DES MOINES, Iowa – Two brothers who directed the biggest lottery scam in U.S. history have repaid less than $1,400 in restitution despite owning property worth nearly $2 million, a Des Moines Register and Corpus Christi (Texas) Caller Times investigation has found.
Between them, Eddie and Tommy Tipton admitted rigging drawings in at least five states worth a combined $24 million.
But they barely have made a dent in the more than $2.4 million they were ordered to pay in restitution even though they own more than a half dozen properties in Texas that are worth nearly as much as they owe, according to records the Register has obtained.
At the pair's current rate of repayment, Oklahoma – one of the five state lotteries the brothers scammed – estimates it will be fully reimbursed in 190 years.
► Nov. 3: Lottery and gift card scams are on the rise. What you need to know
► March 26: How a gaming geek pulled off the biggest lottery scam in U.S. history
► Feb. 18: Lottery scam mastermind rigged more drawings than first thought
"How do these guys slip through the loop every damn time? They’re like Teflon," said Allen Weise of Flatonia, Texas, who provided information about the brothers and their properties to Iowa prosecutors before their 2017 convictions.
Eddie Tipton, mastermind of the "random number" scam and former security chief of the Urbandale, Iowa-headquartered Multi-State Lottery Association, remains in prison serving a 2017 sentence that could last up to 25 years. His job also barred him from playing the lottery because the association provides games for state lotteries across the USA.
His brother, Tommy Tipton, a former justice of the peace from Flatonia, Texas, who admitted helping his brother hijack the world's largest lottery network, served a 75-day jail sentence and has been off probation for 15 months.
Using "random" numbers generated from a computer program designed by his brother at the Multi-State Lottery Association, Tommy Tipton acknowledged that he helped to claim prizes in at least two states: Colorado and Oklahoma.
Eddie Tipton was ordered to pay almost $1.7 million in restitution while Tommy Tipton was ordered to pay more than $800,000.
From prison, Eddie Tipton has paid almost $800. His brother has repaid $587, court records show.
Yet, the brothers retain full or partial ownership in more than $1.8 million of property in Fayette County, Texas, where Flatonia is located about halfway between Houston and San Antonio.
Since Tommy Tipton’s Sept. 15, 2017, release from jail and probation he has:
• Sold at least two properties with a combined market value of more than $635,000.
• Continued to own his longtime home with a pool valued at almost $780,000.
• Remained the sole owner of at least five business or investment properties that have a combined market value of $572,950.
• Continued as a joint owner with his still-imprisoned brother in at least two properties and mineral rights on a third valued at $105,420.
So far, no state has pursued the legal actions outlined in the Tiptons' plea deals that entitle the defrauded lotteries to lay claim to the brothers' property or to property that the Tiptons placed in the names of associates and family members.
When the Register contacted Tommy Tipton, he declined to discuss his current work, income or properties. He said in that brief interview that his brother, Eddie, "ain’t never done anything wrong in his life" and vowed the two would once again work together.
"It's hard. I'm a single dad raising three kids on a very limited income with lots of bills, and when Eddie gets home he probably will create something,” Tommy Tipton said. "He's a smart, intelligent guy. Hopefully, the future will be better and we’ll get all that stuff paid back."
In 2007, Eddie Tipton built a roughly 5,000-square-foot home in Norwalk, Iowa, a Des Moines suburb. That was two years after he embedded fraudulent computer code into random-number generating software that several state lottery games distributed and used.
The random-number fraud allowed him to accurately predict at least five winning drawings that totaled more than $24 million in Colorado, Iowa, Kansas, Oklahoma and Wisconsin.
The multi-year scheme ultimately unraveled in 2010 after a Des Moines convenience store video captured Eddie Tipton purchasing what would become a $16.5 million ticket. Iowa Lottery officials refused to cash that ticket after some of Tipton's associates on multiple occasions tried to redeem the ticket anonymously.
After years spent fighting criminal charges, Eddie Tipton pleaded guilty to "ongoing criminal conduct" in 2017.
Iowa prosecutors were aware of his Norwalk home that contained a movie theater and gym, overlooked a pond and sat on nearly 23 acres. He sold in July 2015 for $590,000.
► July 2016: Court tosses 1 fraud conviction in lottery rigging scam
► February 2016: Lawsuit: Lottery fraud reduced winner's payout
But at the time Eddie Tipton sold his home, prosecutors knew only about the Iowa Hot Lotto ticket that state officials had refused to cash. In late 2015, prosecutors learned that he had rigged lottery wins in other states.
As a result, Iowa Attorney General Tom Miller's office in March 2016 attempted to gain access to Eddie Tipton's Norwalk home; office equipment; multiple vehicles; and his checking, savings and futures trading accounts.
Eddie Tipton argued in court filings that the lien was unconstitutional because it would interfere with his constitutional right to counsel and result in a deprivation of property without due process. Judge Brad McCall of Polk County District Court in Des Moines agreed and dismissed the state's attempt to place liens against the property.
Some of the money that Eddie Tipton scammed in rigged drawings was acquired a decade before his arrest, records show.
Many banks and financial institutions are not required to maintain records that old, which made it difficult for prosecutors to directly link Eddie Tipton’s assets with the winnings, said Rob Sand, a former lawyer for the Iowa Attorney General's Office who helped prosecute the Tipton cases.
