Hot Lotto

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Speaker 5 Well, some very exciting news happened here in Iowa last night. A $16.5 million winning hot lotto ticket was sold here in the Des Moines area.

Speaker 6 On December 23rd, 2010, a $16.5 million hot lotto ticket was sold at a quick trip gas station on the northeast side of Des Moines, Iowa.

Speaker 6 The buyer of the ticket had matched all five numbers, plus the hot lotto number.

Speaker 6 The ticket read 3, 12, 16, 26, 33, and hotball, 11.

Speaker 6 The news made local headlines all throughout the state after the numbers were drawn six days later. The Muscatine Journal's headline read, someone is suddenly a millionaire.

Speaker 6 But then, no one showed up with the winning ticket.

Speaker 4 The Iowa Lottery was out there saying on a regular basis, hey, folks, check your ticket. Somebody's got 16 million bucks.
And it was sort of this mystery. Why hasn't anyone come forward?

Speaker 6 This is Rob Sand, Iowa State Auditor.

Speaker 4 So every few months,

Speaker 4 Terry Rich, the head of the Iowa Lottery, would have a press conference and remind people, hey, we owe somebody $16 million. Check your tickets.
You know, we want to pay this money out.

Speaker 4 And no one came and no one came and no one came.

Speaker 6 Actually, some people did come forward.

Speaker 4 They would try to say, hey, that was my ticket. I lost it.
Okay.

Speaker 4 Can you do any better than that? No.

Speaker 4 That was my friend's ticket. That was my brother's ticket.

Speaker 4 So-and-so bought that and they died, but I'm just sure it was theirs. Those are their lucky numbers.
They played those numbers all the time. All kinds of stuff like that.

Speaker 6 Someone called in to say that his friend, who was a religious hot lotto player, had just died in a car accident. He asked whether he should go to the junkyard to look through the wrecked car.

Speaker 6 But each time someone called in, the lottery officials would ask for the 15-digit serial number on the back of the ticket. And each time, those numbers didn't match the winning ticket.

Speaker 4 Privately, one thing that the

Speaker 4 Iowa lottery had that the public didn't know the lottery had was a video of the purchaser.

Speaker 4 So the Iowa Lottery is looking at this video and we know, okay, here's a very heavy-set heavyset man in a big leather jacket with a very low voice who's walking up to claim these tickets.

Speaker 4 So Phoebe, if you had called in and said, hey, it's me, Phoebe, I bought that ticket. We would have said, no, you didn't.

Speaker 4 And you might have been confused as to how we knew you didn't, but we could use that to screen people who were trying to get that $16 million, but who we knew hadn't purchased the ticket.

Speaker 4 Now, of course, if we made that video public, It gets a lot harder to use it as a screen because then everybody nudges their heavyset middle-aged friend and says, hey, that could be you on that video.

Speaker 4 You should call them and tell them it's you.

Speaker 4 And so we had held that back.

Speaker 6 By early November, almost 11 months had passed with no winner. The ticket was only valid through the end of December.

Speaker 6 Mary Neubauer, who works for Iowa's Lottery, said, I was convinced it would never be claimed.

Speaker 6 And then she answered a call that came into the lottery office. It was from a man named Philip Johnston, and he had the correct 15-digit serial number.

Speaker 4 So finally, about a month to go before the deadline runs, somebody calls in who knows the serial number. Now Mary checks the other piece.

Speaker 4 She's talking to the man and very wisely asks him, whoa, that must have been a memorable day. You won $16 million.
What were you wearing when you bought that ticket?

Speaker 4 And this man from Canada, Philip Johnston says, well, probably what I normally wear, a sports coat and flannel pants.

Speaker 4 Of course, Mary has seen the video of the actual purchaser. The actual purchaser, again, is a very heavyset man, middle-aged, wearing a leather jacket.

Speaker 4 And Philip Johnson is describing himself to be not that man. So immediately there's some suspicion there about what's going on.

Speaker 6 About a month later, the man called a second time. This time he told Mary that he had, quote, fibbed the first time.

Speaker 6 He said he was actually a lawyer calling to help his client claim the ticket, but he couldn't disclose the name of his client.

