five separate lottery draws before their elaborate scheme was foiled. Picture: iStock

Mr Tipton, who was earning around $130,000 per year through his lottery job, said he never intended to rig the system for financial gain, instead insisting he did it because he enjoyed the challenge.

But it turns out Eddie Tipton should never have been working for the MUSL in the first place.

Because in 1982 at the age of 19, he had been involved in a warehouse burglary - and before that, he had been convicted of stealing computer software from a shop.

Mr Tipton disclosed his criminal past to MUSL during his interview, but for some reason it was overlooked, and he went on to become one of America's most senior lottery security officials.

In a further twist, USA Today revealed Eddie Tipton had tried to warn his employer about the risk of fraud when a software error drew the exact same lottery numbers in two separate draws in 2006.

Mr Tipton had even suggested the company hire a second person to oversee the lottery process - a suggestion that would have ended his scam after just one win.

But his concerns were ignored, and for almost 10 years Mr Tipton rigged the system for draws held on May 27, November 23 and December 29 each year.

The scam finally unravelled when Eddie Tipton purchased a ticket himself on December 23, 2010.

Before that date, he had always enlisted other people to buy the tickets for him.

Mr Tipton told his close friend Robert Rhodes that he would be able to claim the prize, and Mr Rhodes waited until just hours before the deadline to claim the $21.5 million prize, more than a year later.

Mr Rhodes tried to claim the money anonymously via attorneys who represented a trust, however, a local law dictated the winner's identity must be made public, and three years later, investigators finally connected Mr Tipton to the fraud.

In January 2015 he was charged with two counts of felony fraud along with money laundering.

Tommy Tipton and Robert Rhodes were also charged in relation to the rigging, although Mr Rhodes was ordered to just six months of home confinement and ordered to pay back $AU534,000 after striking a plea deal which saw him testify against the Tipton brothers.

Tommy Tipton, a former magistrate, spent just 75 days behind bars after winning a $AU740,796 jackpot prize share in a Colorado Lottery drawing on November 23, 2005.

A friend of Tommy Tipton said he had asked him to cash in the winning ticket in exchange for a 10 per cent share of the prize.

Eddie Tipton was sentenced to up to 25 years in jail - but may be eligible for parole in three to four years.

alexis.carey@news.com.au



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