Category Archives: Broke

My Friends Who Won the Lottery

Lately I’ve been thinking about some friends who won the lottery quite a few years ago. We’re talking twenty-ish years, give or take.

Yes, I have personal friends who were big lottery winners. At the time they won, they were already friends of some close family members, and through a certain set of circumstances, they became good personal friends of myself and my wife not long after.

They were good enough friends that we went to visit and stayed in their home, and they came to visit and stayed in ours.

For the sake of keeping their identity private, I’m being vague about some of their details. I will say, though, that in today’s dollars (that is, adjusted for inflation) their win was in the $35 to $40 million range. And that’s after taxes.

At least, that’s what they had when the husband talked to me about their finances. At that time, their net worth had likely increased through their business dealings after winning the lottery.

Back then, I had nothing to do with lotteries at all. And while it may sound odd to some to say it, I was more interested in what they were doing with their wealth than in the wealth itself.

Because they were doing some really good things. They had become heavily involved in philanthropy, and that interested me. It was a topic that I was pretty heavily into at the time.

In addition to the philanthropy, and their business interests — which were quite considerable — they had purchased a big home for themselves. My wife and I went and visited them a time or two, and stayed for several days when we did. We were given not just a bedroom, but a suite of rooms to stay in. The whole thing was fun, of course. But it wasn’t just staying in such a big place. The fun was largely because our friends were genuinely really good people

We didn’t spend all of our time in the big house. We went out and did things with our friends. But oddly, other than the fact that it involved eating, I don’t really remember that much about what we did.

The most vivid memory I have is of my friend showing me some of his investing online. This was back in the early days of online trading, but my friend was very up-to-date.

I remember staring at his portfolio — which accounting for inflation would be worth about $5 million today — and feeling uncomfortable. A little bit of the discomfort was due simply to looking at the finances of someone who had a whole lot more money than I did. But most of the discomfort came from a thought that I have never forgotten:

“If I had that much money to invest, I think I would invest it differently.”

Or, to put it another way: His investing style worried me.

I didn’t tell him this. Maybe I should have. But I know in my heart that even if I had, it wouldn’t have made any difference. He would not have listened. Because I simply didn’t have the authority to command his attention on the issue.

He was the big businessman, and I wasn’t. And in fact, by the time of this incident he had been in business for several years, and his business interests were still doing really well.

Two or three years later we learned that our friends were going through some difficulties. There was a lawsuit involved.

Now our friends had the great majority of their money in a single business. Probably about everything except for the mansion and the investment portfolio I’d looked at was in their one business. So the business was worth maybe $30 to $35 million in today’s dollars.

And this business had previously been doing fine, but now things had turned sour. There was at least one lawsuit involved. And it had nothing to with anything that was my friends’ fault.

In fact, they were the plaintiffs, against a business partner.

The lawsuit dragged on for several years, with the other side (who had even more cash than my friends did) using every trick they could pull to make it last forever.

Somewhere along the way, our friends pretty much ran out of cash, and he took a blue-collar job to help make ends meet.

When it was finally over, our friends had won. But it wasn’t much of a victory. The legal fees had piled up, the company itself was pretty much worthless, and our friends were — if not entirely broke — at least fairly close.

It goes without saying that they lost the mansion.

And no, they didn’t end up quite penniless. But they certainly moved from being mega-wealthy to being those-folks-down-the-street-who-used-to-be-really-rich.

So why am I sharing all this? I don’t know. Just because I’ve been thinking about it a lot lately.

It’s a personal experience — at least, as personal as it might be given that I wasn’t the one who lost the fortune — that says once again that wealth, and especially wealth achieved suddenly, is not necessarily a lifelong condition.

Are there things our friends could’ve done to avoid going broke? Yes. In this case, they might have been helped by better planning, avoiding putting so many of their eggs in one basket, and above all — not thinking they were immune from losing what they had.

Major Sports Star Earned $200 Million, Has (Almost) Nothing Left


Allen Iverson brought in — and lost — around $200 milllion. At age 55, the unusually fortunate ball player will get a second chance. Wow.

4 years after he played his last NBA game, Allen Iverson’s basketball career is officially over. He announced his official retirement last fall.

While it lasted, “AI” was one of the highest scoring basketball players in NBA history.

Over the course of 15 years, Allen Iverson brought in around $200 million. He earned about $155 million in salary alone, plus tens of millions more through things like product endorsement contracts.

He is reportedly about $1 million in debt, with no income adequate to pay those debts.

In other words, if you have less than $1 million in personal debt, then you’re in better overall shape financially than Allen Iverson… for the short term, at least.

Iverson’s slide into bankruptcy has been marked by the loss of multiple luxurious mansions.

It turns out that Iverson isn’t completely broke, however.

Back in the glory days, Iverson signed an endorsement contract with shoe manufacturer Reebok. One of the provisions of that contract was a rainy-day trust fund that Iverson will inherit when he reaches 55 years of age.

Iverson is 38 now, which means he can’t touch a penny of it for another 17 years. Although the value of that trust fund is $30 million, Iverson will probably have to split it with his ex-wife. Still, he should be left at age 55 with $15 million.

So Iverson, it turns out, is an extremely fortunate man. One gets the idea that the folks at Reebok had a streak of smart and benevolent in them, and that if things had been left up to Iverson himself, he would’ve ended up living in a trailer.

Of course, if his past history is any indication, he still may. Some people lose their fortunes in spite of exercising apparent good sense — hiring financial advisors, and so forth. In Iverson’s case, he was famous for having an entourage of about 50 people, showering them with various gifts, and in general behaving recklessly, financially and otherwise.

It takes at least some effort to go through an average of a million dollars every month for 15 years. But, as the case of Mr. Iverson shows, it can certainly be done. (Of course, Iverson’s example pales next to that of Prince Jefri Bolkiah, mentioned elsewhere on this site, who reportedly went through about 75 times as much money in only 2/3rds the time.)

In any event, when the year 2030 rolls around (assuming he’s still living then) Allen Iverson will get a second chance.

What’s he going to do for the next 16 to 17 years? Hard to say.

Quote: “I made a lot of mistakes, a lot of things I’m not proud of. But it’s only for other people to learn from.”