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He Hacked the $16.5 Million Lottery: Inside the Biggest U.S. Lottery Scam (with Brad Osborne & Terry Rich)
In this episode of Lottery, Dreams, and Fortune, Powerball winner Timothy Schultz interviews Brad Osborne, co-writer and director of the new documentary Jackpot: The Biggest Lottery Scam in U.S. History, and Terry Rich, executive producer and former Iowa Lottery CEO who helped crack the case.
They share the unbelievable true story of Eddie Tipton, a lottery insider who manipulated the random number generator to try to steal $16.5 million. From surveillance footage to fake lawyers and hidden identities, this is the real-life fraud that changed how lotteries operate across the United States.
Topics include:
-How Tipton rigged the system from the inside
-How investigators followed digital breadcrumbs to catch him
-Behind-the-scenes decisions while making the Jackpot film
-Whether modern lotteries are still vulnerable
-What every lottery player should know
Follow Lottery, Dreams, and Fortune for more behind-the-scenes stories of winners, experts, and extraordinary odds.
Mentioned in this episode:
Youtube: LOTTERY, DREAMS AND FORTUNE Podcast
Transcript
Timothy Schultz
There was a $16.5 million lottery ticket and no one claimed it for almost a year.
Brad Osborne
It's the largest lottery fraud in America. What our perpetrator was able to do was inject a nefarious code, security cameras all around it. I mean, you'd think it would be impenetrable.
Terry Rich
Tickets are actually ID'd and we can tell you where that ticket was bought the second it's printed. This was an internal job where the guy wrote the code and so he had a couple keys of the kingdom. We ultimately busted it wide open.
Brad Osborne
The guy, you could just tell, just red flag after red flag going up. And you're like, ooh, something's wrong here. Something's weird. He almost got away with it. Almost got away with it.
Timothy Schultz
Welcome to Lottery Dreams and Fortune! So I am so excited to be joined today with two very, very special guests, the executive producer and the co-writer and director of Jackpot: America's Biggest Lotto Scam, Terry Rich, the executive producer, and Brad Osborne, co-writer and director. How are you guys doing today? Doing great. Good to be here with you. Very well. Yeah, thank you so much for taking the time. Terry has actually been on this show once before. He's retired now, I believe, but you have a long history working for the Iowa Lottery, among other things. But with this particular movie, this was just released, this documentary, and it is so fascinating. I just watched this and it was so interesting with Eddie Tipton and this huge scam with the lotto. So there was a $16.5 million lottery ticket and no one claimed it for almost a year. What was going through your mind as the clock kept ticking?
Terry Rich
It's pretty pretty simple to start looking at fraud when somebody wins a jackpot and they don't claim it for a while And the reason is is in Europe. There's been a couple of times where people have waited And weren't going to claim it. Maybe they lost the ticket whatever happens and so Someone internally says well, I wonder if I could replicate that ticket now in the early days in the 80s and 90s That was a lot easier today. It's almost impossible. And so the longer people wait, the more you kind of worry about fraud, that somebody's either stolen the ticket, trying to claim it as a duplicate ticket, and they really didn't have the original, all those sort of things. But I always felt confident because lottery tickets are really, really secure today. You really have to, I mean there's just no way, there are certain numbers on a ticket when you buy a ticket today that are only on the actual ticket. So in other words, somebody wouldn't know those numbers. So we had people calling in trying to say they'd claim the ticket. But the thing that really during this particular time that gave it away was video and video and audio. We only had four retail establishments out of the 2,400 that we sold lottery tickets that had the audio. And lo and behold, the audio is what gave it away.
Brad Osborne
The fact that it, a lotto fraud started with an unclaimed ticket is already strange. I mean, that's what what sort of hooked me at first. I'm like, well, if someone doesn't claim a ticket, how does that lead to this huge unraveling of this mystery? And so from a storytelling perspective, it's really, really interesting.
Terry Rich
And it almost seemed to write itself, right, Brad? Because there were so many things and it took so many people. I mean, it isn't just like the security guy said, hey, this is wrong. We can see the person, let's go bust them. It took like four or five years before we actually solved the caper, but we knew right away that something was wrong.
Brad Osborne
Yeah, it's all of these layers that the perpetrator, we don't want to mention his name, uh, for spoiler reasons or not, I don't know, but the layer of complexity that he set up, uh in this fraud is really genius again, just how it first sort of got the attention of lottery officials, the investigation, what it revealed, the phone calls that we have recorded of people. With the actual serial number calling in to claim the winnings, but not willing to come to Iowa. One thing after another is just suspect and raises red flags. And the deeper you dig, the more you find the sort of grand conspiracy of fraud. It's fascinating.
Terry Rich
And to find out how complicated this particular one was. It just is not always as simple. I mean, people, when there's money involved, always have an angle of, I wonder if I could do this, or I wonder I could that. They surely aren't going to catch me. But ultimately, the bigger the fraud, the quicker we try to look and catch people.
Timothy Schultz
Yes, and Brad, as the director, you mentioned this surveillance footage and Terry mentioned this audio that is out there, is very, for lack of a better word, lucky to get this audio because it was so rare to have this in a store. So this is in the film and I believe this hasn't been released anywhere until this movie, correct me if I'm wrong, but Brad, what were your thoughts on this evidence when you first saw this?