Speaker 6 He proposed various ways his client could receive the money, but Mary told him that according to Iowa lottery rules, a winner has to identify themselves.

Speaker 6 Philip Johnston stopped calling after that.

Speaker 6 And then on the day the ticket was set to expire, about two hours before the end of the claim period, two attorneys showed up in person at the Iowa lottery office with the actual winning ticket in hand.

Speaker 6 They said the ticket belonged to their client, a man in New York named Crawford Shaw.

Speaker 6 Crawford Shaw requested that the money be paid to Hexham Investments, a trust in Belize.

Speaker 4 That is owned by none other than Philip Johnston.

Speaker 6 So what happens?

Speaker 4 So the Iowa Lottery says this has just gone from weird to double weird. We know this Philip Johnston guy isn't the actual purchaser.

Speaker 4 And we have our due diligence to do. So, hey, you need to tell us who bought this ticket and everyone who possessed it along the way, or we're not going to pay.

Speaker 4 They did not get a favorable response. The response was, pay us, or we'll sue you.
And then the Iowa Lottery to their credit said, go right ahead, sue us.

Speaker 4 Of course, the Iowa Lottery knew

Speaker 4 if this plaintiff files a lawsuit, they get to conduct discovery, which means they get to kind of find out who actually had possessed this ticket, or at least find out as much as the people trying to claim it knew.

Speaker 6 But Crawford Shaw didn't sue, he just walked away.

Speaker 4 Rather than disclosing the actual purchaser, he decided it was worth $16 million to maintain that person's privacy. That is interesting.

Speaker 4 Ladies and gentlemen, the hot lotto jackpot claim has been withdrawn. We received an official withdrawal

Speaker 4 note from the lawyers here in Des Moines that represent the Hexham Investment Trust

Speaker 4 today.

Speaker 4 So I guess I'll just like to jump right into question and answers and let you ask whatever. Harry, pardon my French, but what the hell?

Speaker 6 I'm Phoebe Judge. This is criminal.

Speaker 6 We'll be right back.

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Speaker 6 The mystery of the unclaimed $16.5 million hot lotto ticket remained unsolved for more than two years.

Speaker 6 The Iowa Division of Criminal Investigation had looked into it. The Attorney General's Office had looked into it, but no one had made much progress.

Speaker 6 And then in 2014, Rob Sand, who was working as the Assistant Attorney General in Iowa, was handed the case file.

Speaker 6 Happy birthday, his boss said.

Speaker 4 It was this

Speaker 4 curious little

Speaker 4 essentially dead end of a investigation with a $16 million lottery ticket.

Speaker 6 It wasn't even clear that a crime had been committed. Rob didn't know how to move forward.
But included in the case materials, he found a DVD.

Speaker 6 the security video from 2010.

Speaker 6 He watched it over and over.

Speaker 6 There are two camera angles. One, taken at some distance from the register.
You can't make out the person's face at all from this angle. Just what he's wearing.
Jeans and a leather jacket.

Speaker 6 And his build. The way he moves.

Speaker 6 The second angle is closer, shot from above and behind the register.

Speaker 6 The man has what looks like a sweatshirt hood pulled up over his head and a baseball cap underneath it. He's looking down most of the the time, even when he hands the clerk the money.

Speaker 6 So no matter how many times Rob Sand watched the video, he just couldn't see much.

Speaker 6 The video had been kept from the public, but Rob Sand started to think that maybe someone out there wouldn't need to see the man's face to know who he was.

Speaker 4 The big thing that we had left to do was releasing the video of the purchaser and asking the public for assistance.

Speaker 4 To make that video public and to say to people, hey, if you think you know who this is, we want to talk to them.

Speaker 6 They put out a news release, and news stations broadcast the video across the country.

Speaker 9 Oh, there's no mistaking Eddie's voice.

Speaker 6 This is Ed Stefan. He spent years working at the Multi-State Lottery Association.
It's called Muscle for short.

Speaker 6 And when he heard the voice in the video, he knew exactly who it was. Eddie Tipton, his colleague and the head of IT security for the Multi-State Lottery Association.

