Suzanne Mullins used her lottery winnings as collateral for a loan in 1998
Eleven years after becoming a millionaire through the lottery, a Roanoke, Virginia woman has seen her fortune turn to debt.
A circuit court judge ruled last week that Suzanne Mullins owes $154,146.50 in defaulted payments to a Florida company that gave her a loan six years ago with her lottery winnings as collateral.
It seems an unlikely outcome for someone who once purchased a lottery ticket worth $4.2 million.
But as with others who have won the lottery, Mullins soon discovered the win is no guarantee against future bad luck and unforeseen circumstances.
"It's not security," said Mullins' attorney Michael Hart. "A lot of times, it causes more problems than it solves."
Mullins declined to comment. She referred questions to Hart, who attributed her financial problems in part to the lengthy illness of a son-in-law who died in 2000, leaving medical bills in excess of $1 million with no health insurance. In the midst of that ordeal, other bills began to pile up.
"It's been a hard road," Hart said of his client's life since winning the lottery. "It's not been jet plane trips to the Bahamas."
In January 1993, Mullins bought a lottery ticket at a Grandin Road convenience store that matched all six numbers in the state's Lotto drawing. At the time, Mullins said she planned to split the $4.2 million jackpot three ways with her husband, Tommy, and her daughter, Susan. After taxes, Suzanne Mullins' share worked out to 20 annual payments of $47,778.84.
As money got tight, Mullins decided in 1998 to take out a loan with People's Lottery Foundation, a company with the financial niche of serving lottery winners who need their money faster than the annual payments can arrive. The foundation lent Mullins $197,746.15, which she agreed to pay back with her yearly checks from the Virginia lottery through 2006.
Then, when lottery rules changed in 2000 to allow winners to collect their money in a lump sum, Mullins decided to cash in on the remaining amount. She did not make any more payments on the loan after February 2001, according to a lawsuit filed by Singer Asset Finance Co., a Delaware company that was assigned the note from People's Lottery Foundation.
Her decision to cash in on her winnings was a "flagrant and intentional violation of her duties and obligations" under the loan agreement, the lawsuit stated.
A judge ruled in Singer Asset's favor last year, leaving only the amount of damages to be decided. At a hearing Tuesday, Judge Jonathan Apgar set the amount at $154,146.50. By applying an interest rate of 12 percent, six points less than what Singer had asked for, Apgar reduced a sum that could have exceeded $230,000.
Hart declined to comment on Mullins' current financial situation or her ability to pay the judgment. Mark Kidd, the attorney who represented Singer Asset Finance Co., said his understanding is that Mullins has no assets.
At a news conference several days after they won the lottery, the Mullins family did not seem to be on the verge of a spending spree. Tommy Mullins said he planned to keep his job, and the only possible purchase mentioned was a new car for Susan Mullins.
It's not that unusual for people to go broke after winning the lottery, according to Tom Nasta of Personal Financial Planning in Roanoke. Nasta said he once had a client who won $1 million and had only a mobile home to show for it within seven years.
"People have a false sense of how much the money is," Nasta said. "Taxes are a big hit."
And for those who elect to take annual payments, the tendency is often to spend with the total figure in mind while losing track of their current cash flow.
Of course, that's just a problem for the lucky ones who win: Most lottery players never hit the elusive jackpot.
"It's a form of hope," Nasta said, "but the odds are so stacked against you."