Brad Osborne
Well, we tried to tell the story from the average person's point of view, the average citizen, and what was unveiled to them as it became known. There were some people who had access to this video footage and audio early on, but we only reveal that when it becomes public because it was so telling. That footage is now freely available. But a lot of the audio of the perpetrators, I should say, the folks involved in the conspiracy calling in to claim the ticket, that's all new and never before heard. So, you know, the story has been told off and on through the past few years, but never this way. And never with all of the kind of bells and whistles that really Terry provided to us materials that. That are completely unseen and that's, that's really.
Terry Rich
And people often ask us, why didn't you release it earlier? Why didn't do this? Why didn't do that? You know, I'm really, really proud I live in the state I live in, because as a public official, it's really easy for a governor or a public officials to just say, hey, don't follow up on this, because we make a lot of money on the lottery, and if you act like something's wrong with it, people aren't going to play. You're gambling. People would say you're gambling with the U.S. Industry of $80 billion. And that's more money than all the money that's spent on movies, music, tickets, and sporting events combined. And most people don't realize how much money is spent on lottery each and every year. So there was a lot of public, or not public pressure, but with internal pressure from other states, because each state kind of runs their own lottery to not say much and not follow up on the investigation. I really felt fortunate that our governor and others said, I don't care what it costs. I want the game fair and honest. That's, I think, kind of important to people who are playing the game.
Timothy Schultz
Oh my gosh, so $80 billion per year spent on lottery tickets in the United States? And there's a postscript to this.
Terry Rich
The idea is we gambled with the $80 billion when it was all said and done because we solved it and we got folks in prison. We actually went up because people saw us on TV all the time and said, hey, we want to solve this and we tried to be very transparent. Even this movie when AMS Pictures called and said hey, we want to do a documentary and I said well as long as I can at least help on the facts, I want the facts correct. We wanted to be very public and very transparent so that people learned about how honest and how lotteries try to do the right thing here, even when it's someone internal because I don't care where you're at. If you work for a bank and there's a bank teller, you always look over and think about that money that's in the till. I wonder if they will miss that if somebody, if I don t give somebody an extra 10 if I'm counting out a whole bunch of money. Hmm, I don't t think the bank would miss it. The integrity of what people do, you'll always have to have the checks and balances to make it work.
Brad Osborne
And it's really, really interesting what money will do to otherwise normal, moral, upstanding people, people you might be friends with. They might be very kind people, but what they'll do when a little bit of money's involved. And I love, there's a quote, one of the people that we interviewed, there's quote at the end and he says, if you have a bowl of M&Ms on your desk at the beginning of the day, at the of the end of the the day Is there a couple of them missing? You know, or could you may have eaten one or two and will anyone miss those? And that's sort of the kind of philosophy I think that our perpetrator had that, you know, it's really not harming anyone, is it? Of course it is. And that's one of the things that we go into the documentary is it's a very serious crime and it does harm a lot of people. But, you, know, his mentality is, so.
Terry Rich
I think people get greedy. They find, you know, if I get away with it once, I'm gonna test it out, right? You know, maybe I take that one dollar out, or I take the one M&M, as Brad mentioned. But I had one, well, you now, they didn't miss it yesterday, maybe, I'll try, too. But the more greedy they get, the more likely they already get caught. And most people, if they do have that temptation, I always say there's like a pyramid, three things that cause internal fraud that I do a lot of speaking on to banks and. And other financial institutions. The first one is financial need. Now, we all want more money, right? And every time we buy a lottery ticket, we think, guy, if I just get that, I could get the car, I could my house, I can get whatever. But they're not willing to steal that unless something major happens. Drugs, alcoholism, you know, you lose your job, that sort of thing. The second is opportunity. You really can't steal anything if you can't get to the cash drawer, right. But if you have the opportunity to get to that cash drawer and nobody's overseeing you or checking your numbers, you know, if a person can write the checks and write the purchase orders both, that organization's pretty right for fraud. The final one is the toughest one I found as a supervisor, and that is rationale. At what point do you say, or the little devil says, hey, you get that, or, you know, Joe over here is making more money than me and I'm working twice as hard. He's not as smart, he's not doing what I'm doing, I'm worth more to this company, I deserve it. And in this case, the person thought they deserved more because they were being worked way too hard and thought nobody would get by with it because they had the opportunity, they wrote the code, they did the different things that drew the numbers at the time, and they were an internal part of piece of how this all worked. And brother had a little financial problem, friend had a financial problem. Hey, I should be able to help them.
Timothy Schultz
Well, for people that haven't yet seen this documentary, I have, and it's extremely interesting, but for people who have not yet seen it, how did this case unfold, and how does it compare to other cases of lottery fraud around the world, would you say?
Terry Rich
Brad did a lot of research as he did that. Brad, you found some other pretty interesting pieces.