Speaker 6 Ed Stefan wasn't the only person who recognized Eddie Tipton on the video clip.

Speaker 4 In fact, Noel, one of his coworkers, walked into the office one day, walked into the muscle office. This is right after we released the video.

Speaker 4 And one of her coworkers says, hey, Noelle, come over here. And hands Noel

Speaker 4 headphones and says, put these on, and then clicks a button. Noelle is just standing there, can't see the computer screen that she's looking at.

Speaker 4 And this person starts playing the video of the purchase. And Noelle says to this co-worker without seeing the screen, why am I listening to a tape of Eddie talking?

Speaker 6 Another colleague at the lottery, who is a good friend of Eddie Tipton's, also saw the video and recognized Eddie's voice. But he thought it couldn't possibly be his friend.

Speaker 6 There had to be something wrong.

Speaker 6 So he did a little of his own investigating.

Speaker 6 He used audio software to remove the white noise from the video file. He visited the quick trip where the ticket was purchased to measure the height of the shelves and the width of the floor tiles.

Speaker 6 And then he did some sort of analysis to try to show, for example, that the feet of the man in the video were too big or small to be Eddie's, that the man in the video was taller or shorter than his friend.

Speaker 6 He later said, When the FBI guys came in, I wanted to be able to tell them it wasn't Eddie.

Speaker 6 Once I did this, it was like, well, it is Eddie.

Speaker 6 Six days after the video was made public, the Department of Criminal Investigation received a tip that the purchaser was Eddie Tipton.

Speaker 6 Investigators visited Eddie Tipton at his office at the Multi-State Lottery Association. where he told them that on the date the lottery ticket was purchased, he wasn't even in the state of Iowa.

Speaker 6 He said he'd been visiting family in Texas.

Speaker 6 They subpoenaed his phone records and bank statements, which showed that his story was not quite true. He'd been in Des Moines at the time the ticket was purchased.

Speaker 6 They also looked at Eddie's LinkedIn profile and saw a familiar name. He'd been endorsed by a man named Robert Rhodes.

Speaker 6 Investigators had heard this name before from Philip Johnston, the man who'd claimed to represent the winning ticket holder back in 2011.

Speaker 6 Eddie Tipton was arrested and charged with two felony counts of fraud. Multi-state lottery association employees are ineligible to play the lottery.

Speaker 4 And not only did Eddie Tipton work for the lottery, he also writes the program that actually picks the supposedly random numbers.

Speaker 4 that people want to hit when they're trying to hit the jackpot.

Speaker 6 Even as he prepared for trial, Rob Sand didn't know how exactly Eddie Tipton had rigged the numbers. He offered Eddie Tipton a plea deal if he would tell investigators how he'd pulled it off.

Speaker 6 But Eddie Tipton refused to talk, and the trial began in July of 2015.

Speaker 4 The day we started presenting evidence, CBS This Morning did a nationwide broadcast

Speaker 4 calling into question whether we had enough evidence to prove the case.

Speaker 6 Rob Sand argued that the jury didn't need to understand how Eddie had chosen the winning numbers.

Speaker 6 They just needed to recognize the incredible coincidence of the head of IT security for the Multi-State Lottery Association picking the winning numbers, with the odds at more than 10 million to one.

Speaker 6 And that a man who had access to everything involved in picking the numbers just happened to get the right ones. He wrote the code that produced the winning numbers.

Speaker 6 He had direct contact with the random number generating machines. He had to have tampered with the process somehow and tried to get around lottery rules when he wanted to claim the prize.

Speaker 4 I wasn't sure if the jury would understand our case that he had rigged it.

Speaker 4 The defense counsel kept saying, you know, this is just, he wants you to imagine this stuff. He can't explain to you how it works.
He just wants you to say that it happened.

Speaker 6 Eddie Tipton was found guilty of both counts of fraud. One for attempting to fraudulently claim a winning lottery ticket, and the other for manipulating lottery equipment in order to ensure his win.

Speaker 4 We got him on the first count because the evidence was pretty clear and inescapable.

