{"id":28906,"date":"2016-01-11T09:07:25","date_gmt":"2016-01-11T13:07:25","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=28906"},"modified":"2016-01-11T09:07:25","modified_gmt":"2016-01-11T13:07:25","slug":"inside-the-biggest-lottery-scam-ever","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=28906","title":{"rendered":"Inside the Biggest Lottery Scam Ever"},"content":{"rendered":"<p><!--more--><div id=\"attachment_28908\" style=\"width: 636px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/stateofthenation2012.com\/wp-content\/uploads\/2016\/01\/Screen-Shot-2016-01-11-at-8.04.56-AM.png\" rel=\"attachment wp-att-28908\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-28908\" class=\"size-full wp-image-28908\" src=\"https:\/\/stateofthenation2012.com\/wp-content\/uploads\/2016\/01\/Screen-Shot-2016-01-11-at-8.04.56-AM.png\" alt=\"Emil Lendof\/The Daily Beast\" width=\"626\" height=\"394\" srcset=\"https:\/\/stateofthenation2012.com\/wp-content\/uploads\/2016\/01\/Screen-Shot-2016-01-11-at-8.04.56-AM.png 626w, https:\/\/stateofthenation2012.com\/wp-content\/uploads\/2016\/01\/Screen-Shot-2016-01-11-at-8.04.56-AM-300x189.png 300w\" sizes=\"auto, (max-width: 626px) 100vw, 626px\" \/><\/a><p id=\"caption-attachment-28908\" class=\"wp-caption-text\">Emil Lendof\/The Daily Beast.<\/p><\/div><\/p>\n<div class=\"dek char-limit multiline\">\n<p>M.L. Nestel<br \/>\nThe Daily Beast<\/p>\n<p>A locked room, a fat suit, and a pump-and-dump stock scheme: They\u2019re all part of what the cops say is the ultimate attempt to rig the lotto.<br \/>\nIt was two days before Christmas in 2010 and Eddie Tipton had a $16.5 million lottery winner in his pocket.<\/p>\n<p>Sporting a hooded jacket, the stocky 47-year-old approached a silver-haired clerk at the counter of an Iowa-based Quik Trip market at around 3:30 p.m., stacking on the counter $3.17 worth of hot dogs, a fountain soda and two tickets.<\/p>\n<p>But Tipton didn\u2019t need Lady Luck. The Quik Trip purchase was phase two of a crafty plan to take the 29 million-to-1 odds out of the lottery equation.<\/p>\n<p>The first phase came a month before when Tipton inputted the same winning numbers in the computer system tucked away in Iowa Lottery\u2019s secure \u201cDraw Room.\u201d<\/p>\n<div class=\"inline-image-box load-img-inview\" data-sensitivity=\"1000\">\n<figure class=\"inlineimage\"><img decoding=\"async\" class=\"img-100\" title=\"150706-nestel-lotto-scam-embed1\" src=\"http:\/\/cdn.thedailybeast.com\/content\/dailybeast\/articles\/2015\/07\/07\/inside-the-biggest-lottery-scam-ever\/jcr:content\/body\/inlineimage.img.800.jpg\/47876034.cached.jpg\" alt=\"\" \/><figcaption class=\"photocredit\">Handout<\/figcaption><\/figure>\n<\/div>\n<p>At least, that\u2019s the story Iowa prosecutors would have you believe.<\/p>\n<div class=\"teads-wrapper\"><\/div>\n<p>To hear Eddie Tipton tell it, he\u2019s a lottery patsy.<\/p>\n<p>\u201cI\u2019m having to defend myself against hundreds, if not thousands, of hours of investigative time,\u201d he told The Daily Beast in an exclusive phone interview at his home, where he was awaiting trial after posting $10,000 bail. \u201cThey\u2019re running against time because the statute of limitations was almost up and they gotta find somebody. So they throw it all on me,\u201d he said.<\/p>\n<div id=\"ndn-video-player-1\" class=\"ndn_embedContainer ndn-widget-embed-1 ndn_embed ndn-widget-embed-3 ndn_widget_VideoPlayer-Single ndn_embedded\" data-config-legacy-embed-url=\"http:\/\/embed.newsinc.com\/Single\/iframe.html?VID=28455750&amp;WID=23688&amp;freewheel=91456&amp;sitesection=dailybeast_hom_non_non_dynamic&amp;height=353&amp;width=628&amp;pp_product=dynamic\" data-config-distributor-id=\"91456\" data-config-height=\"9\/16w\">\n<div class=\"ndn_floatContainer ndn_floatContainer_disabled\">\n<div id=\"ndn-widget-embed-3-player\" class=\"ndn_playerContainer ndn_floatContainer_contents ndn_videoPlayer ndn_videoPlayer_largeView ndn_videoPlayer_view1198 ndn_videoPlayer_view1022 ndn_videoPlayer_view999 ndn_videoPlayer_view849 ndn_videoPlayer_view784 ndn_videoPlayer_view766 ndn_videoPlayer_view702 ndn_videoPlayer_view639\">\n<div class=\"ndn_startOverlayContainer ndn_playerOverlay\">\n<div class=\"ndn_startOverlay\"><\/div>\n<div class=\"backstretch\"><img decoding=\"async\" src=\"http:\/\/content-img.newsinc.com\/jpg\/1954\/28455750\/18889054.jpg?t=1422606300\" alt=\"\" \/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div id=\"ndn-video-player-2\" class=\"ndn_embed ndn_embedding ndn_embedContainer ndn-widget-embed-2 ndn_embedded\" data-config-distributor-id=\"91456\" data-config-height=\"9\/16w\"><\/div>\n<p>On January 15, 2015, more than four years after the Hot Lotto ticket was bought at the mini-mart, Tipton was arrested for attempted fraud by the Iowa State Police. \u201cI was like \u2018What for?