Brad Osborne
Yeah, I mean, it's the largest lottery fraud in America, but it's not the largest lottery fraud in the world. And it is interesting to kind of compare and contrast how these various lottery frauds were pulled off. But we do talk about an instance in China where a television host, much like Terry, was involved in the manufacture of a fake ticket or something like that and was caught and was sentenced to life in prison. Our perp didn't quite get that. So it's interesting how that kind of works out depending on where you are. The largest lottery fraud took place in Milan, Italy. And I think it was to the tune of 220 some million. And it involved uh children selecting the numbers so it was it was doubly evil um but uh yeah i mean it's.
Terry Rich
Where there's money, there's fraud. There's a pretty simple concept, wasn't it, Brad? They actually either heated the balls, or they shaved them off, or that, and then they'd tell the kid who was blindfolded, hey, draw the warm balls, and draw the smooth ones, and so then they could predict what it is. The second biggest one in the U.S. Wasn't done by computer drawing, it was done by ping pong balls. And John Travolta and Lisa Kudrow starred in a movie about that. It was Pennsylvania. And what they did was they figured out we put a little paint latex paint in all of the numbers except the twos and fours and shake them up and those will be heavier so they won't go up crazy as it may sound, the mafia is the one that busted that one, not the lottery themselves, although they came in and figured it out afterwards. The mafia were using the numbers and they were watching the draws and they noticed that all the balls except the two's and four's were bouncing low and two's four's are bouncing high. They called the state and said, hey I think you got a problem there and actually turned in and that was a draw officer and that too. But very few internal frauds have occurred in the lottery. Brad mentioned the balls and we had a computer that had a random number generator. It's not millions, billions of draws happen in the countries all over the world every single day. Some do up to five to ten draws a day on various games because lotteries, you can do scratch tickets, or you can have second chance draws, or you could do two balls, five balls, all these different games that people like to play based on what their desire is and what they like to do in gambling. And yet, in the U.S., we've really had very, very few internal frauds. Now, there have been some, and this happened a lot in the 70s and 80s when lottery was just beginning. You had scratch tickets. People would cut out the numbers and try to repaste them on. We busted an Asian gentleman who tried to do that. And you'd come in. And in the old days, there weren't really an easy way. There weren't the computers and the sophistication we have today that you could do that with. But they would try it. And then, of course, get caught. But today, tickets are actually ID'd. And we can tell you where that ticket was bought the second it's printed. And on scratch tickets. From the second that it's printed, in our case, in Georgia or Canada, the places that send them, all the way to us, into the warehouse, they're marked that they're in the warehouse. Then they go out to each individual delivery person. They're assigned to them. Then they're put into the store and they're activated. And then at the end, if they're not sold, they are deactivated, picked back up and taken to the trash. Even crazier think about this we had a cleaning lady who is at the trash place and when they'd hold in all these uh... Undone unused lottery tickets that they were going to destroy at the get the trash placed uh... One of them blew off the truck she found it scratched in one hundred thousand dollars guess what, she walked into the convenience store and ding ding ding ding ding we got a call or a notice at the security department They go running out and they arrest her for trying to cash a check. I mean, that's how sophisticated lottery tickets are today. So externally, it's pretty tough to do a fraud on a lottery ticket. This was an internal job where the guy wrote the code and did some other things with that. And so he had a couple keys of the kingdom, but again, he didn't have all of them. That's what ultimately busted him, which you'll find out in the documentary.
Timothy Schultz
So you mentioned that he wrote the code and there were, there are serial numbers on lottery tickets that most people aren't aware of that are just playing the lottery that make it very unique. And so someone called an attorney from Canada, I believe, and they had this serial, they had the correct serial number, but for people that haven't watched this yet, I mean, what exactly happened?
Brad Osborne
This was the first sort of, this is what kicked it all off. There was the initial winning drawing for $16.5 million, which wasn't claimed. And you only have a year to claim that money. And the year was almost up. It was getting pretty close. Literally talking about days. And suddenly the lottery folks in Des Moines got a call from. Uh, Canada from an attorney in Canada who had the serial number, the correct winning serial number and read it off over the phone, but he claimed he couldn't come to Des Moines that they just needed to send him the money because he had a heart condition or something.
Terry Rich
Ding, ding, ding. Yeah, there were a lot. He said, I'll send you the ticket, you send me the $16 million. yeah, right buddy.
Brad Osborne
And this is an example of a recording of a phone call that we played that hadn't been heard. And it's fascinating. The guy, you could just tell this red flag after red flag going up and you're like, ooh, something's wrong here. Something's weird. And yet he claims he doesn't have the ticket, but it's on its way to him, which is also very odd. So anyway, that's kind of how it kicks off. And of course, a lot of officials can't award that to him because he needs to pick it up in person. That's part of the rules. Well, he calls back a week later and says, well, it's not my ticket. Actually, it was someone else that I represent who won. And that gets even fishier. And they're trying to figure out who that person is. And as it turns out, it is not that person. It's someone else who got someone else, who got someone else to do it. And so there's layers of conspiracy here, trying to hide the identity of the actual...
Terry Rich
Hey, we can't say, Brad, we can't it was Bigfoot was the original purchaser, either can we? But Bigfoot was somewhere in that mix.
Brad Osborne
Bigfoot was in that mix. Yes, absolutely. Bigfoot comes into the story, which is a little crazy.