Speaker 4 And we got him on the second count because at the end of the day, when you look around at all this mountain of circumstantial evidence that this man's job is to write the program that picks the winning numbers, that he was in the drawroom, that he had access to these machines in his office constantly and could have at any point installed different software.

Speaker 4 It was just sort of this inescapable conclusion.

Speaker 6 Rob Sand tried again to offer Eddie Tipton a deal, this time a reduced sentence, if he would explain how he'd pulled it off.

Speaker 6 Again, Eddie refused to tell how he'd done it, or even admit that he'd rigged the system at all.

Speaker 6 Rob Sand thought it was interesting that even after he'd already been found guilty, Eddie Tipton wouldn't go for a reduced sentence.

Speaker 6 And then he got a phone call.

Speaker 4 And I pick up the phone.

Speaker 4 Some guy says, This is Rob Sand. I said, Yeah.

Speaker 4 Do y'all know Eddie Tipton's brother won the lottery about 10 years ago out west somewhere, maybe Colorado?

Speaker 6 We'll be right back.

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Speaker 6 Eddie Tipton was convicted of two counts of felony fraud in 2015 and sentenced to 10 years in prison.

Speaker 6 His multi-state lottery association co-worker and old friend Ed Stefan says he couldn't believe it.

Speaker 6 They'd known each other for 30 years. They'd met in a calculus class at the University of Houston and had stayed close.
Eddie was in Ed's wedding.

Speaker 6 And in the early 2000s, when Ed needed to hire someone to run the IT department at the Multi-State Lottery Association, he recommended Eddie for the job.

Speaker 6 So you're the guy who got him hired?

Speaker 9 I am.

Speaker 6 Did anything in him lead you to believe that this was an inside job that he might be involved?

Speaker 9 Oh, definitely not. No, there was no

Speaker 9 idea of that's possibility one way or the other. No idea that that was even on the table as a possibility, quite frankly.
There was just no reason to believe any or all of that.

Speaker 6 Had you noticed over the years that

Speaker 6 Eddie seemed to

Speaker 6 have a lifestyle

Speaker 6 things, cars, homes that

Speaker 6 didn't really match up with the salary that you knew he was making?

Speaker 4 Yes,

Speaker 9 absolutely.

Speaker 9 So Eddie and I, so Eddie and I were tight.

Speaker 9 And so he and I actually bought together a 50-ish acre parcel of land, and we split it. And so he was building his house, I was building my house, and so our houses were constructed on adjoining land.

Speaker 9 And so Eddie's over here building this McMansion. I mean, his house is incredible.
I mean, absolutely astounding. You know, 7,000 square feet, two basements, racquetball court, all this stuff.

Speaker 9 And I'm like, Eddie, dude, like, I know what you make. Like, how are you doing this?

Speaker 6 Assistant Attorney General Rob Sand was asking the same question.

Speaker 6 When he learned that Eddie Tipton's brother, Tommy Tipton, had won the lottery in Colorado back in 2005, he started making calls and learned that Tommy Tipton had been investigated by a Texas FBI agent named Richard Renison.

Speaker 6 And Richard Renison told Rob Sand that after he'd won the lottery, Tommy Tipton went to a fireworks dealer and tried to launder $500,000.

Speaker 4 Tommy Tipton is justice of the peace in Texas, has like half a million dollars of consecutively marked bills. And of course, this

Speaker 4 makes the fireworks dealer suspicious.

Speaker 6 The fireworks dealer went to the FBI, and the FBI questioned Tommy. He told Agent Renison that he was laundering the money because he didn't want his wife to know he'd won it.

Speaker 6 He said he'd even gone so far as to ask a friend to claim the prize on his behalf. It was all a little strange, but it was all legal.

Speaker 4 They closed their case because they say, well, that's weird.

Speaker 4 I don't fully understand why you're doing what you're doing, but for somebody to be laundering money, that money has to be dirty. And if you won this in the lottery, then it's not dirty money.

Speaker 4 And they closed their case.

Speaker 6 Still, Rob Sand wondered why Eddie's brother had behaved so strangely, and why Eddie still wouldn't tell him him how he'd managed to get the winning numbers in Iowa.