\u2019\u2014It came as a complete shock,\u201d he said.<\/p>\n<p>Tipton faces five years in what amounts to an alleged lotto shakedown. Now 52 years old, unemployed, and living off his savings, his trial begins on July 13.<\/p>\n<p>Tipton believes he\u2019ll be exonerated, although the authorities have already released a video of the Hot Lotto ticket purchase. According to a criminal complaint, voice experts and a Tipton pal all say it\u2019s Tipton on the screen. Authorities also accuse Tipton of using his security clearance to juke the lottery\u2019s computer, and teamed with a close friend to recruit a crew to collect the winnings.<\/p>\n<blockquote id=\"quote-0\" class=\"blockquote\">\n<div class=\"centerer\">\n<div class=\"safe-area\">\n<div class=\"content\">Tipton went into the lottery\u2019s fortified \u201cDraw Room.\u201d He said he was there to update the lottery computer system. Instead, the authorities say, he tinkered with the room\u2019s video recorder and closed circuit cameras.<\/div>\n<\/div>\n<\/div>\n<\/blockquote>\n<p>Eddie Tipton\u2019s case may piece together the most ornate and brazen run on the lottery of all time. It\u2019s certainly the largest jackpot claimed and then withdrawn in lottery history. And Tipton\u2014if he did pull off the attempted heist\u2014may not be the only one in on the job.<\/p>\n<p><b><\/b><iframe loading=\"lazy\" class=\"\" title=\"fb:like Facebook Social Plugin\" src=\"http:\/\/www.facebook.com\/plugins\/like.php?action=like&amp;app_id=189930913679&amp;channel=http%3A%2F%2Fstaticxx.facebook.com%2Fconnect%2Fxd_arbiter.php%3Fversion%3D42%23cb%3Df3da8742718f376%26domain%3Dwww.thedailybeast.com%26origin%3Dhttp%253A%252F%252Fwww.thedailybeast.com%252Ff1f1cd7e80f5e78%26relation%3Dparent.parent&amp;container_width=0&amp;href=http%3A%2F%2Fwww.facebook.com%2Fthedailybeast&amp;layout=button&amp;locale=en_US&amp;sdk=joey&amp;share=false&amp;show_faces=false\" name=\"f2f177025db696\" width=\"1000px\" height=\"1000px\" frameborder=\"0\" scrolling=\"no\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<\/div>\n<div class=\"inline-newsletter inline-newsletter_static inline-newsletter_social \">\n<div class=\"inline-newsletter-social\">\n<ul class=\"inline-newsletter-social-buttons\">\n<li class=\"inline-newsletter-social-button inline-newsletter-social-button_facebook\"><\/li>\n<li class=\"inline-newsletter-social-button inline-newsletter-social-button_twitter\"><iframe loading=\"lazy\" id=\"twitter-widget-0\" class=\"twitter-follow-button twitter-follow-button-rendered\" title=\"Twitter Follow Button\" src=\"http:\/\/platform.twitter.com\/widgets\/follow_button.c633b87376883931e7436b93bb46a699.en.html#_=1452517407512&amp;dnt=false&amp;id=twitter-widget-0&amp;lang=en&amp;screen_name=thedailybeast&amp;show_count=false&amp;show_screen_name=true&amp;size=m\" width=\"300\" height=\"150\" frameborder=\"0\" scrolling=\"no\" data-screen-name=\"thedailybeast\"><\/iframe><\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p>After 12 loyal years and a six-figure salary as director of security under the employ of the <a href=\"http:\/\/www.musl.com\/\" target=\"_blank\">Multi-State Lottery Association (MUSL)<\/a> a nonprofit agency overseeing several lottery games throughout the U.S., Eddie Tipton took his job seriously. \u201cI was more of a consultant and helped them with following the rules and showed them how to comply with them,\u201d he said.<\/p>\n<p>Tipton says he had no reason to toss it all way. \u201cI was not hurting for money,\u201d Tipton said. \u201cNot hurting enough that I need to take a chance and ruin my whole life. No way.