AG Coffman Announces Guilty Plea of Man who Stole Millions in Multi-State Lottery Fraud Case

06/23/2017—From our partners at the Colorado Attorney General's Office...an update on an investigation by the Colorado Bureau of Investigation ID Theft/Fraud Unit. 

DENVER – Today, Attorney General Cynthia H. Coffman announced that Eddie Raymond Tipton of Flatonia, Texas, has pled guilty to theft by fraud, and computer crime charges related to his role in defrauding state lotteries in Colorado, Wisconsin and Iowa. Tipton was prosecuted in Wisconsin, as part of a multi-year, multi-state fraud case, and faces a total maximum penalty in Wisconsin of 13.5 years of incarceration.

As part of the multi-state plea agreement Eddie Tipton further agreed to pay $1,137,980.00 in restitution to Colorado for the ill-gotten gains from his fraud. His brother, Tommy Tipton, has agreed to pay restitution to Colorado in an amount of $568,990.00. The Tiptons have also agreed to pay restitution to Oklahoma and Kansas for similar fraudulent lottery wins.

“Mr. Tipton and his cohorts took their criminal activities on the road, defrauding several states, and rigging the system to steal from Colorado,” said Attorney General Coffman. “His devious gamble has finally caught up with him, and he will now face the consequences for his actions.”

In 2015 the Colorado Lottery was informed by officials from Iowa that a 2005 Colorado winning lottery drawing involving Tommy Tipton, the brother of Eddie Tipton, and another man, Alexander Hicks, may have been part of a larger multi-state lottery fraud scheme. At the time, Eddie Tipton was being prosecuted in Iowa for a fraud which targeted Iowa’s lottery in 2010 with a $16.5 million winning drawing.  

After conducting an initial investigation, The Colorado Lottery and the Colorado Bureau of Investigation developed evidence indicating that two manual draw winning tickets from a November 23, 2005 drawing were suspicious. The first of these two suspicious tickets had been purchased in Colorado on November 21, 2005 in Commerce City and the second purchased on November 22, 2005 in Lamar with specifically selected numbers being manually chosen by the respective purchasers instead of the quick pick option being used.  Evidence was ultimately acquired showing that Tommy Tipton bought one of the two “winning” Colorado tickets in Lamar and then solicited Alexander Hicks to claim the winning funds in Colorado in exchange for Hicks receiving 10% of the proceeds.  The second suspicious winning ticket was claimed by a newly formed Nevada LLC whose registered agent was also a Texas resident. As a result of these findings, Colorado joined the multi-state investigation.

“The Colorado Lottery, a division of the Colorado Department of Revenue, would like to recognize the Colorado Bureau of Investigation and the Colorado Attorney General’s Office, the 10th Judicial District Attorney’s Office, and their law enforcement counterparts in Iowa and Wisconsin for ensuring this crime, perpetrated against the Colorado Lottery game "Lotto” more than 11 years ago, will not go unpunished,” said Laura Solano, Colorado Lottery Director.  “The Colorado Lottery is committed to ensuring the highest standard of security and integrity of all lottery games of chance for our players.  To ensure Lottery games meet these high industry standards, the Lottery utilizes Random Number Generators for all in-State Draw Games, which have been purchased from an independent third party vendor, and certified by two gaming test labs and forensic auditing firms.  For more information please visit coloradolottery.com/protect-yourself.”

During the course of the investigation it was determined that Eddie Tipton, a key employee of the Iowa based Multi-State Lottery Association (MUSL), was responsible for programming the software used in the random number generator (RNG) machines that picked the winning numbers in lotteries such as Colorado’s.

Wisconsin’s forensic investigation determined that Tipton programmed a modified code in the RNG software that, when certain conditions were met, produced a predictable set of winning numbers that were then used by Eddie Tipton or shared with other family members or associates, so that manual lottery tickets could be purchased using these numbers.

The Colorado Lottery headquarters are located in Pueblo, Colorado, and the Attorney General’s Office worked with the 10th Judicial District Attorney’s Office on this case.

“The successful prosecution of this case is the result of the strong collaborative efforts of all of the agencies involved,” said 10th Judicial District Attorney Jeff Chostner. “My office looks forward to continuing to partner with state and local agencies as we work together to protect Coloradans.”

Eddie Tipton is currently scheduled for sentencing in Wisconsin on September 21, 2017.  Eddie Tipton and Tommy Tipton are also expected to be in court in Iowa on June 29, 2017 for disposition hearings.