Terry Rich
It's amazing what, but the police know what to ask for certain things. And, you know, and when the guy said, you know, I bought the ticket and, and I'll just send it to you. There's a lot of things about $16.5 million. One is most people would be running in. Now, most people like to talk to their accountant, talk to their lawyer, get everything in order before they come in. So it isn't that they just don't show up a day or two later. We understand that. But once it gets to a month, two months. Then we start getting a little suspicious if it's too late like they've got a really good story and and you know we start listening uh... Listening to that because we had a lot of people calling in fraud fraudulent claims that say, I think the uh... the lady stole that ticket from me when I when I wanted to check it at another store but you know in today's society we have camera photos of everybody goes in and out and we knew exactly what the shape and size of this person was. Now they were concealed themselves a little bit in the picture. But, we could discount, we knew it was a male, had a southern accent, so maybe southern Iowa, we thought, initially, but we knew it wasn't a 20-year-old female that we'd call in and say, I know that ticket's mine. And so we could discount everything, but when this gentleman called 11 months later, and the frontline person, you talk about having a culture that people have within their organization to watch for fraud. The first person that got the call was the front line receptionist lady and said, you know, this just doesn't feel right because he's going to send us the ticket? Yeah, all right. So he called up to our folks and our investigators and Mary, the PR person, and said this just doesn't feels right. And that began almost a seven-year saga that you'll see in the film.
Timothy Schultz
It is crazy. And speaking of not feeling right, Terry, what happened, like literally before the ticket expired, just a few hours, I believe, before the ticket was going to expire, because it was valid for a year to claim this, and then it would expire, some attorneys showed up and tried to claim the ticket.
Brad Osborne
Yeah, with the actual ticket in Des Moines, right?
Timothy Schultz
Yeah, did you have any gut feelings about that? Did you, what were your thoughts at the time? It's some, I mean, that's a-
Terry Rich
That's a gut feeling for sure because they showed up and they represented, they sent a lawyer in New York who represented, and he said, yeah, I have a corporation in Belize that we're going to put the money in. Yeah, right. That's where a lot of the fraudulent money laundering stuff happens anyway. And said, well, you know, just pay us, you owe me the money. And ironically, Iowa is about, I think there are about 12 states that allows you to claim your, if you have the ticket, you just get the money. You can claim it anonymously and not let people know who you are. But our law stated that you need to know that. It seemed pretty logical to have that in our law because if you sell a farm here, it could be 10, 15, 16 million bucks, and that's always public. So we felt that was a good law to have, but they couldn't fulfill that. Legally purchased, legally presented. And legally possessed. And that illegally purchased, we couldn't figure out who purchased it and that's why they kept denying it, denying it. Because if we give it to a fraudulent claim, if it goes to Belize, we'd never see the money again. And our players and other players would be out at two. Remember, this was a regional game. We had like 17 states, you know, the middle of the country states that played this. And the reason that is, is because there are 48 states, 45 states that play the lottery in the United States. Has different rules, regulations, but they combine to do Powerball Mega Millions in this particular game. So we knew when these people came in that, we didn't know exactly where it was, but it was in a state that required that, and because it did require that, we ultimately busted it wide open.
Timothy Schultz
Such a crazy story. And Brad, as a co-writer, you know, director of this movie, there was so much audio and video in this that you had, I assume, even stuff that perhaps didn't make the cut. But did you have to, what sort of creative decisions did you have to make or face when choosing what to actually show in the movie?
Brad Osborne
It's a great question. We had, in addition to these phone recordings that had never been heard, we had a lot of video interviews that were shot of the people involved, mainly the investigators and lottery officials, almost right after everything happened. Those were shot by you, I believe, Terry, back in the day. And everything was totally fresh in everyone's mind. And so I had this sort of library. Great interviews of just all of this information that just kind of blew me away, but it was shot I think in 720p and it was just kind shot on a generic screen. It was mainly for just capturing for the record, this information. And I'm you know Terry will tell you I'm the big one for visuals and everything so I was like what are we going to do with these archival interviews to make them interesting? And so one of the things we did is we used, oh, like security video monitors and convenience stores and lotto machine monitors and cell phones. And we integrated these interviews into all these devices. So you'll see, for example, a lottery official speaking, instead of a full screen and an interview, they'll be on a convenience store monitor, which is fun. It's just visually kind of all over the place. So taking what we had and creatively making it visually compelling was a really fun challenge for us. And then we also, because it's, there's a lot of dark humor in this, you know, we mentioned Bigfoot, hot dogs come into play in the story. And there's, opportunity, I narrate it, so there's opportunity, there was opportunity in the writing to sometimes make some some dark jokes and some little clips that may or may not pass by you. So it's just an interesting way to tell a crime story. I come from a background of true crime. I did seven seasons of a show called Murder Made Me Famous on Reels. Sort of the unique and fun thing about doing this documentary is that nobody dies, first of all, which is good, but it is a very, very compelling mystery, as compelling as any true crime mystery that's out there.
