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Lottery rigging accomplice used Wisconsin payout for offshore tax scam

Lottery rigging accomplice used Wisconsin payout for offshore tax scam

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Insider BuzzInsider Buzz: Lottery rigging accomplice used Wisconsin payout for offshore tax scam



IOWA CITY, Iowa — After Robert Rhodes accrued a Wisconsin Lottery jackpot that were rigged by way of his buddy Eddie Tipton, he used the providence for an funding scheme that produced every other wave of undeserved govt cash, court docket data display.

Rhodes, an accomplice in a scandal that has shaken state lotteries, just lately defined underneath oath how he used the $783,00zero payout to obtain an extra $180,00zero in bogus tax refunds. The Texas businessman despatched his lottery winnings offshore to shop for a phony insurance coverage for a non-public company that by no means did any industry — with the exception of obtain the lottery prize. He then claimed the coverage as a tax-deductible “business expense.”

The upshot: Rhodes gained more or less $150,00zero from the U.S. govt and $36,200 from Wisconsin in tax refunds at the lottery payout. But in an ironic twist, the St. Lucia-based insurer the place Rhodes despatched his money would later be accused of duping traders and, in Rhodes’ phrases, “abscond” with a bit of the loot.

Rhodes and Eddie Tipton, former safety director for the Multi-State Lottery Association, just lately pleaded accountable to rigging the Dec. 29, 2007, Megabucks drawing marketed at $2 million. They agreed to refund Wisconsin the $783,00zero payout and an extra $18,100 apiece to hide the state tax refund.

Investigators say Tipton put in pc code that allowed him to expect successful numbers on 3 days of the yr, and that he labored with Rhodes, his brother Tommy and different friends to shop for successful tickets and declare prizes price hundreds of thousands in a couple of states. Tipton and his brother pleaded accountable remaining week in Iowa, the place the lottery affiliation is founded.

Rhodes, a 49-year-old father, pleaded accountable and cooperated with investigators in change for probation. He disclosed the offshore scheme in a deposition underneath wondering from Tipton’s legal professional, Dean Stowers, who referred to as it cash laundering and tax fraud.

Rhodes, who didn’t go back a message in the hunt for touch upon his testimony, hired Tipton at a Houston tech corporate within the 1990s they usually turned into pals. Tipton equipped him with notecards list dozens of doable successful mixtures earlier than the Wisconsin drawing, and Rhodes purchased them, together with the successful price tag.

With Tipton’s encouragement, Rhodes shaped a restricted legal responsibility company, referred to as Delta S Holdings, to say the prize. Rhodes had up to now visited the lottery affiliation’s administrative center and each frightened their ties could be found out if Rhodes used to be indexed because the winner. The LLC filed a lawsuit to procure the prize after Wisconsin lottery officers stated they could not pay the company and not using a court docket order.

Rhodes stated he then grew to become to mavens for tax making plans recommendation on his providence, purchasing a plan that “allowed me to get a tax refund.”

Under the association, Rhodes despatched $450,00zero to Bancroft Life & Casualty ICC Limited in St. Lucia to shop for an “insurance policy” for Delta S Holdings. His tax returns claimed the acquisition as a industry expense, generating refunds when the governments decided they withheld an excessive amount of of the prize.

Bancroft recruited tax-weary, rich folks to spend money on its insurance coverage. Customers would purchase dear insurance policies that their companies did not want however may just write off. Bancroft would mortgage again as much as 70 % in their top class bills.

Rhodes gained a $250,00zero mortgage from Bancroft after purchasing his coverage. He additionally gained an insurance coverage declare for $75,00zero for “regulatory changes” that he stated harmed Delta S Holdings, although it by no means did another industry. Asked what rules had modified, Rhodes testified, “I don’t remember.” He stated its potentialities in “real estate” and “consulting” by no means materialized.

Rhodes stated Tipton wasn’t advised in regards to the offshore deal till later and gained not one of the refunds. He stated the deal went bitter in 2012, when Bancroft turned into bancrupt and the corporate “absconded” with $150,00zero his LLC had left.

“I started getting insurance account records that say all of the money that Delta S Holdings had put there through paying the premium was gone,” he stated. “Some expletives followed on my part, you know, what… happened to whatever money was there to pay insurance claims? Well, there is none.”

