Eight Lottery Winners Who Lost Their Millions

The only thing worse than not having a pile of money (from a financial standpoint) is having a pile of money and losing it. So for those of you who have never had a ton of loot, soothe yourself with the stories of people who lost millions. Here are some key sections of this Money Central article:

"Winning the lottery isn't always what it's cracked up to be," says Evelyn Adams, who won the New Jersey lottery not just once, but twice (1985, 1986), to the tune of $5.4 million. Today the money is all gone and Adams lives in a trailer. "Everybody wanted my money. Everybody had their hand out. I never learned one simple word in the English language -- 'No.' I wish I had the chance to do it all over again. I'd be much smarter about it now," says Adams, who also lost money at the slot machines in Atlantic City. "I was a big-time gambler," admits Adams. "I didn't drop a million dollars, but it was a lot of money. I made mistakes, some I regret, some I don't. I'm human. I can't go back now so I just go forward, one step at a time."

William "Bud" Post won $16.2 million in the Pennsylvania lottery in 1988 but now lives on his Social Security. "I wish it never happened. It was totally a nightmare," says Post. A former girlfriend successfully sued him for a share of his winnings. It wasn't his only lawsuit. A brother was arrested for hiring a hit man to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant in Sarasota, Fla., -- two ventures that brought no money back and further strained his relationship with his siblings. Post even spent time in jail for firing a gun over the head of a bill collector. Within a year, he was $1 million in debt. Post admitted he was both careless and foolish, trying to please his family. He eventually declared bankruptcy. Now he lives quietly on $450 a month and food stamps.

Suzanne Mullins won $4.2 million in the Virginia lottery in 1993. Now she's deeply in debt to a company that lent her money using the winnings as collateral. She borrowed $197,746.15, which she agreed to pay back with her yearly checks from the Virginia lottery through 2006. When the rules changed allowing her to collect her winnings in a lump sum, she cashed in the remaining amount. But she stopped making payments on the loan. She blamed the debt on the lengthy illness of her uninsured son-in-law, who needed $1 million for medical bills. Mark Kidd, the Roanoke, Va., lawyer who represented the Singer Asset Finance Company who sued Mullins, confirms her plight. He won a judgment for the company against Mullins for $154,147 last May, but they have yet to collect a nickel. "My understanding is she has no assets," says Kidd.

Ken Proxmire was a machinist when he won $1 million in the Michigan lottery. He moved to California and went into the car business with his brothers. Within five years, he had filed for bankruptcy. "He was just a poor boy who got lucky and wanted to take care of everybody," explains Ken's son Rick. "It was a hell of a good ride for three or four years, but now he lives more simply. There's no more talk of owning a helicopter or riding in limos. We're just everyday folk. Dad's now back to work as a machinist," says his son.

Willie Hurt of Lansing, Mich., won $3.1 million in 1989. Two years later he was broke and charged with murder. His lawyer says Hurt spent his fortune on a divorce and crack cocaine.

Charles Riddle of Belleville, Mich., won $1 million in 1975. Afterward, he got divorced, faced several lawsuits and was indicted for selling cocaine.

Missourian Janite Lee won $18 million in 1993. Lee was generous to a variety of causes, giving to politics, education and the community. But according to published reports, eight years after winning, Lee had filed for bankruptcy with only $700 left in two bank accounts and no cash on hand.

One Southeastern family won $4.2 million in the early '90s. They bought a huge house and succumbed to repeated family requests for help in paying off debts. The house, cars and relatives ate the whole pot. Eleven years later, the couple is divorcing, the house is sold and they have to split what is left of the lottery proceeds. The wife got a very small house. The husband has moved in with the kids. Even the life insurance they bought ended up getting cashed in. "It was not the pot of gold at the end of the rainbow," says their financial advisor.

How can this happen? It seems almost impossible, yet it's true. Here's Money Central's take on the issues:

"For many people, sudden money can cause disaster," says Susan Bradley, a certified financial planner in Palm Beach, Fla., and founder of the Sudden Money Institute, a resource center for new money recipients and their advisors. "In our culture, there is a widely held belief that money solves problems. People think if they had more money, their troubles would be over. When a family receives sudden money, they frequently learn that money can cause as many problems as it solves," she says.

Bradley, who authored "Sudden Money: Managing a Financial Windfall," says winners get into trouble because they fail to address the emotional connection to the windfall. "There are two sides to money. The interior side is the psychology of money and the family relationship to money. The exterior side is the tax codes, the money allocation, etc. The goal is to integrate the two. People who can't integrate their interior relationship with money appropriately are more likely to crash and burn," says Bradley.

So what should you do if you win millions in a lottery (I hope I need to use this advice, though I don't see how I would since I don't play the lottery):

To offset some bad early decision-making and the inevitable requests of friends, relatives and strangers, Bradley recommends lottery winners start by setting up a DFZ or decision-free zone. "Take time out from making any financial decisions," she says. "Do this right away. For some people, it's smart to do it before you even get your hands on the money. People who are not used to having money are fragile and vulnerable, and there are plenty of people out there who are willing to prey on that vulnerability -- even friends and family," she cautions.