"Unless we could very specifically and very clearly show that the money he was paying for them (properties) with was stolen money, we couldn’t do anything about it,” said Sand, who in November was elected as Iowa’s state auditor.
It's "absurd" that states and their lotteries have not taken further action to claim restitution from the Tiptons, Judge Ed Janecka of Fayette County, Texas, told the Register.
In 2015, Janecka successfully urged Tommy Tipton to resign from his elected judicial position because of Tommy Tipton's involvement in the lottery fraud, Janecka said.
► December 2015: Prosecutor: Convicted lottery official fixed 2 Kansas jackpots
► October 2015: Iowa lottery-rigging probe widens
"This is just wrong, and the states need to come back with a vengeance," Janecka said.
The Register contacted the lotteries and attorneys general offices in each state where Tommy Tipton or Eddie Tipton owe restitution.
Conversation is ongoing about which state should take the lead on actions that could result in seizing property, said Jay Finks, a spokesman for the Oklahoma Lottery. Some of the games fraudulently won in the scandal were part of multi-state networks.
► September 2015: Lottery official sentenced to 10 years in scam
► July 2015: Guilty verdict in lottery scam but game safe, official says
“It kind of creates a layer of complication we’re trying to navigate,” Finks said.
The land records the Register obtained should alert states to take further action, Sand said.
"Our law-enforcement team in Iowa did not work hard for three years to now see other states make a minimum effort to collect," Sand said. "Hopefully, this is a wake-up call."
Photos: Lottery scheme brothers slow to pay restitution
What the Tipton brothers owe
Here is what Eddie and Tommy Tipton owe and each state’s response.
In Oklahoma and Colorado, portions of the restitution are considered joint payments that both brothers owe, instead of individually. The amounts listed for those states are total amounts owed.
• Amount ordered to be repaid: $1,137,980 by Eddie and Tommy Tipton
• State response: The state received slightly less than $400 of the restitution, said Annie Skinner of the Colorado Attorney General’s Office. The office did not respond to questions about why officials haven’t tried to seize the Tiptons’ properties.
• Amount ordered to be repaid: Eddie Tipton never was able to claim a $16.5 million Hot Lotto prize in Iowa in 2010, even after enlisting a New York lawyer to set up a Belize-based trust to shield his identity.
• State response: In 2016, the Iowa Court of Appeals reversed one of two fraud convictions against him, saying prosecutors brought the charge after a three-year statute of limitations had expired. He pleaded guilty and was sentenced in 2017 for his crimes in all the states. Eddie Tipton's job as security chief for the Multi-State Lottery Association also barred him from playing the lottery even without the rigging charges.
• Amount ordered to be repaid: $644,478 by Eddie and Tommy Tipton
• State response: Conversation continues about which states should take the lead on actions that could result in seizing property, said Jay Finks, a spokesman for the Oklahoma Lottery.
• Amount ordered to be repaid: $30,805.60 by Eddie Tipton
• State response: The state has received no payment, said Jennifer Montgomery, a spokeswoman for the Kansas Attorney General’s Office.
Iowa records indicate Eddie Tipton has paid the state $14.89. Montgomery did not respond to questions about why the state hasn’t tried to seize properties.
• Amount ordered to be repaid: $409,600 by Eddie Tipton
• State response: The state has received $198.12, said Patricia Mayers, a spokeswoman for the Wisconsin Lottery. The state did not respond to interview requests to the lottery and the state’s attorney general about why officials haven't sought further court action.
Photos: Lottery scammers own property worth millions of dollars
What the Tipton brothers own
Among Eddie and Tommy Tipton's properties and recent transactions identified in public records:
• Home with a pool. Tommy Tipton owns his longtime home with a pool in Flatonia, Texas, that has a market value of $779,460.
In May 2013, he and his now ex-wife, Pamela, transferred that property to a trust – a financial tool sometimes used to protect property from creditors – that remains in their names. The transfer occurred 15 months after the Iowa Division of Criminal Investigation and the Iowa Attorney General’s Office announced they had launched an investigation into the lottery scam.
• Business or investment properties. Tommy Tipton owns at least five other properties in Fayette County, Texas, with a combined market value of $572,950.
The most valuable parcel includes 100 acres of native pasture land with a market value of almost $401,000; others include a gas station, a house, a mobile home and a commercial building.
• Home ownership from prison. Eddie Tipton owns a 55-acre parcel with a home near Flatonia, Texas, that has a current market value of $365,380.
• Joint ownership. Tommy and Eddie Tipton jointly own two properties and mineral rights on a third valued at $105,420 in Fayette County, Texas.
The most valuable property is 13 acres of land appraised at $80,750; the other property includes a mini-storage commercial site.
• Recently sold. Tommy Tipton sold at least two Fayette County, Texas, properties since his release from jail.
In January he sold 102 acres of pasture, and in March he sold a 5.7-acre vacant residential plot. The market values of the properties are listed as $580,730 and $54,490, respectively.
• Recently purchased. On March 25, 11 days after Tommy Tipton sold the 5.7-acre parcel, a home assessed at $36,240 was deeded to his daughter.
The mailing address for the property remains the same address as Tommy Tipton's pool home. She did not return requests for an interview.
16 photos: Tipton sentenced in Iowa Lottery case