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.
$100 million dollar life insurance policy? LOL. Did you make this story up Todd?
Woe unto you, Scribes and Pharisees, hypocrites! for ye devour widows' houses...
-Matthew 23: 14
I don't like lawyers much neither my ownself.
That's how I feel, esp. the parts about investing. I'd rather sock my money away at 1% until I educated myself as to how to get a better return...and even then I'd leave a large enough portion in something safe so in case those riskier investments went belly up I would have enough money to last.
It only makes sense, and like u said, keep a portion incase something goes wrong. He paid all that money to financial planners for bad advice. If only he had common sense and not try to be such a greedy piggy, he wouldn't be in such a rut.
I wonder if these financial planners were legit? It's funny that they are financial planners, attorneys and insurance agents all in one..lol That should have been enough of a redflag right there. They seen this lottery winner coming and the lottery winner just funded their business and retirement accounts..lol
When I bought my house, my real estate agent and her company kept recommending me to use one of their Home inspectors on their list but I refused. I don't want to deal with someone that is affiliated with my investment. I felt they would work against me just to get a deal done, though it may not have been the case, just hate the idea of it.
I sincerely Hope you win , so that the curse holds true as you state. The post certainly affirms your on your way to that status.
Most folks go to professionals because they are versed in their fields.
We go to a doctor we go to lawyers and we go to banks ...
So many will even state that after they win they SHOULD see a financial advisor. What hypocrites to then rant how foolish he was to do so. He followed the advice of professionals...and he is now in litigation. good for him!
Humans are a fickled bunch.
I look forward to reading how his litgation unfolds.
Its a known fact that even the riches of folks Supervise over their own financial affairs. Never sign a document you dont understand....which on a side note is good advice when wanting to get married :)
70 Million after Taxes, why are you invested and borrowing money? Even in this enviorment of low intrest rates he should be able to pull close to a million a year just off interest without going into principal. That Lottery owner needs to take responsibiltiy for his own actions he signed the contracts.
It's not what he asked to do but what the financial advisers told him to do. He could have taken the same free advice we see right here on LP, "hire a team of financial advisers and lawyers before validating your ticket". On face value it sounds like good advice providing the jackpot winner finds a financial adviser that will act in the best interests of their clients.
"Why not just set up a trust...or yo want to invest in something invest in precious metals, oil, stocks, bonds, etc. etc."
It's possible that is exactly what he wanted, but the financial advisers suggested a "better investment". Not many people have $70 million to invest and probably only a handful of people who know how to make sound investments with that amount of money. It's really no different than the long lists of Hollywood celebrities and athletes who lost or where swindled out of millions.
You can invest in all the things you mentioned with less than a $1000 for a small commission. However the advice on which "metals, oil, stock, bonds, etc. etc." will cost you extra.
"Most folks go to professionals because they are versed in their fields."
True but any client still needs to do their due diligence prior to hiring any professional. There are many in all fields that lack any integrity and that is who this particular lottery winner hired.
I know many Financial planners/advisers and not a single one would have recommended a whole life insurance policy. What makes this even worse is that this clueless individual didn't have any family/children or siblings with the exception of his mother.
This guy Kevyn should have interviewed several different attorneys and financial planners not some scrupulous insurance salesmen.
I hope the judicial system sides with him and hopefully he can recover a fraction of what he lost.
Either he's incredibly dumb or very greedy. Or both. But that doesn't let the so-called "advisors" of his off the hook either. Clearly they are sleaze-bags who took advantage of him.
But yeah, to take on millions in debt when you've got that much money is crazy. I don't know how they managed to word that advice to make it sound like a good deal. Debt would be something I would not take on, even if I had only 10% of what he had.
True Pita- but ttech10 posted this above, and it got me thinking- How did Ogawa fall for his " Financial Advisors" spin yet was able to con his friends into letting him walk away with $70 million?
It appears his dumb in some things but somewhat " bright" in others.
Another reason why lottery winners should remain anonymous.