What do you buy when you win the lottery? An exotic new car? Likely. A sprawling luxury home? Sure.
Life insurance? Not so much.
A young, unmarried grocery store worker, with no children, won half of a $336 million Mega Millions jackpot and did just that: bought a $100 million life insurance policy. Now he is suing the financial advisors who sold him the policy, along with other investments that encouraged him to "assume tens of millions of dollars in debt," according to the Courthouse News Service.
Kevyn Ogawa won the lottery back in 2009, taking a lump-sum cash payout and netting $70 million, after taxes. Shortly thereafter he began investing with two financial advisors, who were also attorneys and insurance agents. They convinced Ogawa to buy four policies from four companies, telling him he could "earn $50 million by the time he was 50 years old," the complaint states. Ogawa says the agents made $1million in commissions from the sales, exploiting the fact that he "knew nothing about life insurance."
The complaint adds: "Kevyn, a young unmarried man with no children, no siblings and only one living parent, had no need for so much life insurance. Kevyn stood no chance to benefit from the insurance financially since he was not named as a beneficiary of the trust that owned the policies."
But the alleged bad investments didn't end there, according to the lawsuit.
"The duo additionally encouraged Kevin to open a line of credit and borrow the money necessary to purchase several expensive pieces of real estate, including a $10 million beachfront property in Malibu. This strategy saddled Kevyn with $27 million in debt."
Two years later, Ogawa says, the defendants attempted to persuade him to exchange his existing life insurance policies for a single $600 million policy. That's when, after conferring with another advisor, Ogawa learned that his existing policies were "highly unsuitable for him and [were] funded in a way that would provide him no potential benefit and would leave the trust liable for large amounts of gift tax."
The claim says Ogawa finally surrendered the policies after paying nearly $2 million in premiums. He is seeking damages for breach of fiduciary duty and professional negligence.
When you are dreaming about winning the lottery. Take a minute to also dream about maintaining your good fortune. Lottery winners are easy prey because con artist will say " It's not like you earned it!"
That is why it is important to vet more than one Attorney, financial advisor etc, both parties are to blame here. His naivete, and their brazen attitude.
Sue them and learn a lesson from this Ogawa. You don't marry the first person you kiss dum $$ s.
They say always have two lawyers and two accountants that way one can keep an eye on the other
From what I just read about Mr. Ogawa(google his name) he does not seem to be an honest man himself. Seems he was to share his winnings with two friends
I'll be my own advisor
Not sharing his lottery winnings with his friends doesn't make him dishonest. I suspect friends and families of lottery winners always expect to share their winnings even if they never contributed a penny toward the cost of their winning ticket.
A young, unmarried grocery store worker, with no children, won half of a $336 million Mega Millions jackpot and did just that: bought a $100 million life insurance policy.
When you intend to do something that you have no know-how and are too lazy to learn then tragedy is what you get. Personally I would have bought municipal bonds from a thriving state such as Florida. They are tax free too.
9/27/2013.
AAA RATED
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When you win the lottery, you have a lot of work to do before you can rest easy.
The guy's a dunce, and he got taken. It was too bad he didn't get better advice from outside the first firm. He failed to do his homework. As to his supposed to be sharing... karma karma karma.
For that kind of win: 1 large legal firm specializing in high value clients, 1 wealth management firm, 1 CPA firm specializing in high value clients, and 1 local legal firm to watch them all. Kinda like Lord of the Rings. And don't necessarily go with the firms recommended by the others. Do your homework.
What I read Ogawa did not buy the ticket one of the friends did he bought 3 tickets and distributed one to each member. Also after he won he had the friends sign a purported release agreement. The agreement states there was an agreement to share the Lottery jackpot, but only provides that the friends will receive $1 million(which one of the friends claims he has not received).
Anyhow, it's time for this big jackpot winner to buy a high-speed home Internet connection, a laptop computer, and start searching at least 1 hour per day for things he thinks he understands AND doesn't understand (BEFORE SIGNING AND INITIALING ANYTHING).
Should have been alarming: More than a $300K life insurance policy for a solo guy with only a mother in 50s? Plus, expensive real estate purchases in a 6-year high defaulting/foreclosures-trend, mainly 6-year price depreciating trend market state, really [one should only buy when quarterly foreclosure lawsuits are very low PLUS the existing short sales and foreclosures/REOs inventory is almost non-existent]? One would think his banks/credit unions would have heard of his big win and offered him a 4.5% APR for a few 15-year CDs or something, geez!
If you must go to a financial advisor, only go to a flat fee-based advisor/company, not one that sells products/policies or where they make a commission off of the sale...
I take back everything I have ever said about the lottery not being cursed.
There is obviously a curse. Seems only dumba$$es win.
If you can take home $70 million AFTER taxes and end up tens of millions in debt 4 years later, you are a dumb_ _ _. There is no other way to put it.
And these 'advisors' didn't even have to do any fancy accounting tricks or speak in legalese or use Wall Street terms that perhaps the regular Joe wouldn't understand. Didn't even have to forge his signature and pay off a notary. All they did was tell him to buy life insurance he didn't need and to buy properties he couldn't afford. And he did it.
Having an advisor does not preclude you from having common sense.
Here's the world's smallest violin. Another idiot winner flat broke.