Category Archives: Good Intentions

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.

David Lee Edwards Is Dead

“I want this money to last, for me, for my future wife, for my daughter and future generations.” — David Lee Edwards
David Lee Edwards married girlfriend Shawna shortly after winning the lottery. Their bright future quickly turned dark.

David Lee Edwards married girlfriend Shawna shortly after winning 1/4th of the Powerball jackpot. Their bright future quickly turned dark.

In August of 2001, David Lee Edwards won one fourth of the Powerball jackpot. After taxes, his share came to $27.1 million in cold, hard cash.

In less than 5 years, David and his new wife Shawna were living in a storage unit, after coming to the end of the money and losing their $1.5 million mansion.

Shawna left David not long after the money ran out. David then spent the last 7 years or so broke before dying alone in a hospice, reportedly thousands of dollars in debt. He was only 58.

David leaves behind not a single penny for his daughter Tiffani. She now works as a clerk at an amusement park.

There are many lessons that could be learned from David Lee Edwards’ tale. For one thing, a prudent couple could easily be set for the rest of their lives on less than one tenth of the resources Edwards and his wife had.

The frugal and well-advised could probably even do it on a twentieth the amount.

And that’s in reasonable comfort, for the rest of two people’s lives, without ever working again, and even having something left to leave to the kids.

But with David and Shawna, it was all gone in less than five years.

“If he followed my advice, he’d be pulling in about $85,000 a month for the rest of his life.” — James Gibbs, former financial advisor to David Lee Edwards

Another lesson is: Exercise some prudence and humility. If you’re a multimillionaire, don’t try to live like a multibillionaire. If you do, don’t be surprised when total poverty is the result.

Also, if you have any interest in drugs, then you’d better get yourself seriously sorted out, or else find a way to restrict yourself from blowing through your fortune. The same may be true if you’re inexperienced in managing money.

And you’d better find ways to restrict those you hire from fleecing you, as well.

Another lesson — and this is a big one — Good intentions aren’t enough.

David wanted to be responsible. He wanted the money to last. He wanted to leave a legacy for his daughter and future grandchildren. He even said so. In fact, it was one of the first things out of his mouth.

But the world doesn’t give a fig about your good intentions. It only cares about what you do.

And David Lee Edwards didn’t do the things that go along with either living a long and happy life, or holding on to your fortune.

Here’s one of the cold, hard truths of life: Winning the lottery is just money. It doesn’t change your nature. If you were a screw-up before you won the lottery, then winning the lottery isn’t going to automatically make you a success.

The good news it that it will give you the opportunity to have enough space and resources to reform yourself. But unless you actually put yourself onto that path, and keep on it just as seriously as if your life depended on it — because it well may — you’re only going to keep being a screw-up.

Only now, you’ll be a screw-up with money. Enough money to fail spectacularly. And the entire world is going to know you’re a screw-up.

And in the end, the money will do you no more good than it did David Lee Edwards. Dying penniless and alone at age 58? I don’t call that a benefit.

Finally, what’s the good of hiring a financial advisor if you’re not going to follow his advice? David Edwards seems to have enjoyed joking about how upset his spending decisions were making his financial advisor.

The value of a financial advisor is not in showing him off as some sort of status symbol. It’s in getting good advice from him, and then actually FOLLOWING good advice, so that you don’t end up as Edwards did.

If he doesn’t give good advice, then get an advisor who does. If he does give good advice, then follow it.

What David Lee Edwards seems to have missed at the time — when he was making fun of his upset financial advisor — is that the joke wasn’t on his advisor — it was on him.

The advisor wasn’t upset over David’s unwise use of the advisor’s money. The advisor was upset over David’s unwise use of David’s money.

And the advisor was only in danger of losing a client — which he did.

Edwards was in danger of losing his fortune and his life. Which he did.

More information about David Lee Edwards’ tragic life and death can be found here, and here.