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Former lottery security official’s fraud trial delayed

TAGs: Crawford Shaw, eddie tipton, Iowa lottery, Lottery, Multi-State Lottery Association

iowa-lottery-jackpot-fraudThe trial of a former lottery exec accused of rigging a multi-million dollar Iowa Lottery jackpot has been delayed.

Eddie Ray Tipton (pictured), a former director of information security for the Multi State Lottery Association, was arrested in January. The 51-year-old Tipton is facing two counts of fraud for allegedly hacking into the computer system that picked winning lottery numbers. As a lottery employee, Tipton is barred from participating in lottery draws.

A gas station security camera showed a man in a hooded sweatshirt buying a $14.3m Hot Lotto winner in December 2010. This jackpot went unclaimed for nearly a year, until New York attorney Crawford Shaw showed up at Iowa Lottery HQ mere hours before the ticket was set to expire.

Shaw claimed to be acting on behalf of an investment trust, whose membership wished to remain anonymous, But Iowa Lottery rules require jackpot winners to publicly identify themselves, leading Shaw to withdraw all claim to the winning ticket one month later. The jackpot funds were then reabsorbed into the lottery prize pool.

Prosecutors have since alleged that Tipton used his security privileges to change settings on the video camera monitoring the computer that randomly generates the lottery’s winning numbers. Prosecutors say Tipton then connected a thumb drive to this computer, reprogramming the system to pick the numbers he subsequently selected when purchasing his ticket at the gas station.

Mike McLaughlin, senior analyst at security firm First Base, told the BBC that the prosecutors’ theory was plausible. McLaughlin said a rootkit-equipped USB drive would only take a second to execute its program. However, while the rootkit would make efforts to scrub any record of its illicit transaction, it “can leave traces on the infected machine if you know where to look.”

Prosecutors say that the other four individuals who had access to the computer’s security camera have denied altering the settings, which were changed to record one frame per minute rather than continuous video. Prosecutors also intend to call a witness who will testify that Tipton claimed to have a self-destructing rootkit.

Tipton’s attorney Dean Stowers called the allegations “fanciful” and disputes that Tipton is the man buying the ticket on the Des Moines Quik Trip CCTV footage. Tipton has claimed he was in Texas at the time the ticket was purchased but prosecutors say his cell phone records indicate he was still in Iowa. Tipton’s alleged accomplice in the investment trust, Robert Rhodes II, was arrested on similar fraud charges in Texas in March.

On Monday, Judge Jeffrey Farrell announced that jury selection would be delayed after Stowers pleaded for more time to wade through over 500 pages of new material plus video evidence that prosecutors released on Friday. Farrell set a new court date for July 13. If convicted on both counts, Tipton faces a maximum of five years in stripes and a $7,500 fine.

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