Hot Lotto Scandal Book Author Subpoenaed in $16.5 Million Lawsuit Against Iowa and Multi-State Lotteries

Posted on: August 28, 2019, 06:39h. 

Last updated on: August 28, 2019, 10:46h.

Lawyers for a man suing the Iowa Lottery and the Multi-State Lottery Association (MUSL) for $16.5 million over the Hot Lotto scam have subpoenaed the author of a book on the subject, the Associated Press reports.

Hot Lotto scandal
Perry Beeman (left) and former Iowa Lottery CEO Terry Rich at the launch of their book on the Hot Lotto scandal, The $80 Billion Gamble in June. (Radio Iowa)

Iowa journalist Perry Beeman co-authored The $80 Billion Gamble with former Iowa Lottery CEO Terry Rich, which recounts the story of former MUSL security-guy-turned-mastermind-lottery fraudster Eddie Tipton.

Tipton was sentenced to up to 25 years in prison in 2017 for rigging at least six draws in at least five different states for the enrichment of himself and a network of friends and family.

Now, lawyers for “Lucky” Larry Dawson want Beeman to turn over transcripts of interviews he conducted with Rich last year.

Dawson won a $9 million lottery jackpot a week after Tipton fixed the draw in December 2010. The latter’s attempt to claim the $16.5 million prize resulting from the rigged contest ultimately led to his downfall and arrest.

Chilling Effect

But Dawson argues that without Tipton’s interference, the jackpot would have rolled over and he would have won not $9 million — but $25.5 million.

Instead, the $16.5 million — which Tipton ultimately failed to claim — was redistributed among the state lotteries that comprise MUSL’s membership. According to the AP, the Iowa Lottery used its share for a “Mystery Millionaire” promotion, which included a $1 million prize draw at the Iowa State Fair.

Dawson is represented by the Crawford Law Firm, which recently obtained a $4.3 million class-action settlement for lottery players across the US who had participated in draws that Tipton had rigged.

Beeman told the AP that he had not yet made his mind up whether he will burn his source and accede to the request, but the veteran journalist said he has resisted similar subpoenas in the past because they have a “chilling effect on the reporting process.”

The Iowa Supreme Court has ruled that a reporter’s sources and notes are privileged information that can only be subject to court-ordered disclosure under certain circumstances.

Tipton’s Downfall

Tipton was able to rig the draws by installing a malicious, self-destructing code in the random number generator so that it would choose a set of numbers known to Tipton on three days of the year.

He waited 11 months before he tried to claim the $16.5 million prize via a third-party, a Canadian law firm based in the Turks and Caicos Islands.

This aroused the suspicions of lottery officials, who examined security footage showing the purchase of the ticket at a Des Moines, Iowa convenience store. Tipton’s colleagues ultimately recognized their head of information security as the man in the video.

Tipton told authorities he had repeatedly tried to warn his superiors at MUSL that the system contained exploitable vulnerabilities, but says he was ignored. According to The Des Moines Register, he continues to claim that the system is flawed.