US lottery security boss charged with fixing draw

http://www.bbc.com/news/technology-32301117

by goodcanadian • 11 years ago

40 19 11 years ago

vonklaus• 11 years ago

If found guilty of the two charges of fraud, Mr Tipton faces up to five years in jail and a fine of up to $7,500.

5 years is certainly non-trivial, but that is the maximum sentence. If you could only serve half of the maximum sentence, 2.5 years in prison and $7,500 does not seem like a steep penalty for a $14 million fraud.

goodcanadian• 11 years ago

It depends on what the probability of getting away with it is. In other words, multiply the likelihood of success by $14 million. If the result is greater than $7500 plus however you choose to value the jail time and criminal record, go for it! :)

ianlevesque• 11 years ago

That penalty seems surprisingly just to me actually. Sure, the amount would've been large if he had escaped with it, but this doesn't sound like a criminal that we should lock up for many years to remove him from society. He could go on to live a long productive life even with this stupid crime in his past.

BillTheCat• 11 years ago

He never successfully claimed the prize. Even if he had claimed the prize it would probably be seized by the state.

gameshot911• 11 years ago

I'd be curious how the state picked up on it. Sure there'd be evidence of the crime...if you knew to look. If not, it's just another win, and seemingly normal offline PC, and a few abnormal bytes of video storage out of the thousands and thousands of otherwise benign hours of footage. There must have been a tip off, or some other abnormality.

I highly doubt that info is forthcoming though, unless the state is forced to disclose it at trial. Gov probably doesn't want to give away its secrets.

Also, can't help but wonder if the guy would have gotten away with it had recruited someone else. Buying the ticket himself was a stupid idea if true, since the ticket can be traced to the machine it was purchased on and at what instant, so it's trivial to ask for the store surveillance footage. And having a company incorporated Belize claim the ticket at the last second would also raise eyebrows. But if he had recruited a trustworthy accomplice with no immediate connections, it would have been just another person claiming a prize.

dmix• 11 years ago

This type of behaviour would set off alarm bells at the lottery company for sure:

The ticket Tipton has been accused of buying went unclaimed for almost a year, until Hexham Investments Trust, a mysterious company incorporated in Belize, tried to claim the prize through Crawford Shaw, a New York attorney, hours before the ticket was set to expire in 2011.
Lottery officials refused to release the prize because those behind the trust declined to give their identities, which is required under Iowa law. Shaw asked officials whether Hexham Investments could claim the money and then turn it over to the state to be given out for charity. Lottery officials rejected the offer and said the prize winner must accept and distribute the funds.
Shaw withdrew the claim to the prize in January 2012. At that time, Iowa Lottery officials asked the Iowa Attorney General's Office and Iowa DCI to investigate.

They don't hand $14m out without making sure the buyer is legit - - and an attorney claiming it on a behalf of a foreign company is definitely worthy of investigation.

exelius• 11 years ago

See, all of this makes me wonder how smart this guy actually is. It feels like he had a half-baked plan, but being a security chief for the lottery, he should have known all of the checks they have to go through before someone can claim a prize.

It seems like this type of scheme is really, really hard to pull off because of financial records retention requirements. No matter what you do, the money trail will catch up with you. Unless you're a drug cartel laundering billions through HSBC. Then you get away with it because the scale is so audacious, the justice system doesn't have any way to deal with it without taking down the global financial system.

twoodfin• 11 years ago

There are many more details in the original Des Moines Register story:

http://www.desmoinesregister.com/story/news/2015/04/11/prose...

Essentially, the strange circumstances of the claim for the winnings was investigated, and that trail led to enough suspicion that they tracked down the surveillance video of the ticket purchase. They released the video publicly to help identify the purchaser and were subsequently pointed to Tipton.

leot• 11 years ago

Good thing nothing like this could have happened with electronic vote tabulators.

matheweis• 11 years ago

This is a duplicate of: https://news.ycombinator.com/item?id=9371517

tptacek2• 11 years ago

The defense here has their work cut out for them:

* Employees of the Multi-State Lottery Commission are not allowed to play the lotto at all.

* This guy runs infosec for the Multi-State Lottery Commission.

* He is on camera buying what turns out to be a $14MM winning ticket.

* The prize for that ticket was claimed by a Belize-registered company the day before the ticket was to expire.

* The defendant was more or less caught modifying the camera settings for the safe room for the lotto-generating computer systems specifically for the day he was in that safe room.

The rest of the stuff about "rootkits" and "USB drives" and other theories of the crime seem like a red herring. The winning ticket is a smoking gun. Even if, in violation of the rules of his job, he'd played the lotto every day of his life, it would still be so statistically overwhelmingly likely that the ticket was bogus that no reasonable person could acquit. But I'm guessing it's going to turn out that this is one of the only times since he got the job that he played lotto.

ufo3• 11 years ago

I wonder if there is a way to make a more transparent RNG system that can be verified to be fair by the public. Maybe something involving clever crypto like zero-knowledge-proofs?

razwall• 11 years ago

See the NIST Randomness Beacon.

ufo3• 11 years ago

Correct me if I'm wrong but that wouldn't stop a NIST insider from making the system output the numbers at lottery selection time would it?

imglorp• 11 years ago

There are some bitcoin lotteries if you search around. One simple method is players all propose a number, and then at choosing time, compare to the hash of the last blockchain transaction. They might be able to automate the wagering and payout parts too.

ufo3• 11 years ago

Isn't that liable for manipulation by bitcoin miners? Why not use some other public source of randomness instead?

PeterWhittaker• 11 years ago

Uhm, it's a lottery. Do what Canada does, use a ball-drop machine [1].

Hmm, just did a bit of checking: Apparently we use both ball-drop machines and RNGs, depending on draw frequency [2].

I hope the powers-that-be audit their system security now.

[1] http://www.olg.ca/lotteries/draws_overview.jsp

[2] http://www.olg.ca/lotteries/games/lottomax_faq.jsp

pjsullivan3• 11 years ago

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US lottery security boss charged with fixing draw

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