\u201d<\/p>\n<p>But now that he\u2019s been accused of trying to rig the lottery, Tipton stands to lose everything.<\/p>\n<blockquote id=\"quote-1\" class=\"blockquote\">\n<div class=\"centerer\">\n<div class=\"safe-area\">\n<div class=\"content\">\u201cI know how the game works. So either I\u2019m an incredible genius that did something stupid or I\u2019m just plain incredibly stupid. But how can I be an incredible genius and so something stupid at the same time?\u201d<\/div>\n<\/div>\n<\/div>\n<\/blockquote>\n<p>On November 20, 2010, Tipton allegedly went into the lottery\u2019s fortified \u201cDraw Room,\u201d where only he and four colleagues had access. He said he was there to update the lottery computer system to the passing of Daylight Savings Time. Instead, the authorities say, he tinkered with the room\u2019s video recorder and closed circuit cameras.<\/p>\n<p>According to multiple criminal court documents, the footage from November 20 didn\u2019t properly capture what went on in the room. Instead, Tipton either on or before that day allegedly set the machine to record \u201croughly one second per minute,\u201d according to a reply to Iowa prosecutors\u2019 motion by Tipton\u2019s lawyers filed on April 9, 2015. The other 59 seconds were invisible.<\/p>\n<p>With the cameras disabled, prosecutors allege, Tipton could have enough time to insert a memory stick that loaded a so-called \u201croot-kit\u201d program. That would\u2019ve given him the ability to do anything we wanted on the computer\u2014like fixing the lottery numbers and \u201cself-destruct without a trace\u201d\u2014which means the program would be undetectable.<\/p>\n<p>Authorities paint Tipton as a cybersecurity obsessive who preached about root-kits; \u201che even made a presentation about them at a lottery conference,\u201d according to document filed by Tipton\u2019s lawyers. The same papers say \u201c[Tipton] tampered with the camera equipment to have an opportunity to insert a thumbdrive into the [computer] tower without detection.<\/p>\n<p>But Tipton insists that he\u2019s taking the blame because of his access. \u201cThe only reason I\u2019m in trouble is because I\u2019m an employee,\u201d he said, unwilling to get into the backroom rigging details.<\/p>\n<p>Tipton believes he\u2019s the one \u201cholding the bag\u201d because of the Iowa Lottery\u2019s lapses. He claims he never bought that winning ticket\u2014some still-undisclosed stranger did, instead. \u201cIf I knew who the mystery person was that bought the ticket I would serve them up on a platter just to clear my name,\u201d he said.<\/p>\n<p>Tipton, clean shaven and heavyset, couldn\u2019t have been the man in Quik Trip footage, his lawyer, Dean Stowers, insists. The lotto ticket buyer was \u201cwearing a fake beard\u201d and could have been a \u201cskinny man in a fat suit\u201d to mimic Tipton\u2019s stout figure,\u201d Stowers told The Daily Beast. \u201cThose photos certainly show that my client didn\u2019t have a beard on that day, unlike the person seen in the video.\u201d<\/p>\n<p><b>***<\/b><\/p>\n<p>Whoever bought the tickets, authorities believe, he didn\u2019t act alone.<\/p>\n<p>Also arrested in the caper was Tipton\u2019s close friend, 46-year-old Robert Rhodes. The Sugar Land, Texas-based man is also being charged with defrauding the Iowa Lottery.<\/p>\n<p>It\u2019s Rhodes who allegedly is the conduit to a crew of five stretching from South America to Canada\u2014all of whom are named in the criminal complaint as colluding with the pair to try to grab the lotto loot.<\/p>\n<p>There\u2019s the Canadian lawyer named Philip Johnston, who splits his time between St. Pacome, Quebec, and sunny Turks and Caicos. He allegedly was the first one to take a swing at the lotto pi\u00f1ata.<\/p>\n<div class=\"inline-image-box load-img-inview\" data-sensitivity=\"1000\">\n<figure class=\"inlineimage\"><img decoding=\"async\" class=\"img-100\" title=\"150706-nestel-lotto-scam-embed2\" src=\"http:\/\/cdn.thedailybeast.com\/content\/dailybeast\/articles\/2015\/07\/07\/inside-the-biggest-lottery-scam-ever\/jcr:content\/body\/inlineimage_0.img.800.jpg\/47874842.cached.jpg\" alt=\"\" \/><figcaption class=\"photocredit\">Handout<\/figcaption><\/figure>\n<\/div>\n<p>Johnston tried to get at the lottery windfall by claiming he was in possession of the Hot Lotto ticket in a phone call on November 9, 2011. He submitted the \u201cunique\u201d 15-digit security number printed on the winning ticket but said he was too sick, according to a reply Iowa prosecutors\u2019 motion by Tipton\u2019s lawyers filed on April 9, 2015, to make the trip to the lottery HQ in Des Moines. He asked if they could take pity on him and instead mail a check.