Speaker 6 Plus, two winners in the same family was just too much.

Speaker 6 He thought it was suspicious enough to make calls to all the other state lotteries in the country.

Speaker 4 And say to them, Hey, we have a very

Speaker 4 real reason to believe that

Speaker 4 this wasn't isolated in Iowa, and we need a lot of your data about your lottery winners all over the country.

Speaker 6 They started looking at a list of names of winners, searching for connections to the Tipton brothers.

Speaker 6 And they learned that in 2007, a winning lottery ticket had been purchased in Wisconsin by a man named Robert Rhodes, a name they knew from Eddie Tipton's LinkedIn.

Speaker 6 He'd been the link between Philip Johnston and Eddie Tipton.

Speaker 6 Robert Rhodes' winning ticket numbers were drawn on December 29th, 2007.

Speaker 6 Eddie Tipton's winning ticket numbers were drawn on December 29th, 2010.

Speaker 6 And then Rob Sand discovered an Oklahoma lottery winner named Kyle Kahn.

Speaker 4 Kahn is the last name, C-O-N-N, which is just too rich.

Speaker 4 So let's ask Oklahoma for that claim file. So we go back to Oklahoma.
We say, hey, we want this file related to

Speaker 4 this Kyle Kahn, who claimed this ticket here.

Speaker 4 And they say, all right, here you go. And I remember I'm sitting in my

Speaker 4 home. This is around the holidays.
Sitting in my parents' living room, just

Speaker 4 pulling up the phone number that is in the Kyle Kahn claim form and running that phone number through Eddie and Tommy's years upon years of phone records. And boom, there's a hit.

Speaker 4 So at some point, we know Tommy Tipton had a phone call with Kyle Kahn.

Speaker 6 Kyle Kahn's winning ticket numbers were drawn November 23rd, 2011.

Speaker 6 Tommy Tipton's winning numbers in Colorado were drawn on November 23rd, 2005.

Speaker 6 Rob Sand also discovered two jackpots in Kansas that had been won on the same day and same year as Eddie Tipton's Iowa ticket. The people who claimed those prizes were both contacts in Eddie's phone.

Speaker 4 One of them, in fact,

Speaker 4 she and Eddie had met on a dating website and they had gone on a date or two and you know it didn't work out but they stayed friends and Then she got engaged and he presented this as an engagement gift But it wasn't until January of 2016 that Rob Sand actually figured out what Eddie Tipton was doing I was sitting at my desk and David Moss from from Wisconsin AG's office calls me he says hey Rob are you at your computer?

Speaker 4 I said yeah. He says check your email

Speaker 4 I check my email, open up an email from him, open up a PDF attached to it. And I had done a very small amount of HTML coding when I was in high school.

Speaker 4 And I was instantly able to recognize what I was looking at. What I was looking at was the code that Eddie had written to make these allegedly random numbers be actually predictable to him.

Speaker 4 I remember I said to David, do you guys hear that?

Speaker 4 It's the hallelujah chorus.

Speaker 4 It's playing in my head right now.

Speaker 6 Eddie had written a code that would dramatically decrease the number of possible winning combinations to a smaller set of numbers that Eddie could go play.

Speaker 6 He designed his code to work within specific, narrow circumstances. Wednesdays or Saturday evenings, only three days of the year, May 27th, November 23rd, and December 29th.

Speaker 6 Butting right up against Memorial Day, Thanksgiving, and Christmas. Very convenient times for Eddie Tipton to be out of the office buying lottery tickets.

Speaker 6 Rob Sand and investigators presented Eddie Tipton with the new evidence against him, including the fact that Robert Rhodes was now working as a witness for the prosecution.

Speaker 6 They asked him once again to tell them how he did it. And this time, he agreed.

Speaker 4 And the story that he tells in that interview is that, you know, he didn't necessarily set out

Speaker 4 to start the

Speaker 4 largest lottery rigging scheme in American history, but that he sort of saw that he could do it, and once he saw he could do it, he decided to see if he would get caught.

