In 2017 the world discovered a tale of a lottery worker who bent the system in his favour as he was sentenced. He took millions of dollars from the lottery during his decade at playing the system – all through the inclusion of a few lines of computer codes that went unnoticed. Today we’re going to look at the tale, how he pulled this technological heist. Why they went through these extreme measures, how they were caught and what happened afterwards.
The year was 2010. It was December 29th as the Hot Lotto game was drawn in Iowa. The Hot Lotto is a game variation of the lottery. If a player matches 5 number plus the bonus number, they can win a fortune. Well there was a winner in that draw, who won $16 million, only no one came forward to collect. Iowa Lottery put out a press release, stating the winner would have to stake their claim by December 29, 2011 at the latest. In that State, the winner couldn’t remain anonymous, they had to be publicly known as they collected their lottery jackpot prize.
Many people came forward to claim the life-changing jackpot prize, however, they couldn’t match the serial number on the ticket. Some claimed they lost the ticket or had it stolen. However, the lottery had another verification up their sleeve. They had CCTV footage of the winner purchasing the ticket on December 23, 2010 at a Quick Trip store. None of the winners that claimed to have won the jackpot matched the description of the grainy image of the man. The man seemed to be avoiding the stores cameras. He had a hood on over his head and a cap on underneath.
Finally, in November 2011, a man came forward with proof as called the lottery saying that he had the correct 15-digit serial number. The man was Phillip Justin. A lawyer based in Quebec Canada. He stated that he was unable to come collect his lottery prize in person due to illness. The Lottery then asked him what he was wearing on the day he bought the ticket. He described clothing that was vastly different to that on the CCTV footage. Something was wrong. The Lottery pressed Johnston more. Eventually he gave in and stated he was claiming the prize on behalf of someone else who didn’t want to be identified. Due Iowa’s lottery rules, Johnston’s claim was rejected. On December 29th, just hours before the deadline a law firm approached the lottery. They stated they were claiming the money on behalf of a Trust. The Lottery investigated. They discovered the Trust benefactor was a Corporation based in Belize. Its president was Philip Johnston. The CEO of Iowa’s Lottery was very suspicious. As such, the Iowa’s Attorney General Office and the Iowa’s Division of Criminal Investigation opened a case to find out what was going on.
Johnston was questioned further on these bizarre circumstances. Eventually he cracked. He told the authorities he was given the ticket by Texas attorney, Robert Sonfield and the Sonfield was given the ticket by Texas businessman Robert Rhodes. However, the authorities were unable to get anything from Sonfield or Rhodes.
For three years the case went cold. The authorities had little information to work with but they had one more card to play. They released the grainy CCTV footage to the public. They hoped that someone out there would recognise through his appearance or his voice as he made his purchases.
The video quickly spread online. The footage was emailed through to the Lottery by an employee to her boss. As soon as they watched the CCTV footage they immediately recognised the voice. It belonged to a man that briefly worked at the company a few years ago. The man was at Maine Lottery for a week conducting a security audit.
Noelle Krueger, a draw manager at Iowa Lottery, was shown the video by a colleague. She instantly knew who it was. Eddie Tipton. Eddie worked at the multi-state lottery association as an Information Security Services Director. The MUSL worked with many lottery games across the country. One of which involved the Iowa Lotteries, Hot Lotto.
Tipton was a quiet and well-liked man. He grew up in Texas. Tipton’s job involved creating webpages and software. He also installed firewalls and security into the computer system for MUSL. On top of this he would review security systems for lottery games across dozens of states across the US. Often he would work sixty hours a week. His role at the MUSL gave him a wage of $100 thousand per year. Yet he was still able to splash out $540,000 on building a new house. Since Tipton lived by himself, many people questioned how he could afford to build such a home. Tipton would tell them that he was building the house to attract a future wife and children.
Ed Stefan was the Chief Informant officer at MUSL. He couldn’t believe it was Tipton when he saw the footage. The two were close friends. They bought land together and built adjacent houses.
Jason Maher was another close friend of Tipton’s. The two shared a passion for computers. Tipton even helped Maher’s secure a job at MUSL. While Maher was shocked to see the footage, he needed to be sure. He isolated the audio from the CCTV footage and improved the quality of the audio.
He then took footage from his own security cameras at his house of Tipton. He then compared the audio of the two files. The soundwaves matched but Maher was finished yet. He took a look at the shop in the footage and took the dimensions of the floor tiles. He used this as a guide when measuring the proportions of the man. The measurements matched with Tipton’s.
Maher’s stated, “When the FBI guys came in I wanted to be able to tell them that it wasn’t Eddie but once I did this I knew it was Eddie.”