<\/p>\n<p>Then he failed to answer a couple of softball security questions. He said he was wearing a tweed suit on the day he bought the winning ticket. (The guy caught on tape wore a hooded coat) He said he was in his 60s. (The real winner appeared to be in his 30s or 40s). So, the lottery officials declined Johnston\u2019s bid.<\/p>\n<p>He tried again, two weeks later on December 6, 2011. This time, Johnston had a new story: He wasn\u2019t the guy who had the ticket after all. The winning ticket actually belonged to a wealthy mystery man and together they had set up a Belize-based trust called Hexham Investments, according to multiple documents, including the criminal complaint.<\/p>\n<p>Somehow, Johnston and company erroneously assumed they could cash in the ticket through a trust to keep the <a href=\"http:\/\/www.thedailybeast.com\/articles\/2015\/05\/24\/michigan-lottery-winners-go-into-hiding.html\">buyer anonymous<\/a>. But this was another oversight: Iowa is one of several states that mandates winners be identified to the public.<\/p>\n<p>The jig was up. Johnston later told investigators he was approached on Oct. 17, 2011, by Tipton\u2019s friend Robert Rhodes and by Robert Sonfield, both of Houston, Texas. They asked for Johnston\u2019s \u201cassistance with claiming the lottery ticket,\u201d according to the criminal complaint. Sonfield told Johnston that he was representing a lotto winner who \u201cwanted to remain anonymous.\u201d<\/p>\n<p>Somehow\u2014it\u2019s not clear how, exactly\u2014Sonfield got hold of the Hot Lotto ticket. He sent it via FedEx to his longtime friend Crawford Shaw, a New York City lawyer.<\/p>\n<p>Just before the ticket was about to expire, Shaw came forward acting as a trustee for Hexham Investments (for which Johnston was a principal). Shaw initially retained a respected Des Moines-based law firm to present the signed ticket.<\/p>\n<p>On Dec. 29, 2011, 1 hour and 50 minutes before the ticket was to expire, two lawyers from <a href=\"http:\/\/www.davisbrownlaw.com\/in-the-news-view.aspx?id=1427\" target=\"_blank\">Davis Brown law firm<\/a> brought the ticket Shaw sent them to the state lottery offices in Des Moines, and tried to claim the prize with the trust name alongside Shaw\u2019s signature. The trouble is, Shaw misspelled the trust\u2019s name as \u201cHexam\u201d and skipped the second \u201ch.\u201d The lawyers were sent away without a dime.<\/p>\n<p>Then Shaw hopped on a flight to meet with Iowa Lottery officials in Des Moines on January 17, 2012. Unwilling to reveal the name of his mystery client, Shaw couldn\u2019t persuade lottery officials to cut him a check.<\/p>\n<p>Nine days later Shaw signed an affidavit and officially withdrew his claim to the ticket.<\/p>\n<p>(When reached by phone last week Shaw identified himself to The Daily Beast, but repeated, \u201cI am not going to comment,\u201d before hanging up.)<\/p>\n<p>Nearly two years went by. Finally, on Nov. 7, 2014, an Iowa Division of Criminal Investigation agent quizzed Tipton, according to the criminal complaint. Tipton told the investigator he knew the rule that he wasn\u2019t permitted to play the lottery. What\u2019s more, the authorities should scratch his name off the list of suspects because he \u201cwasn\u2019t even in town in that time period\u201d when the ticket was purchased.<\/p>\n<p>Tipton told the agent he was in Houston, Texas, visiting \u201call family.\u201d Yet the complaint points to cellphone records that put Tipton in Des Moines at the time the Hot Lotto ticket was issued. What\u2019s more, Tipton was having \u201cfrequent lengthy phone calls\u201d with Robert Rhodes, according to the complaint. When asked twice about his Houston contacts Tipton \u201cdid not mention Robert Rhodes,\u201d the complaint reads.