Lottery Fraud Which Led to Arrests and a Book: A True Crime Saga That Shook the Nation

July 09, 2025

It reads like a Hollywood crime thriller or a gripping Netflix docuseries, cybercrime, deception, offshore shell companies, and even a side of Bigfoot hunting. But this wasn’t fiction. It all happened in the heart of Iowa. What began as a mysterious unclaimed lottery ticket turned into one of the most shocking fraud cases in U.S. history, resulting in multiple arrests, a best-selling book, and national media coverage.

At the center of it all was Terry Rich, the former President and CEO of the Iowa Lottery, who helped lead the charge in unraveling a case so bizarre and calculated, it threatened the integrity of the entire $80 billion U.S. lottery industry.

“This was like nothing we had ever seen before,” said Rich in a recent interview on The Law Enforcement Talk Radio Show and Podcast. “We were dealing with someone on the inside who had found a way to game a system designed to be foolproof.”

The scandal started to take shape in 2010, when a $14.3 million Hot Lotto jackpot went unclaimed for nearly a year. Eventually, an anonymous trust based in Belize stepped forward to claim the prize. That’s when alarms went off.

“We had one simple rule,” Rich explained. “If we don’t know who’s behind the claim, we don’t pay.”

That firm stance triggered an investigation that would span a decade, capturing headlines across CNN, CBS, 20/20, The New York Times, and more. The podcast episode is available now for free streaming on the Law Enforcement Talk Radio Show and Podcast website, Apple Podcasts, Spotify, and other major podcast platforms.

Eventually, surveillance footage from a Des Moines convenience store identified a man purchasing the winning ticket. Shockingly, he turned out to be the information security director at the Multi-State Lottery Association (MUSL), the very organization that managed the random number generators for several state lotteries.

Using his position, the culprit had installed a rootkit, a piece of hidden software, on the computer that selected winning numbers. This allowed him to rig outcomes across multiple states, including Iowa, Colorado, Wisconsin, Kansas, and Oklahoma.

In 2015, the suspect was convicted of fraud and sentenced to 10 years in prison, later receiving an additional 25-year sentence for conspiracy. But in a twist fitting of the story, he was released on parole in 2022 after serving just five years.

But he didn’t act alone. Dubbed “The Hot Lotto Fraud”, the scheme exposed a network of accomplices, including his brother, a former Texas Justice of the Peace, and a Texas businessman, all of whom were exploiting specific calendar dates to predict winning combinations since at least 2005.

“They figured out how to rig a random number generator,” said Perry Beeman, an investigative journalist who co-authored the book The $80 Billion Gamble with Rich. “It was the perfect crime, until it wasn’t.”

The book pulls from court records, emails, internal communications, and interviews to take readers deep inside the investigation. It's part true crime, part corporate thriller, and all shocking.

“We wrote the book not just to tell the story,” Beeman added, “but to show how transparency and relentless pursuit of the truth led to justice.”

Listeners can hear the full story in Terry Rich’s episode of The Law Enforcement Talk Radio Show and Podcast, streaming now on Apple Podcasts, Spotify, and featured across Facebook, Instagram, LinkedIn, and Medium.

The story made waves across national media. Terry Rich spoke openly on multiple platforms about the emotional toll the scandal took on his team.

“When you realize someone on the inside is stealing from the public, it shakes your foundation,” Rich shared in one video. “But we were committed to getting it right.”

The fallout was widespread. The Hot Lotto game was officially discontinued in 2017, replaced by Lotto America. And in 2019, a legitimate winner filed a lawsuit after his jackpot had been reset due to the fraudster’s earlier rigged win. The case was settled out of court.

Despite the scandal, Terry Rich’s leadership during the ordeal became a defining moment in a long and varied career. Over 25 years, he not only helped increase Iowa Lottery sales by 50%, but also revived the Blank Park Zoo and launched four successful businesses. He’s appeared on The Tonight Show with Johnny Carson, worked in television production, and now shares his experiences through keynotes, podcasts, and online platforms.

“I’ve always believed in integrity, whether it’s in business, media, or government,” Rich said. “That belief is what guided us through this entire ordeal.”

The Iowa Lottery, founded in 1985, has since raised over $2 billion for state programs. In October 2018, the largest prize ever won in the state, $343.9 million was claimed by a single ticket holder.

Today, Terry Rich continues to tell the story not only to entertain but to inspire. His message? Integrity matters.

“The lottery is about hope, dreams, and fairness,” Rich concluded. “We had to protect that, at any cost.”

For true crime fans, tech-savvy sleuths, or anyone fascinated by modern fraud and justice, The $80 Billion Gamble is a must-read, and the Law Enforcement Talk Radio Show and Podcast episode is a must-listen.

Listen now for free on the official website, Apple Podcasts, Spotify, and follow updates on Facebook, Instagram, LinkedIn, Medium, and other social media platforms.