Terry Rich
We were trying to figure out how many people had to be involved at solve this thing because you know, someone hadn't mentioned hot dogs if the clerk hadn't mention hot dogs, you know Bigfoot hadn't been a part of it, right? They were like, what do we figure 20, 20 to 25 different pieces had had to happen to put this together. And so I get all excited to tell the story because I lived the darn thing and there's so many details. So I'm trying to tell Brad well this happened this happened This happened and I don't know if he's got a simpler mind than I do or he's gotten more complicated in figuring out how to twist that all around and make it, so when you watch it you understand it.
Brad Osborne
I have a distillation machine in my office. I just throw everything in there and it distills it. Oh, chat GPT, huh? There you go. Just makes it all interesting and easy to understand. No, no, it was very complicated. And in fact, a lot of our conversations over the phone were, A, getting the facts right, and B, just like, how do we explain this in a way that makes sense? I mean, literally, you've got, And you saw this, Timothy, so you would know the way that the lottery generates random numbers begins with what's called a seed. And that seed is generated by the decay of radioactive particles coming from essentially from a smoke detector. There's a small amount of radioactive material in smoke detectors and they use that measure the decay with a Geiger counter and the time between these decays are random numbers that are generated and that creates the seed so that's a truly random pool of data right of numbers and then they take that and they run that through a computerized random number generator. So it takes that data and it makes it random and then it finally spits the random numbers. Well, what our perpetrator was able to do, was inject a nefarious code in that random number generator that said, ignore all that and just do this. And this was a self-destructive code. So there's no way you could identify it. I'm getting a little ahead of myself, maybe with the ins and outs, but it is a complicated story and it's perpetrated by really genius planning.
Terry Rich
And what's even weirder and the reason he was caught was he could do everything from the making it so that he knew what numbers were there because he was an internal employee, a vendor internal employee. But he didn't know the rules and regulations and how the tickets from the lottery are actually generated at the store. So when he went in, he didn t realize when we recorded that we recorded video and you and all the other things that we had. Even to the point that the box itself generates his ticket. I mean, he knew the numbers it might be able to be drawn, but he had to buy 200 combinations. He didn't know the generation of the ticket and that that's another random number generator. Each one of those boxes is a different one that creates it. So it just did weirdness upon weirdness. Even with winners, a couple of the winners, one of them name was what, Brad Kahn?
Brad Osborne
Yes, last name Con, last named Damoney, last name Rich.
Terry Rich
Yeah, last name Rich. We just need to get Schultz in there somewhere.
Brad Osborne
This story is the gift that just keeps on giving.
Timothy Schultz
Oh my gosh, well, it is so involved, this scam, and all these people, there was a tip line, and when they released some footage to the public and all of these people called in with tips, and Terry, did you have any idea who this person was, because one name kept resurfacing, and it's very interesting what's uncovered in the documentary, but. From your perspective, Terry, what were your thoughts at the time?
Terry Rich
I laughed when I got the call and say, hey, this number, this name keeps popping up on the tip line. I started laughing. I said, there's no way. And even our security guy said, wait a minute, I know that guy because he worked for the vendor that did our security audits. I know the guy and he doesn't weigh as much as what that guy on the screen does and doesn't seem to look like him. I don't think it's him. So, you know, I had the opportunity, I saw the guy out at the facility and and said, hey, do you know a guy named, who is the guy from Canada that said it was this guy from Houston? I said, do know it? And he said, yeah, he's my best friend. And I about fainted. And then I knew I did something you're not supposed to do in an investigation with the Department of Criminal Investigation and the Attorney General, and that is get your nose in the investigation. I had now inserted myself, so I went back and told my security guy, and he said hey, keep your nose out of this thing. We'll do the investigation. That's a good rule of thumb if you're in an organization and somebody's stealing something and you start an investigation, just keep your mouth shut. But I have a little trouble doing that.
Timothy Schultz
Where would you say that the real vulnerability lied in this for how someone was able to achieve this? I mean, they got caught eventually, but. Well, I think.
Terry Rich
Let's give the example again of the school district. Say a school district has a business manager, one business manager small school district, they write the purchase orders to buy a new widget, and they also write the checks. Well, if they're writing the checks to their brother-in-law and nothing's getting really brought in, the widgets were never made, you're ripe for trouble. In this case, the security person wrote the code, combined the code and then oversaw the draw. And so, since that time... There's all sorts of more people that see and check and do all of those, and that solved it very fast. But he knew the vulnerability because he was in charge of security. And as he would go to conferences and talk to all the other security officers of all the lotteries around the U.S., they would theorize because they're the ones trying to watch and try to figure out, well, what happens if this happens or this happens? And they said, well, if this would happen? He thought, you know, I think I'll try that. That's how it began, and ultimately he did get caught, so our checks and balances worked, but it's an awful, ugly story, and you feel awful as the person in charge of it when it's all said and done.
Brad Osborne
Well, it certainly wasn't your fault or your doing. And it's interesting because we talk about security. I mean, this lottery, basically this computer that generates, uh, is responsible for generating the random numbers is like a fortress, right? It's this impenetrable thing. It's not connected to any networks or the internet. It's zone thing in a glassed in room. You have to have two people entering at the same time. You can't just go in solo. Security cameras all around it. I mean, you'd think it would be impenetrable, but our perp was able to to do just that by sneaking a thumb drive in while someone's not looking. The cameras were somehow switched and instead of recording normally to only record one frame every 60 seconds. So to know that window that you had to pull something off unseen so that no one would know. To that kind of pre-programming and the coding involved.