Once the police got wind of Tipton being recognised, they went to interview him. Tipton claimed he wasn’t in Iowa when the ticket was bought. They asked him about people he knew in Texas, he mentioned his family but didn’t bring up Robert Rhodes. The police investigated further, they discovered in his phone records that Tipton was in Iowa on the night in question. He also spoke to Rhodes for 71 minutes. The police also realised that Tipton and Rhodes where best friends and would go on vacations together. Tipton also worked at Rhodes’s company for several years.
Maher then told the police that Tipton always an interest in software that deletes itself once it had completed its designated task. The police were sure they had their man. But they couldn’t prove that the self-deleting software was used or even how Tipton did it exactly. There was no evidence on the lotteries hard drives as they had been wiped out. But they charged Tipton anyway. A lot of the evidence could be termed as circumstantial.
Rob Sand was the Assistant Attorney General that was on the prosecution team. Due to his work, he managed to convince the Jury that Tipton was guilty. On July 20, 2015, Tipton was sentenced to 10 years imprisonment. However, Tipton’s team filed an appeal. Tipton was freed on bond until the appeals conclusion.
While Sand believed he had the right person, something was off. Tipton’s legal team had requested a quick ninety-day trial. This vastly cut-down the amount of investigating the prosecution could do. They received an anonymous tip that Tipton’s brother Tommy had won the lottery about ten years ago. Tommy won about $570,000 in the Colorado Lottery. Shortly after, Tommy contacted his friend Tom Bargas. Bargas owned a number of stalls that sold fireworks. Twice a year he would handle huge amounts of cash. Tommy wanted to trade his unused half a million bills for Bargas’s used crumbled bills. Bargas knew he couldn’t afford that amount on his wage and he was certain something dodgy was going on. No one trades new bills for old ones for no reason. Bargas then told the FBI who believed Tommy was involved in corruption. They investigated Tommy but nothing came of it. This tip prompted the FBI and Sands to investigate other lottery wins.
On December 29, 2007 a Public Limited Company won almost $784,000 in the Wisconsin area. The company was owned by Robert Rhodes. On closer inspection the FBI saw that the company had paid a hefty sum to Tipton shortly after the win.
On November 23, 2011, Kyle Khon claimed the prize of $1.2 million in the Oklahoma Lottery. He wasn’t a regular lottery player and chose the numbers on the ticket than have them randomly generated. Sand examined Tipton’s phone records and sure enough there was Khon’s number. Sand also found that two smaller winners of almost $15,500 in the Kansas Lottery knew Tipton - Amy Warrick and Christopher McClouskey. Warrick had gone on one date with Tipton but they remained as good friends. Warrick told Sand that Tipton asked her to collect the money on behalf. Due to his work he couldn’t participate in the lottery. Sand realised that some of the winners didn’t realise that they were doing anything wrong.
In Wisconsin investigators found that the random number generators used to make the lottery draws hard drives hadn’t been wiped on these. Sean McLinden was tasked by Sand with examining the computers. McLindon discovered a piece of code that wasn’t meant to be there. It’s believed that Tipton used a route kit to install the code onto the computers. The new code didn’t vastly change the ability to choose numbers, otherwise the code would have been easy to spot.
Tipton’s scheme was to limit the random selection process as much as possible. His code kicked in only if the coming drawing fulfilled a narrow set of circumstances. It had to be on a Wednesday or a Saturday evening, and one of three dates in a non–leap year: the 147th day of the year, the 327th day, or the 363rd day. Investigators noticed those dates generally fell around holidays—Memorial Day, Thanksgiving, and Christmas—when Eddie was often on vacation.
If those criteria were satisfied, the random-number generator was diverted to a different track that didn’t use the Geiger counter reading. Instead, the algorithm ran with a predetermined number, which restricted the pool of potential winning numbers to a much smaller, predictable set of options: Rather than millions of possible winning combinations, there would be only a few hundred.
Tipton saw himself as a Robin Hood figure helping out those in need, stealing from the lottery and helping people in need: his brother, who had five daughters; his friend who’d just gotten engaged. “I didn’t really need the money,” Eddie said. The judge noted that Eddie seemed to rationalize his actions—that he didn’t think it was necessarily illegal, just taking advantage of a hole in the system, sort of like counting cards at a casino.
However, since Tipton and his brother owned a lot of real estate, prosecution doubted this claim. The prosecution eventually cut a deal with him. As long as he plead guilty and told them everything about his scheme.
In January 2017 Rhodes received a six months house arrest and a fine. In March 2017 Tipton was sentenced to 25 years in prison.
Since the Eddie Tipton saga lotteries have implemented a huge amount of security systems in place to ensure this never happens again.
It just goes to show crime, no matter if you think you’re a Robin Hood, definitely does not pay.
Playing a game of chance should be just that. Being given a fair chance to win just like the next lottery player.