Timeline of the largest crime in US lottery historical past

The following is a compilation of Lottery Post information protection chronicling the Hot Lotto thriller and due to this fact found out crime.

We get started the timeline with a information tale indicating that handiest three months remained for the $16 million Hot Lotto jackpot to be claimed.



  • Iowa Lottery safety leader bent on figuring out id of jackpot winner, Jan. 10, 2012
  • NY legal professional in lottery thriller travels to Iowa this week, Jan. 17, 2012
  • Iowa Lottery safety leader to grill NY legal professional over Hot Lotto price tag, Jan. 17, 2012
  • Representative of Hot Lotto winner named in lawsuit, Jan. 20, 2012
  • Hot Lotto accept as true with consultant would possibly not identify winner, Jan. 20, 2012
  • Iowa Lottery threatens to disclaim jackpot payout if winner remains nameless, Jan. 23, 2012
  • Lawyer provides up $14 million Iowa lottery price tag declare, Jan. 26, 2012
  • $14.three million Hot Lotto prize declare withdrawn, Jan. 27, 2012
  • Iowa Legislators happy with Lottery’s dealing with of puzzle jackpot winner, Feb. 1, 2012
  • Iowa Lottery to offer away hundreds of thousands from jackpot thriller, Feb. 26, 2012
  • Iowa Lottery director: 50-50 that Hot Lotto thriller might be solved, Aug. nine, 2012
  • Iowa officers seeking to resolve lotto thriller, might unencumber surveillance video, Aug. 19, 2012




  • MUSL worker arrested in Hot Lotto jackpot thriller, Jan. 15, 2015
  • BOMBSHELL: MUSL worker would possibly have rigged Hot Lotto automated drawing, Apr. 13, 2015
  • Texas guy charged in Iowa lottery case contests extradition, Apr. 20, 2015
  • Extradition trial starts this week in $16.5M Hot Lotto fraud case, Jun. 7, 2015
  • Inside the largest lottery scam ever, Jul. 7, 2015
  • Trial underway in global’s largest lottery fraud case, Jul. 14, 2015
  • Lottery safety leader: Rigging automated recreation “sadly” conceivable, Jul. 15, 2015
  • Prosecution rests in Hot Lotto trial, Jul. 16, 2015
  • Defense temporarily wraps up in Hot Lotto trial, Jul. 16, 2015
  • Hot Lotto case strikes to jury for deliberations, Jul. 17, 2015
  • Former lottery safety worker accountable of rigging $14.3M drawing, Jul. 20, 2015
  • MUSL safety employee who rigged drawing will get 10 years, Sep. nine, 2015
  • Texas government had up to now investigated brother of lottery cheat, Oct. 14, 2015
  • Another $1.2M Hot Lotto jackpot rigged by way of Tipton, officers say, Nov. 21, 2015
  • Jackpot-fixing investigation expands to extra state lotteries, Dec. 18, 2015
  • Prosecutors say Tipton rigged two jackpots he bought tickets for in Kansas, Dec. 21, 2015
  • Maine provides names of Hot Lotto winners to Iowa workforce having a look into rigging scheme, Dec. 23, 2015
  • S.C. Lottery assures public no automated drawings used in state, Dec. 23, 2015
  • Kansas lottery avid gamers wondering recreation’s integrity, Dec. 23, 2015
  • Lottery scandal not likely to impact New Mexico, reputable says, Dec. 26, 2015
  • Tipton granted lengthen in subsequent trial till July, Dec. 29, 2015