Terry Rich
It'd be no different than having someone that knew what time the security code went off on the safe in a bank, they work at a bank and they go in and do the auditing of the bank and looking how it works and is this all going to work right, tell me how, what time does it go on, what time, and keeping that and remember the three things all of a sudden they lose their house or whatever and the husband's mad at them so she remembers what happened in there and then she goes in and she has opportunity to do it, and then ultimately says, well, I gotta do this, I don't want to lose my house and then does it. So it's no different than what a lot of fraud happens in life today and that everybody kind of keeps their eyes open. And you know, let me give you a real easy example. When you walk into a new job anymore, they ask you to sign something that says, I will not steal. Well, if you don't have something that people sign right off the bat and then remind them monthly in the all staff meetings and everywhere you say, hey, look, You know, you sign something that if you steal anything, or you do anything nefarious, you will be fired and you will prosecuted so that when you think about it, you go, I'm not gonna do that. Yeah, I have the opportunity. I've got a good family life and I enjoy doing my podcast. I'm not going do that. And that's a real simple example of how you can do checks and balances. And in this case, with technology and everything else, he thought he could get by with it, but ultimately with more technology, like the audio. He got busted.
Timothy Schultz
Once they found this code, Brad, when you were putting this film together, once they found this in the state of Wisconsin, I believe, how big of a breakthrough do you feel that that was like in this when you're putting this film together?
Brad Osborne
Um, you know, when they, when this, uh, gentleman first went to trial, really all that they had on him was that he was the purchaser of the ticket and they, they can get victim of that, but they didn't a really have enough information is certainly not enough to convict about how this was all perpetrated. And, and Unfortunately, because of statute of limitations, really that first prosecution went away and he was about to walk and the case would have been over. What came to light is in other states like Wisconsin, in other States, people who knew this person were connected to this person were also winning the lottery. And this wasn't known until after. So that's where the story really, really gets interesting. And the fraud really comes to light. Now in Wisconsin, there was a computer that was put away in storage for years. And Wisconsin authorities got ahold of this. I'm not sure exactly how, but it had the code on this machine. This was the perpetrator's code that was used. To commit the fraud and once they had that, that was their ace in the hole for prosecuting.
Terry Rich
This is how it gets so complicated. Brad does a real good job of explaining this story.
Brad Osborne
Once they had that, basically he...I confess, because the gigs's up, right?
Terry Rich
He started by, it was happening right? And we knew it was a hot lotto and we knew something was screwy, so obviously we grab the computers to see if there's anything on it. Well because it took two or three years before we release the tape and we figured out it might be him uh... He said to his boss, hey you know, I need to get rid of this computer and update my computer. We need a faster processing you know. Boss says yeah that sounds logical, so he did it and he wiped the entire drive with the NSA app or whatever the heck it is. What became interesting and once the group and we revealed this, how we got to the point where we realized it isn't a state of Iowa, it was all of these different states that he had built computers for for their in-state game. So a lot of them just used them for in-state, so he built them because it was cheaper and easier to do it by the computer versus doing it by balls because you need more people to do a ball drawing. We found one in Colorado, we found one in all these other places, and he had gone back. He had three years, you know, we didn't know it was him, to go back and he really wiped off that. We couldn't find it in Colorado. We couldn't find it Kansas or in these other places. But by chance, it was Wisconsin who said, you now, we're not going to, he doesn't want this, it's old, let's take this, but we're going to give it back to the Multistate Lottery, who was the organization he worked for. Let's put it in a safe, and we'll just keep it just keep it. He didn't say evidence, he didn't know anything's wrong, was in there. And that was the only one that had that same code, which also tied once we found the code that was also on one of the newest computers in Indiana that he hadn't activated yet. And that one was far enough out. It was the last one to be put into a lottery by him of 50 computers. And that fell within the statute of limitations. And that's how we got to go after him the second. See how complicated this gets? That's why Brad makes the big bucks and simplifying it when you watch it to make it fun and understanding. I mean, that's how complicated it got. And that wouldn't happen without the hot dog and Bigfoot.
Brad Osborne
Well, it's really interesting because this person who pulled off this caper and was eventually caught was well loved by his friends and associates. I think I mentioned this was, you know, reputed to be an extremely, extremely nice guy. And to me, the fascinating thing is what emerges at the end of this documentary. Is that the motive for this crime quite possibly wasn't money, believe it or not. It may have been acceptance, attention, popularity, you know, all of these things that come with being altruistic to friends and women, you know and loved ones and things. And I think that, this is my supposition, but this is to me what the evidence reveals. Is that what was a prime motivator for him. He just wanted to be liked, which adds an interesting twist to this whole story because that's an incredible amount of risk, of effort, and ultimately of punishment that he had to go through in his attempt to be like.
Terry Rich
25 years is a long time, especially during COVID. It's an ugly time. He got out in five for good behavior, which is just the way the legal end works. But I'm fine with that. It was found guilty. We know what it is. The facts are there and the facts are in the documentary.