"It's not a time to decide what stocks to buy or jump into a new house purchase or new business venture. It's a time to think things through, sort things out and seek an advisory team to help make those important financial choices."

Very interesting. What do you think would happen to you if you won a few million dollars? What would you do with it?

Comments

[savvysaver]

If people can't manage their money properly when they make $40,000/year, what makes them think they can manage millions? Many people will always live paycheck-to-paycheck no matter how much money they make.

[Alsymer]

Rather than blow all the money, I'd be inclined to pay off my home (which I love) and replace my wife's aging minivan (but not with something horribly expensive, we just don't live that way). I'd also be looking for some serious investment advice from people I trust and do a few nice things for family and make some small contributions to charities we believe in. Ideally, we'd be able to take some small actions (family, charity, etc.) and then spend some time figuring out what to do next ... how to invest, what to invest in, how our life plans might change as a result of the new income ('cause I'd rather continue to make money off of the winnings than blow it all up front). It sounds so easy, yet it seems to be so hard for most lottery winners ... I can only hope that: 1) I someday were to win (which would mean I'd have to play the lottery) and 2) I could hold to the financial plan without completely losing my head in light of the financial windfall.

[javasoy]

In case anyone hasn't noticed the pattern. Thousands have won lotteries in this country over the last 30 years. Many didn't do as lousy as these eight. You should notice that all of them don't know how to manage their life. Period. They not a single idea of what "wealth" is. Either are people around them. Even people surround them didn't help blow the loot away, they would've gamble them away, or spent them on things they shouldn't be. Think MC Hammer.

If I have won any sort of monetary contest (I didn't, but my wife did. And no, it wasn't lotto), I would follow two rules that my hero Warren Edward Buffett gave to the American public,

Rule #1, Don't lose money
Rule #2, Don't forget Rule #1

[Cathy]

Since you're an MND fan - in The Millionaire Mind, Dr. Stanley notes that the richer a millionaire is, the less likely he is to ever play the lottery.

[Thomas M]

Tomorrow night i will be playing the mega millions an it is a estimated 220 million. and if god helps and blesses me with the winnings, i will truly help my most immediate family members on both sides of the family then i will go and just buy a nice house, a car, extra-cab pickup truck (NOT FORD), and just make a nice donation to a local church. and of course change my home and cell phone number.

[Dana]

Cathy, of course a millionaire is less likely to play the lottery. S/he doesn't need the money.

[Crys]

I'd pay off my car and mortgage and then just invest the rest of it. I've already made it abundantly clear to my friends and family that I don't loan money. At all. If I give someone money, it's a gift that I don't expect to be paid back (because we all know how loaning money causes problems with friends and family). But I'd only do that in dire circumstances, and most likely none of them would have those dire circumstances.

I think it's important to make it known how you handle your money now, even before getting a large sum of cash. That way family and friends should know what to expect.

[asadmeleka]

good

With some of the comments above, I see some glimmers of what caused those in the articles to lose the money (purchase of new home, car/truck, helping out others). While those are not bad things, more reasons to spend the money will pop up, and soon, it is all gone.

Many of us will actually see a large sum of money at some point in our lifetime as we may be recipients of inheritances.

If you don't want to lose it, one strategy is to put the money into investments and then enjoy proceeds from the interest/gains. Just keep protecting the principal.

[josh]

If I won a few million dollars I would pay off anything I was currently paying interest on. Then I would invest the rest i.e. stocks, bonds, mutual funds, CD's, etc. I would definetely NOT quit my job. Not for a "few" million. A million dollars won't even buy you 200 acres of prime farmland in the midwest nowadays. There is roughly 23,000 acres in just one township with 20 townships in my county. That should put things into perspective for most. Don't get me wrong a "few" million would be welcome in my bank account, but I most certainly wouldn't make any drastic changes to my lifestyle. 30 million plus? That might be a different story.

[Garrat]

If I won the lotto...hmm..say the Mega Millions..simple..
To get it out of my system, take a million and buy everything I ever wanted,,
A Grady White Bimini 306 fishing boat, a Boston Whaler shallow running boat, a Ford F450,
A KZ Escalade 5th wheel trailer home, restore my 68 camaro SS to it's stock condition, build a house that has 5 BR and 6 1/2 baths with a screened in porch and outdoor kitchen area, 20 acres near Canyon Lake Tx,
Parent's house is already paid for as is mine...
As far as the rest, low risk mutual bonds and CDs to make the money work for me.

[Tom uchmonee]

my comment is...Most (not all) who play the lootery (sic) do so because they don't believe they can build financial wealth by working-most who play the lottery are not mental giants, if they were, they'd realize that by saving their money instead of wasting it on the lottery (putting it in an IRA for example)over the years they may have a million bucks, but no, they wan't it right away- the 1 in a million that do win (beacuse they tend to be ignorant and by definition-GAMBLERS-) have no clue what to do with the winnings- being gamblers, they often "INVEST" in schemes to double their money (because for these losers, probably working for minimum wage all their lives, a $10,000,000 winning is no longer enuff- they have to double it!!!). They'd be better off putting in a couple of safety deposit boxes (or a regular no risk bank account...that pays one or two pct. interest per year-at least they won't be risk for losing the principle!!!