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
Range
Week
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.
Was it GREED ??
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,"
Why would he need another $50million
He won enough to be set for life, why invest in anything?
Had he taken the annuity, he could have reinvested $5-$7 millions badly every year and still been in good shape. Maybe he should have invested in a bigger grocery store and left the rest in the bank.
Of course it was greed. Nothing else it could be.
If he wanted to play around and invest, then he needed to learn about the things he was getting involved in and do research. Instead he wanted even more easy money.
If you are worth $70M and someone is urging you to buy things you can't afford so that you have to borrow millions of dollars and be wiped out financially if the scheme fails, and you willingly comply, then you are too stupid and too greedy to kep that money. He had to believe he was going to get a huge return on those properties to have even bothered to take the risk, so his own greed blinded him to common sense and reality. I have no sympathy.
Maybe this is just another scam on his part to get out of paying the rightful share (1/3 each) to the two friends he screwed over once the ticket landed in his hand. If not a scam, then someone above is watching and exacted karma upon him for being a cheat and a fraudster.
It was worse than greed- how do you convince this person to take out more than half billion life insurance on himself unless they knew going in that he was not the brightest crayon in the box to begin with?
Who the heck NEEDS a $600 mil life insurance policy? He got played bigtime, the old saying applies" A fool and his money are soon parted".
Wow, what a dummy
Oh Yeah- but Hats Off to Todd once again for dredging up these doozy's, first we have Wild Willie & now Mr Ogawa.
There are lessons to be learned here Folk just from these two- thing is: it ain't pretty.
Remind me not to hire insurance salesmen as my financial advisors and then follow their suggestions blindly.
I did a search of this guy and I found a single article about him frauding his two friends out of their share of the winnings. It kind of seems like karma got him.
http://www.courthousenews.com/2010/11/12/31794.htm
Todd is constantly dredging for stories to make LP interesting and worth coming to to get your lottery news. Hopefully someday one of these stories will be about a LP member being the big winner.
Im not even understanding why he would want to invest in insurance policies...especially if they're on him and he has no wife or kids...Why not just set up a trust...or yo want to invest in something invest in precious metals, oil, stocks, bonds, etc. etc.
I just read the story of him screwing his co workers out the winnings. It seems that Kevin Ogawa is a very scummy person. I don't feel bad for him anymore. Now I just see this as Karma catching up to him.
Con man got conned. No big deal, it's all about greed.
Kevyn stood no chance to benefit from the insurance financially since he was not named as a beneficiaryof the trust that owned the policies."
What the heck!!! I don't understand either
I don't understand some of these big lottery winners who risk the majority of their millions dabbling in investments.
That is what greed will get you! Why bother to invest in something you know nothing about when you have $70M in the bank? I would never risk my entire net or pull any lines of credit if I had his millions, it would sit somewhere safe in the bank until I researched and felt confident and still it would only be put into low risk investments. Not some shady recommendaton by some SLICK talking sales person.
And what is the point of investing in self life insurance? lol he can't cash out if he's dead, maybe his financial planners were going to put a hit on him and collect. This whole story is shady and a what not to do if you win the lottery..lol
I don't know much about investing but I know I wouldn't be investing in life insurance on myself if I were him..lol I have always been skeptical of other people ''professionals'' telling me how to spend my money. I don't have a financial planner now so when I win I'll just collect and kick back and live off my interest and avoid all the extras.
Kevyn got conned into buying life insurance policies which most likely were whole life policies. This is the absolute worst type of life insurance available as it is extremely expensive and the fees will eat up any gains the insurance company had gained on his behalf.
Term life is the only life insurance anyone with a family/dependents should even consider. This fool was single with no dependents, granted he has a mother so he could easily have supported her without the need of attaining any type of insurance.
He could have invested in low risk tax free muni bonds that would have paid him $2-3 million per year without being obligated to pay Uncle Sam anything.