Brad Osborne
And as you know, we did try earnestly, earnestly to try to. Interview this person. He got as far as the end of his dirt driveway and had contacted him numerous times. He simply does not want to talk to anyone at all and there's good reason for that because he still faces some possible fines and punishment in several states.
Timothy Schultz
Did you were you able to actually speak with him or have a...?
Brad Osborne
Unreturned phone calls, unreturned emails, we know that he received them. And Kim, my co-director and writer on this project and the director of photography, went to Flatonia, Texas, where he resides and got his mailbox and they were trying everything to try to, you can't just walk into someone's house, right? No, and especially in Texas where you don't have the right to do that. And so, you know, she rightly, for her safety, and that of Osmond who was with her, you know, weren't going to try to do. They certainly tried, they even, we even spoke to people in town and knew him, got information about him, but he just didn't want to speak and you can't make people speak.
Terry Rich
It might be the next documentary, maybe he'll call all of you guys at AMS, you know.
Brad Osborne
We have nothing against him, you know, we were just trying to tell the story and this is an interesting one.
Terry Rich
So, and it really, I think, when it gets all done, my hope is, in its accuracy, will show how protected lottery draws really are. The guy got caught when it was all said and done. Even I, after, and I was the lottery director, I was privy to most everything and anything, how lotteries work and everything else. I can play the lottery now. And at the end, I'll tell you exactly, at the the end of the documentary, I'll you exactly how much I've won so far.
Brad Osborne
That's right. It's right at the end of the credits. If you watch that far, he reveals what he has won as a civilian. It's called a tease.
Timothy Schultz
curity upgrades now, today in:Terry Rich
Just as much as any fraud or any stealing would happen in a bank or any place else, there's a lot of money. There are people that are thinking about, I'm sure there's somebody who's contacted somebody of, hey, you know how this worked and that's in Europe, since we've already done our security. I wouldn't want to do it in the US. First off, if you're going to steal something in a convenience store, know that you're on camera, anything, candy bar, anything. If you're going to steal something... Like a lottery ticket. If you're going to steal a lottery ticket in a convenience store, it's the dumbest thing you can do because they are tracked. There's so much security with that. Now, if you work for a lottery organization and you think you could put paint and balls or, or try to re-rig do that, rest assured because of this, all of a sudden, everybody's got their eyes wide open and have put all sorts of security measures in. But if you're playing in Belize or in Malta, you're online playing poker in Malte. I would have serious doubts whether that is on the up and up because you have nobody to go talk to with a lottery at least, you can go to the lottery office, you can go the governor, you go to someone and say this ain't right and get an investigation going where you can't in many of the others. So if I had anything to play, I would play it in the United States and I think the lottery ranks above even casinos in integrity when it's all said and done. But are there people thinking about it? Yeah, because they're sitting around talking about how can we secure the lottery you're looking for all the vulnerabilities based on every day somebody's tried it, So I wonder if that would work if they did this or that there, you know, all these different things. So I feel real comfortable and people like to play the lottery. So I think they've done a good job. The industry has done a good job of making it, so it's fair and honest for all.
Timothy Schultz
Brad, do you believe that you've worked on some true crime shows and many productions in addition to this one, do believe that part of this code could still be out there or what are your thoughts on that sort of thing?
Brad Osborne
It certainly could, you know, could Eddie, I think we raised, we do raise the question at the end of the documentary, if this could happen again, could any have sold his code to other lottery programmers around the world? And if so, could it happen again? And, you know, the answer is yes, it could. You know, it's just a matter of, will someone have the courage to take such a risk? Because on the one hand, he almost got away with it. He almost got a way with it and those friends of his who got rich, almost got away with, you know, everyone in his circle, who got money, who won money because of fraud. But on the other hand, you know, he was caught and what doing true crime for so many years has told me is you really can't get away with it in the end. There are very few, very few times when someone gets away with any serious crime. And so just don't do it. Don't do it, unless you're willing to do the time.
Terry Rich
And you might get killed. There was one of them, they executed the guy. Yeah. In China or somewhere, so maybe check your laws before you think about what kind of punishments you're gonna get. But it's back to what we talked about, even with the saying you don't steal in your business, the punishment, you set up the punishment but you make sure people understand, if this happens, this will be our deal. And 55% of the people who steal in any given company, internal fraud, never had done it before they get stuck in a corner financially opportunity all those things again so you know and then if you just call them in and fire them and don't give them any punishment guess what they go to the next company and do it again.
Brad Osborne
For people who can find great entertainment in these financial capers, people who like too big to fail, or the big short, or Enron, the smartest guys in the room, some of my favorite documentaries, because money is such a crazy motivator of otherwise decent people, I think they'll really enjoy this. I'm not comparing it to those. I'm just saying that it's in that vein, I think you'll really find it entertaining. We tried hard to make it a very entertaining watch.
Terry Rich
And you can look at the comments that the a lot of people are commenting on the show you can do that right after you watch it and they're all pretty fun they love the production value and then they cuss either the perpetrator or the lottery or somebody else but. We set up their link really simple simple lottodoc.com L O T T O D O C.com you go directly to it you can watch it. It's a 45,50 minute documentary and it's on YouTube so
Brad Osborne
It's on YouTube, so it's free, completely free, free market exposure. Obviously the largest platform in the world for viewers. And so, yeah, you can hop on it right now and watch it. I wanna make sure I can say the whole title, right? Jackpot: America's Biggest Lotto Scam.