  • Iowa Lottery CEO Terry Rich to respond to lottery participant questions are living Monday night time, Jan. 11, 2016
  • First lawsuit in state lottery-fixing scandal seeks hundreds of thousands, Feb. four, 2016
  • MUSL seeks to push aside lawsuit over rigged jackpot, Apr. 1, 2016
  • Lottery scammer’s brother dealing with prison fees, Apr. 6, 2016
  • Investigators in finding Tipton’s tool code to rig automated lottery drawings, Apr. 7, 2016
  • Lottery rigging scandal activates safety audit in South Dakota, Apr. 13, 2016
  • Preliminary listening to rescheduled for Tommy Tipton in lottery rigging case, Apr. 22, 2016
  • Third suspect surrenders in nationwide lottery rigging scandal, Apr. 28, 2016
  • Lottery scam investigation involves Tennessee, May 11, 2016
  • Investigators in finding every other buddy of Tipton who cashed rigged lottery prize, May 11, 2016
  • Convicted automated drawing fraudster argues Iowa court docket attraction, Jun. 16, 2016
  • US Senate panel calls for data in lottery scandal, Jun. 22, 2016
  • Lottery rigging trial to be moved out of Des Moines, Jun. 27, 2016
  • Eddie Tipton’s new trial behind schedule till 2017, Jul. 1, 2016
  • Iowa court docket reverses a part of Tipton’s lottery fraud conviction, Jul. 28, 2016
  • Internal investigation concludes Tipton acted on my own to rig lottery drawings, Aug. 10, 2016
  • Prosecutors say 2 extra males could also be related to lottery riggings, Aug. 24, 2016
  • Judge: winner’s lawsuit in lottery-fixing case can proceed, Oct. 13, 2016
  • Alleged lottery scandal conspirator to go into new plea, Nov. 14, 2016
  • Accused lottery rigger Eddie Tipton dealing with new Wisconsin fees, Dec. 22, 2016


  • Man recordsdata lawsuit over rigged lottery jackpots, Jan. four, 2017
  • Trials for Tipton brothers charged in lottery scandal behind schedule, Jan. eight, 2017
  • Former MUSL reputable gained severance amid lottery jackpot scandal, Jan. 10, 2017
  • Texas guy pleads accountable to fraud in lottery scandal case, Jan. 11, 2017
  • Iowa Supreme Court hears lottery rigging case, Feb. 14, 2017
  • Kansas recordsdata lawsuit in opposition to accused lottery rigger, Mar. 16, 2017
  • Best buddy to testify in opposition to Tipton at July lottery rigging trial, Mar. 31, 2017
  • Mastermind of lottery fraud will provide an explanation for how he rigged jackpots, Jun. 12, 2017
  • FBI overlooked rigged jackpot in 2006 earlier than lottery scheme grew, Jun. 19, 2017
  • The Five lottery jackpots Tipton and his pals stole, Jun. 20, 2017
  • Lottery jackpot rigger’s Iowa convictions pushed aside, Jun. 23, 2017
  • IT’S OFFICIAL: Tipton pleads accountable to rigging automated lottery drawings, Jun. 29, 2017

AP, Lottery Post Staff

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four feedback. Last remark 1 month in the past by way of .

eddessaknight's avatar - nw paladin.jpg

United States
Member #47729
November 22, 2006
4910 Posts

Posted: July 6, 2017, 7:53 pm – IP Logged

Maybe I overlooked it, however the IRS will no doubt take this up.

Big cheese $$$ large bait, large cash alternative = large schemes & scams that can inevitably observe and has all over the world

When requested why the nice Brooklyn financial institution robber, Willie Sutton,  stored on robbing banks, he responded level clean with out hesitation:

“Well warden that’s where the money is” 

music*'s avatar - bee

Fresno California
United States
Member #157856
August 2, 2014
1825 Posts

Posted: July 7, 2017, four:13 am – IP Logged

Big cheese $$$ large bait, large cash alternative = large schemes & scams that can inevitably observe and has all over the world

When requested why the nice Brooklyn financial institution robber, Willie Sutton,  stored on robbing banks, he responded level clean with out hesitation:

“Well warden that’s where the money is” 

eddessaknight,  “Well warden that’s where the money is” is not true. Electronic funds have changed money cash. Most get their money from the ATMs. Branches have little or no money readily available. 

 “Crime does not pay.” 

 When I win the Lottery I can be a proud taxpayer. I’m playing the lifetime of an American citizen.  I will be able to force anyplace within the decrease 48 and not using a passport. I’m secure by way of police and the Justice device. My votes depend. 

 People are operating towards America and now not clear of our loved Country.

US Flag

Keep the nice occasions rolling !!!  White Bounce

OneTrickpony's avatar - phone

United States
Member #167657
July 25, 2015
95 Posts

Posted: July 7, 2017, nine:52 am – IP Logged

Maybe I overlooked it, however the IRS will no doubt take this up.

I agree.  He can have gotten a slap at the wrist on this case, however the IRS performs hardball.

Updated: August 18, 2017 — 3:03 am

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