A Grander Scheme Than Expected – The Aftermath of the Iowa Lottery Hack

It saddens me when I have to discuss matters such as this. I guess bankers are ashamed when somebody speaks of the last world crisis as well. Well, this is my “world crisis”. Back in April of 2015, a lottery scam was exposed, with Eddie Raymond Tipton at the forefront. Initially, I thought, that’s it, we got him. Nonetheless, the investigation proved otherwise. It was a bigger scam than the authorities initially assumed.

This was the tip of the iceberg. Eddie is the villain, the embodiment of the term lottery scammer.

Reiteration of the Iowa Hack – What Actually Happened?

For all of you lazy people who don’t want to get familiar with the back story, this one’s for you this one’s for you.

The lottery scam involved a pre-programmed RNG, which allowed Eddie to predict the winning lottery numbers for certain draws, which took place on specific dates. This made the whole lottery scam almost perfect! Once he wins the lottery, the program would delete itself, leaving no traces. Eventually, he got caught, scamming the Iowa Lottery for $14,300,000. That’s not all! There were other people involved, some of his friends whom he made claim the prize for him.

People, it never works as the scammers plan it. There are cameras everywhere, security systems, logs and whatnot. It doesn’t matter if you plan it for years, eventually, somebody will get on you.

Now this was pretty much it. Note, this started in 2010. It took the authorities a couple of years to find a trace.

A Lottery Scam, Money Laundering, Insurance Fraud and Much More

I thought this was a one time thing. I think, the general public had the same idea. Fortunately, Eddie decided to strike a deal with the prosecutor. What he had to offer? He offered a lot!

According to his story, it all started in 2005. At this time, he wasn’t directly involved in the scheme, but his accomplice was, Robert Rhodes. He used the lottery to launder money, which eventually led to insurance fraud. Eddie and Robert start cooperating in 2007, when they rig the Megabucks Lottery on the 29^th of December in 2007. Additionally, Eddie Tipton also admitted he had collaborated with other individuals to rig other lotteries in Colorado in 2005, Kansas in 2010 and he also was part of a scam in 2011, in Oklahoma.

These guys were dedicated! They had planned every step of the plan, however, nobody is above the law. Being a cyber-security expert for the Multi-State Lottery Association comes with its perk, apparently. This is why there needs to be thorough background checks, and regular audits, to ensure lottery operators and lottery players are treated fair, by the RNG.

Why Eddie Tipton’s Software Couldn’t Be Detected?

I have to give it to him, the guy’s a genius. He was courteous to explain how his software works. So, Eddie was able to predict the numbers on rather specific dates. The dates are, May 27, November 22, and December 29. Furthermore, the software was on only if the draws take place after 8 PM. This was of paramount importance. Basically, nobody paid attention during this period. If there’s an audit, it’s carried out during the day. In addition, Eddie Tipton is the cyber-security expert, employed by the Multi-State Lottery Association.

Who’d suspect the guy in charge of the security?

During the day, and most of the year, the RNG was working perfectly fine. However, on the aforementioned days, the RNG was acting weird, allowing Eddie to predict the numbers, and to give the numbers to other individuals, Robert Rhodes in this instance. We should point out that his collaborator, Robert Rhodes, pleaded guilty, in exchange for probation.

He took everybody with him. As he stated, Eddie Tipton is the brain behind the scheme. He motivated, incentivized and persuaded him to do everything else. Eddie needed to obtain the numbers.

A Sweet Deal Goes Sour – Greed Is the Only Snake that Cannot be Charmed

They were in a very good spot. They could win the lottery 3 times per year, and they had the best cover. Being greedy rarely ends well. If it still is, well, it’s not the end. I think that they wouldn’t have gotten caught if they played it right. For example, simply rig the lottery as many times as you can, and that’s it. Eddie’s greediness took him and his friend Rhodes on a downward spiral. First, Eddie made Robert open a company called Delta S Holdings. The lottery prize went to the company.

I said it all started in 2005, but Rhodes and Tipton knew each other in the 1990s. They trusted each other, but in my opinion, the only thing that destroyed their cooperation was Tipton’s greediness. He wanted to get little extra cash from tax refunds, insurance frauds and tax evasion.

Now these are not some BIG money of few millions of dollars. In fact, it’s just a little over the $500,000 mark. Nevertheless, this kind of money can change the life of one person, a family!

Rhodes and Tipton Paid the Money Back and Both Admitted The Charges

Tipton was a hard nut to crack. It took 2 years to persuade him to tell the truth. He was adamant that he left no traces, and he was right. But, his friend did leave traces and it was only a matter of time before the authorities can connect the dots.

In the end, both Rhodes and Tipton admitted the charges. Rhodes got probation, and both of them paid all taxes they owed, they paid additional fines and they’re in a rough sport. I bet they knew it was coming, but not so soon.

Could They’ve Gotten Away With It?

I’m quite sure, yes. If they hadn’t claimed the $150,000 from the US government and the $36,200 from Wisconsin as tax refunds on the lottery payout. To reiterate, this took place back in 2007, with the Megabucks Lottery. They got themselves in more trouble with the insurance fraud, featuring Bancroft Life & Casualty ICC Limited. These two guys invested $450,000, they bought “an insurance policy”. Rhodes got a $250,000 loan from the insurance company, and he claimed additional $75,000 due to bogus reasons, “regulatory changes”. They got entangled in shady businesses, and they found trouble.

Eddie Tipton demonstrated great understanding of the people he worked with. He knew nobody will suspect he’s the villain. Yes, he had the expertise, the knowledge and the skills to be called cyber-security expert. After all, he didn’t get caught because he left a trace, but because of Rhodes’s sloppiness.

If they kept a low profile, I’m sure we’re still going to wonder, “Who’s doing this?”

In the end, it’s not just a hack, it’s hacks, plural, with an S. I’m sure you are edgy about this, especially if you’ve been playing the lotteries Eddie Tipton and Robert Rhodes were rigging all the long. My word of advice. It’s been over since 2012. They’re out of business!

Since then, lottery operators have introduced new security protocols lottery operators have introduced new security protocols to ensure this won’t happen, ever again!