Terry Rich
This is where I say void or prohibited member FDIC.
Timothy Schultz
That's right. And we are here with Terry Rich, the executive producer and Brad Osborne, co-writer and director of Jackpot, America's Biggest Lotta Scam. We will put a link to it in the show notes if you're listening to this today or in the details below this video if you are watching this on YouTube. So I know we are running kind of short on time. I have questions that could go a long time, but I do respect your time. So I do want to ask you both, for people watching this, whether they've seen your... Whether they've seen this movie yet or not, what's the biggest lesson that you hope sticks with them? The biggest lesson.
Terry Rich
Is you know the lot play the lotto with your head not above your head and there's no I mean everybody has equal odds if you buy more tickets you have more odds but the chances of winning are still about the same so I would say enjoy it have fun play ten dollars twenty dollars whatever you want to play but if you lose just don't get back in your pocket it's it's true entertainment that's one that I would as the lottery director when I was at. The second is, it really is tough to scam someone and you have to, and I like to sleep at night. If you do something like that, you're always worried that somebody saw you or there's a camera somewhere or someone was over there watching you when you did it and you may be caught and you can't sleep at night, it's an awful, awful feeling. So try to make your money fairly legally and you could sleep at night.
Brad Osborne
Well, I guess I would, at the risk of repeating myself, first of all, say that you won't get away with it. You just won't. Statistics are such that you can't get away with major crimes, and so don't do them. The second lesson, though, I think that I learned is, especially for storytellers like me, filmmakers, writers, or whatever, keep your eyes open, because there are, Still, even though it seems like everything's been done, there are still some really, really good stories out there. And when you find someone like Terry Rich, who not only is just a great storyteller, but has become just the dude of dudes and a wonderful friend, keep your eyes open for the ability for those stories to emerge because they are out there and gosh darn, they're fascinating.
Timothy Schultz
And it's such a fascinating movie, I highly recommend it. Everyone watching or listening today, definitely check it out. For every lottery player, a lot of this audience does play the lottery. For every lottery player that's listening or watching today, what's one thing that you want them to know? They likely don't know about when they buy a lottery ticket, when they go purchase a ticket. Is there something that you want them to know or that would be- They won't win, first of all.
Brad Osborne
They may, there's always a chance.
Terry Rich
Uh... The house house wins and most all gambling because that's the way it's set up that they have oversight and that sort of thing but uh... I think that if you enjoy playing a slot machine you enjoy scratch tickets because the scratch ticket is designed to have smaller prizes lots of them and when you win usually turn it in and play another and play another and another and somewhere you want again play so that if u do when x amount or you spend x amount of time you're or if you spend all your money. Walk away, don't reach in your pocket. Where the Powerball, this hot lotto game, Mega Millions, they're aspirational. The odds of winning the big one are just, you know, 300 million to one. And so they are fun to buy and just say, well, when I win that, I'm gonna do that. And do people win? Absolutely, I gave away a $343 million jackpot prize. I've given away five million, 10 million. In Little Iowa, so you can imagine, in New York. But your odds are the same, whether you're in New York or in California, when you buy a lotto ticket. So, you know, enjoy that and have fun dreaming about it like everybody else. It's likely you go in.
Brad Osborne
It's like when you go into it, it's like, when you go into a casino, you, you know, take the money with you that you plan to lose and have fun. Call it entertainment. But I will tell you that Terry is absolutely right. Um, the, uh, the odds are with the house, but I can tell you that I won the lottery once. I did. The problem is that tons of other people won the lottery too, and so the winnings were minuscule. But I did win something, certainly much more than I bought the ticket for, not much more.
Terry Rich
And both of you won more than I have won.
Brad Osborne
And I worked for him. But you did win something and you reveal it at the end of the documentary. Yeah, I do.
Timothy Schultz
Well, everyone, check it out. We will put a link to it in the show notes in the description. Jackpot: America's Biggest Lotto Scam. And again, we are here with Terry Rich, executive producer and Brad Osborne, co-writer and director. I'm going to start with Terry here. But is there anything else that you want to say today about the movie or about anything that I didn't ask or don't know enough to ask or that you just want to say?
Terry Rich
I'm really pleased with the comments, how professional, people who enjoy it, they watch it, they enjoyed it. And that's all you can really ask. When a storyteller puts it together like Brad and the group did, it really makes it rewarding. And then for me, it was accurate, so enjoy.
Brad Osborne
I guess the only thing I'll add is I just want to thank everyone involved, starting with Kim Clemons, but also the people who spoke out and who were interviewed and whose interviews we used in the documentary.
Timothy Schultz
Well, it's a fantastic documentary, Jackpot: America's Biggest Lotto Scam, and it does have hot dogs and Bigfoot, and so there are some dark humor, but it is extremely also intricate, involved, and extremely interesting. I highly recommend it. But thank you both, Terry Rich and Brad Osborne, for your time today. I greatly, greatly appreciate it.
Brad Osborne
Our pleasure, thank you so much, Timothy.