Lottery vendor employee charged in Hot Lotto fraud case

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Lottery vendor employee charged in Hot Lotto fraud case

An information-security director for a lottery vendor has been charged in a bizarre fraud

case in which authorities say he purchased a lottery ticket at a Des Moines gas station in

2010 and enlisted the help of others to try to claim its $14.3 million prize, authorities

announced at a news conference Thursday.

"This truly is one of the strangest situations in the history of lotteries," Iowa Lottery

CEO Terry Rich said at the news conference.

Eddie Raymond Tipton, 51, of Norwalk has been charged with two counts of fraud, which is

punishable by up to five years in prison and a fine of $750 to $7,500. He was arrested

Thursday afternoon and is being held at the Polk County Jail on a $10,000 cash-only bond.

Tipton is accused of buying a lottery ticket at a QuikTrip near Interstate Highway 80 on

Dec. 23, 2010. That ticket ended up being a winner of a $14.3 million prize several days

later.

Tipton has worked at the Multi-State Lottery Association since 2003, most recently as its

director of information security. The Multi-State Lottery Association, based in Urbandale,

"handles the day-to-day functions in multi-state games on behalf of many U.S. lotteries,

including the Iowa Lottery," according to a news release from Iowa Lottery.

Under Iowa law, Tipton's job bars him from playing the lottery or claiming lottery prizes.

Authorities said the charges are not based on the premise that he manipulated the lottery

outcome.

"We're disappointed to learn that someone who has worked as a vendor in the lottery industry

has been charged in this case," Rich said Thursday at a news conference held by the Iowa

Division of Criminal Investigations. "At the same time, we're gratified that the thorough

procedures and protocols we've developed to protect the security and integrity of our games

worked to prevent the payment of a disputed prize."

When asked whether he anticipated more arrests, Dave Jobes, an Iowa Division of Criminal

Investigation assistant director, said authorities are still investigating the case and will

"continue to evaluate information as it comes forward and consult the attorney general's

office as appropriate."

Attempts to contact the Multi-State Lottery Association by phone and email were unsuccessful

late Thursday afternoon.

The ticket Tipton has been accused of buying went unclaimed for almost a year, until Hexham

Investments Trust, a mysterious company incorporated in Belize, tried to claim the prize

through Crawford Shaw, a New York attorney, hours before the ticket was set to expire in

2011.

Lottery officials refused to release the prize because those behind the trust declined to

give their identities, which is required under Iowa law. Shaw asked officials whether Hexham

Investments could claim the money and then turn it over to the state to be given out for

charity. Lottery officials rejected the offer and said the prize winner must accept and

distribute the funds.

Shaw withdrew the claim to the prize in January 2012. At that time, Iowa Lottery officials

asked the Iowa Attorney General's Office and Iowa DCI to investigate.

"We believe this is the largest lottery jackpot ever to be claimed, only to have that claim

later withdrawn," Rich said at Thursday's news conference.

The investigation led authorities to a man in Quebec City, Canada, who was listed on a

Grantor Trust Agreement as Hexham Investments Trust's trustor and president.

That man, who has not been charged, told authorities that two Houston men, with whom he said

he had past professional relationships, asked for his help in claiming the lottery ticket in

October 2011. One of the Houston men is an attorney, and he told the Canada man that he

"represented a client who had a legitimate claim to the lottery but wanted to remain

anonymous," according to the criminal complaint.

Shaw later said he has had a professional relationship with the Houston attorney for more

than 30 years. Shaw told authorities the Houston attorney originally contacted him about the

ticket and sent it to him. Under the direction of the two Houston men, Shaw then completed

the paperwork needed to claim the lottery prize.

In June, DCI officials traveled to Houston to talk to the two men, but they "did not make

themselves available," the complaint said.

DCI officials had a news conference Oct. 9 to ask for the public's help in identifying the

man seen in surveillance video purchasing the winning ticket. On Oct. 13, authorities

received a tip from an out-of-state employee of the Multi-State Lottery Association that

Tipton was the man in the video.

During an interview with a DCI special agent Nov. 7, Tipton said he did not buy the ticket

and he was not in town when it was purchased. He told authorities he was seeing family in

Houston, where he grew up.

Investigators analyzed Tipton's cellphone records, which indicated he was in Des Moines when

the ticket was purchased, according to the arrest report. They also discovered Tipton rented

a silver 2007 Ford Edge on Dec. 22, which matched the vehicle of the buyer of the winning

lottery ticket.

Cellphone records further indicated Tipton had frequent phone conversations with one of the

Houston men, and discovered both attended the University of Houston and worked together at a

Houston-based company, according to the criminal complaint.

In December, DCI special agents interviewed other people who said Tipton's voice and

mannerisms matched those of the man captured on video buying the winning ticket.

Rich applauded the the DCI, attorney general's office and Iowa Lottery's security division

for their work.

"There will always be people who try to beat the system," Rich said. "We have and will

continue to update our security procedures as we identify vulnerabilities to protect against

them."

http://www.desmoinesregister.com/story/news/crime-and-courts/2015/01/15/lottery-vendor-employee-charged-hot-lotto-case/21828771/