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Having piles of cash only compounds problems for some people. Here
are sad tales of foolishness, hit men, greedy relatives and dreams dashed.
By Ellen Goodstein, Bankrate.com
For a lot of people, winning the lottery is the American dream. But for many
lottery winners, the reality is more like a nightmare.
"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. "I won the American dream but I lost
it, too. It was a very hard fall. It's called rock bottom," says Adams.
"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."
Living on food stamps
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. "I'm tired, I'm over
65 years old, and I just had a serious operation for a heart aneurysm.
Lotteries don't mean (anything) to me," says Post.
Deeper in debt
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.
Back to the basics
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.
Luck is fleeting
These sad-but-true tales are not uncommon, say the experts.
"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.
Craig Wallace, a senior funding officer for a company that buys lottery
annuity payments in exchange for lump sums, agrees.
"Going broke is a common malady, particularly with the smaller winners.
Say you've won $1 million. What you've really won is a promise to be paid
$50,000 a year. People win and they think they're millionaires. They go out
and buy houses and cars and before they know it, they're in way over their
heads," he says.
Are you really a 'millionaire'?
Part of the problem is that the winners buy into the hype.
"These people believe they are millionaires. They buy into the hype, but
most of these people will go to their graves without ever becoming a
millionaire," says Wallace, who has been in the business for almost a
decade.
"In New Jersey, they manipulate the
reality of the situation to sell more tickets. Each winner takes a picture
with a check that becomes a 3-foot by 5-foot stand-up card. The winner is
photographed standing next to a beautiful woman and the caption reads: 'New Jersey's newest
millionaire.'"
Winning plays a game with your head
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.
"Often they can keep the money and lose family and friends -- or lose
the money and keep the family and friends -- or even lose the money and lose
the family and friends."
Bill Pomeroy, a certified financial planner in Baton Rouge, La., has dealt with a
number of lottery winners who went broke.
"Because the winners have a large sum of money, they make the mistake of
thinking they know what they're doing. They are willing to plunk down large
sums on investments they know nothing about or go in with a partner who may
not know how to run a business."
What if you get so (un)lucky?
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."
As an example, Bradley says that people who come into a windfall will
typically put buying a house as No. 1 in list of 12 choices, while investing
is No. 11.
"You really don't want to buy a new house before taking the time to
think about what the consequences are.
"A lot of people who don't have money don't realize how much it costs to
live in a big house -- decorators, furniture, taxes, insurance, even utility
costs are greater. People need a reality check before they sign the
contract," she says.
Evelyn Adams, the N.J. lottery double-winner, learned these lessons the hard
way.
"There are a lot of people out there like me who don't know how to deal
with money," laments Adams. "Hey, some
people went broke in six months. At least I held on for a few years."
(For more information on dealing with a sudden change in your fortunes, read
"You're suddenly rich? Bummer," on MSN
Money.)
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