Speaker 4 And from having done that once, he

Speaker 4 decided to do it again and

Speaker 4 saw that it was a way to help friends. His friend Robert Rhodes was struggling and

Speaker 4 did, frankly, what a lot of white-collar criminals do. Rationalize.

Speaker 4 Give you reasons why the stuff that they were doing wasn't really that big of a deal after all.

Speaker 6 In the end, Eddie Tipton, along with his brother Tommy, admitted to defrauding states out of more than $24 million.

Speaker 4 I look at financial crime and I see people who are in a position of some privilege in life, right? Typically, they're able to commit financial crime because they have access to money.

Speaker 4 So that removes desperation from one of their motivators.

Speaker 4 Financial crimes are people who are in a good position in life, who are abusing, choosing to abuse that position over and over and over again, typically. So

Speaker 4 when you talk to me about financial crime, what I hear is someone who is greedy, whose crimes are crimes of selfishness.

Speaker 4 whose crimes other people and frankly who thinks they're smart enough to get away with it.

Speaker 6 Rob Sand has called them crimes against gratitude. Eddie Tipton was sentenced to 25 years in prison.
Tommy Tipton went to prison for 75 days. What about all the other guys that were involved in this?

Speaker 6 Crawford Shaw, Philip Johnston.

Speaker 6 What happened to them?

Speaker 4 Philip Johnston

Speaker 4 entered a cooperation agreement with the state of Iowa.

Speaker 4 There isn't really any reason to think that he actually

Speaker 4 knows the bigger truth or knew the bigger truth of what was going on at the time that he made the claim. And the same goes for

Speaker 4 Crawford Shaw.

Speaker 4 I think they certainly could have asked more questions of their clients if they wanted to, but they were asserting claims on behalf of a client, and

Speaker 4 there wouldn't be a good basis to charge them

Speaker 4 in the whole scheme of things.

Speaker 6 Tommy and Eddie Tipton,

Speaker 6 there was a lot of money that these guys, that Eddie Tipton won for himself. What happened to all the money?

Speaker 4 A lot of it was cash. A lot of it was spent.
A lot of it Eddie put into his house here in Iowa. A lot of it they ended up paying back to their attorneys here in Iowa.

Speaker 4 But they also agreed to pay restitution. So every penny stolen from a lottery ticket is agreed upon between the two Tipton brothers and Robert Rhodes to get repaid.

Speaker 4 And they've also agreed not to fight legal proceedings in order to seize land in Texas that they own to get those debts paid.

Speaker 6 Do you play the lottery?

Speaker 4 No.

Speaker 6 You've never played?

Speaker 4 Oh, I think I've probably bought a few tickets. I wouldn't say I play it, though.

Speaker 6 Well, you've got me thinking about the lottery again. Maybe I'll just, for the hell of it, stop and get myself a ticket and think maybe I'm lucky.

Speaker 6 Since we first released this episode in 2021, Eddie Tipton was released from Clorinda Correctional Facility in Iowa on parole. He served five years of his 25-year sentence.

Speaker 6 According to the Iowa court's website, as of today, Eddie and Tommy Tipton have repaid less than $20,000 of the more than $2 million that they owe in restitution.

Speaker 6 Criminal is created by Lauren Spohr and me. Nadia Wilson is our senior producer.
Katie Bishop is our supervising producer.

Speaker 6 Our producers are Susanna Robertson, Jackie Sejiko, Lily Clark, Lena Sillison, and Megan Kinnane.

Speaker 6 Our show is mixed and engineered by Veronica Siminetti.

Speaker 6 Julian Alexander makes original illustrations for each episode of Criminal. You can see them at at thisiscriminal.com.
And you can sign up for our newsletter at thisiscriminal.com slash newsletter.

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Speaker 6 We're on Facebook and Twitter at Criminal Show and Instagram at criminal underscore podcast. We're also on YouTube at youtube.com slash criminal podcast.

Speaker 6 Criminal is part of the Vox Media Podcast Network. Discover more great shows at podcast.voxmedia.com.

Speaker 2 I'm Phoebe Judge.

Speaker 6 This is Criminal.

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