<\/p>\n<p>But Tipton told me he was forthcoming with the investigator. \u201cHe asked me, \u2018Do you have a friend named Robert Rhodes?\u2019 and I said \u2018Yes.\u2019 I asked them, \u2018Did I do something wrong?\u2019 and they said, \u2018No.\u2019 Then months later they make this stuff up and I\u2019m fighting for my own freedom,\u201d he said.<\/p>\n<p><b>***<\/b><\/p>\n<p>Tipton said that Rhodes remains a dear friend of over 20 years. He worked with him at the Houston-based oil and gas programming company Systems Evolution for seven years.<\/p>\n<p>Despite his ties to Rhodes, there was never any real communication with any of the other alleged participants in the lotto scheme. \u201cI don\u2019t know Robert Sonfield,\u201d Tipton said.<\/p>\n<p>But Rhodes is tight with Sonfield. And the pair have been earned a questionable rep in Houston. One source\u2014who is both involved in litigation with the pair and asked to remain anonymous\u2014told The Daily Beast that the two have worked in \u201cpump-and-dump\u201d penny stock schemes, driving up the price and selling it off quickly.<\/p>\n<p>Rhodes and Sonfield are in multiple business arrangements with Philip Johnston, the Canadian lawyer who called in sick to claim the lottery ticket, according to the Division of Criminal Investigation records. For example, Sonfield has 20,000 shares and Shaw 2,000 shares in a company called <a href=\"http:\/\/edgar.secdatabase.com\/2666\/150363612000028\/filing-main.htm\" target=\"_blank\">Platinum Energy<\/a>. Its president: Johnston.<\/p>\n<p>Johnston and Sonfield are <a href=\"http:\/\/edgar.secdatabase.com\/304\/114420412061332\/filing-main.htm\" target=\"_blank\">prominently named in stock portfolio documents<\/a> associated with a company known as <a href=\"http:\/\/www.genomeweb.com\/microarrays-multiplexing\/arrayit-legal-dispute-investor-continues-despite-settlement-disclosure\" target=\"_blank\">Arrayit<\/a>. <a href=\"http:\/\/rhodesholdings.wordpress.com\/about-us\/robert-c-rhodes\/\" target=\"_blank\">Rhodes was briefly CEO<\/a> of the company\u2019s pharmaceutical subsidiary, but was quickly voted out by shareholders.<\/p>\n<p>Documents from a bankruptcy case involving a Houston-based telecommunications company called Digerati portrayed the pair as taking actions that hiked legal fees. They\u2019re also accused of jamming up the case with <a href=\"http:\/\/bankrupt.com\/misc\/DIGERATI_DSSept27.PDF\" target=\"_blank\">legal trickery<\/a>, including making unsupported motions to scattering litigation in different venues.<\/p>\n<p>Sonfield himself admitted to an array of \u201ctechnical irregularities\u201d and \u201cdefects in the issuances of the shares.\u201dAccording to bankruptcy filings in the Digerati bankruptcy case filings from September 18, 2013, Robert Rhodes was just a figurehead CEO and \u201cwas not properly appointed or elected.\u201d Philip Johnston\u2014who was believed to be a fictional person\u2014was issued 1,000 shares of stock that should be \u201ccancelled or deemed invalid.\u201d<\/p>\n<p>Tipton insists he doesn\u2019t know Johnston, Shaw, or Sonfield from Adam. \u201cThere\u2019s no communication between me and them,\u201d Tipton said, adding that there\u2019s no way to connect him with these people\u2014other than circumstantially. \u201cMy name is nowhere,\u201d Tipton said.<\/p>\n<p>Ask Tipton about the evidence and he comes back with his own version of conspiracy and innuendo. He never bought the ticket. Some mystery man did.<\/p>\n<p>\u201cI have to prove that it wasn\u2019t me because whoever did it\u2014we don\u2019t know who it is,\u201d he said.<\/p>\n<p>\u201cI know how the game works,\u201d Tipton added. \u201cSo either I\u2019m an incredible genius that did something stupid or I\u2019m just plain incredibly stupid. But how can I be an incredible genius and do something stupid at the same time?\u201d<\/p>\n<p>___<br \/>\nhttp:\/\/www.thedailybeast.com\/articles\/2015\/07\/07\/inside-the-biggest-lottery-scam-ever.html<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-28906","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/28906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28906"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/28906\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}