Lottery Worker Allegedly Rigged Drawings So He Could Win: Part 4

Edward Tipton was found guilty of fraud, and he was sentenced to ten years in prison this past September.
6:57 | 01/16/16

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Transcript for Lottery Worker Allegedly Rigged Drawings So He Could Win: Part 4
Reporter: Just before Christmas, 2010. A burly man walks into an Iowa gas station. He buys two items. A hot dog. $3.17. Reporter: And a lottery ticket. What turns out to be a $16.5 million dollar winning lottery ticket. A Des Moines quiktrip sole the winning ticket but the winner hasn't come forward just yet. Reporter: That winning "Hot lotto" ticket goes unclaimed. Someone has the ticket. The Iowa lottery wants to give away the money. Reporter: Almost a year goes by and in Iowa you've only got a year to claim your winnings. Nothing. No one. Not a peep. And everybody was anxiously anticipating finding out who won. Was it somebody who'd had the ticket stolen from them? Had somebody maybe been killed over it? Maybe it was just a guy who was trying to hide money from his wife that he was divorcing. Reporter: $16.5 mill just waiting in the bank then -- Ladies and gentleman, we have the winning ticket. Reporter: A Canadian lawyer claims he's the winner. He has all the right info except -- He claimed that he'd been in Des Moines on a business trip and wearing a suit and tie had gone to the convenience store and bought some tickets. Reporter: No hot dog? No hoodie? That rules him out. Well, at least it indicated that he was fibbing. Reporter: Then a New York lawyer steps forward to say he represents a foreign corporation based in Belize, yup, Belize that apparently owns the winning ticket, but he won't name that man who bought the ticket. So no payout. Them's the rules. Terry rich sounds deflated. We don't have the person nor all of the background information about this winning ticket. Reporter: Then with less than two hours left on the countdown clock, both claims are sensationally withdrawn. This is something we haven't experienced in the last -- well, since the lottery began 26-years ago. Reporter: Deflated and now suspicious, terry rich launches an investigation. So this was a hot lotto whodunit? Yeah, exactly. There were any number of conspiracy theories. Reporter: The man under the hood is finally unmasked, identified and arrested. A mystery puzzling iowans for five years has been solved. Edward Raymond Tipton age 51, of Norwalk has been arrested and charged with two counts of fraud. Reporter: Mr. Tipton is the cyber security boss at the multi-state lottery association, which controls hot lotto and powerball across the country. Here's Tipton after his alleged jiggery-pokery waxing to a CBS affiliate about the failure of computer users to take security precautions. It's an afterthought. Security has always been an add-on. And when something happens, it's too late, the cat's out of the bag. Reporter: Cyber is key here since unlike powerball there are no balls used in the hot lotto drawing. The Numbers are randomly spit out by a highly secured computer that Mr. Tipton has access to. He somehow fixes those Numbers in the computer, then goes to the gas station in disguise, armed with the Numbers, manually picks them, buys that guaranteed winning ticket. Doug Jacobson is a cyber-security guru. So let's say I anted to rig the lottery. And I wanted to win -- Don't do it, Doug. Don't do it. I won't. Reporter: But he could. A so-called 'root kit,' on a simple USB stick could infect the computer's operating system, enabling someone to secretly control seemingly random lottery Numbers. How long would it take to do that? You could conceivably play all this out in a minute or two. Reporter: Get what you want, remove it, not a trace. Yup, yup. Reporter: Thomas miller oversaw the investigation for two years. It defies all possibly odds that he happened to just in somewhat of a disguise purchase what turned out to be the winning tickets and just happened to also be the director of the company that generated the winning ticket. So, that's enough of a coincidence to constitute evidence as far as I'm concerned. Reporter: Charges and a trial. The focus, is that Tipton in the now infamous video? Tipton's sister takes the stand. I've never seen him wear a hooded jacket. Never has he had a beard. Reporter: We beg to differ, here's a mug shot of Eddie with a fulsome goatee. Then it's little brother tommy Tipton's turn on the stand. The person in the video is also buying hot dogs. Eddie's not a hot dog guy. He's a -- he's go to whattaburger, jack-in-the-box and gets a big meal kind of guy. I've never ever seen him buy hot dogs at a convenience store. Reporter: Then Tipton's old college buddy speaks. Exacts just like Eddie. The mannerisms are just like Eddie. So, as a disinterested third party, I would say "Oh, that's Eddie." Reporter: Oh, dear. Not very helpful friends and family, but is that enough? So far, there's really been no smoking gun to show exactly how he did it. Reporter: At trial, the jurors didn't hear from Eddie. But he heard from them. And we the jury find the defendant Edward tip ton guilty of fraud as alleged in count one. Reporter: Sentenced, just this past September, to 10-years in prison. That's unlucky. He is appealing. It is frustrating because cases in court should be tried on actual evidence from the witness stand and not leaps of logic and that sort of thing. Reporter: But, wait, there's more. Experience has taught us that criminals don't commit just one fraud. Reporter: There's an earlier Colorado lottery windfall, over half a mill paid out in November '05 to Eddie's brother. Tommy and a buddy by the name of Robert Rhodes. Yeah. Lifelong friends, college roommates, the trio, enjoy chasing big foot. And it seems, lottery jackpots. And, in checking cell phone records it was discovered that they were in contact with each other almost every day. You couldn't write a movie script this rich with twists and turns. Reporter: In fact, investigators say they've already identified a total of six suspicious jackpots across the country and expanded their search to 34 states. When you see one cockroach it's reasonable to believe that there's 100 more that you don't see. Hi, I'm looking for Mr. Rhodes, please. Reporter: Mr. Rhodes not eager to talk when our eager to talk when our affiliate KTRK came calling this week. Thank you. Might just all be very lucky. It's reasonable to draw the conclusion that it wasn't merely a coincidence. Covering this trial, did it make you play the lottery more or less? Well, I did buy a powerball ticket twice in the last few weeks. How could you not at that level? Reporter: $1.5 billion. I wonder if Eddie Tipton also

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