There is an interesting article about a man named Andrew Cicero who won a 5.5 million dollar lottery jackpot in 1995. Through a series of bad luck and poor financial advice he is now living in a small apartment on his pension and social security checks.

The story goes that he was receiving yearly payment on his winnings, but eventually decided to sell the payouts to a firm in exchange for a lump sum of $2 million. He then hired Smith-Barney to manage his money for him and heres where things took a turn for the worse. From the article:

He alleges that within a few months, the Smith-Barney advisers had 98 percent of his money invested in individual stocks, substantially technology companies.

The year was 2000, which would prove a spectacularly bad time to sink one’s entire fortune into tech stocks. Cicero’s lawyer has alleged the advisers were “breathtakingly irresponsible” to put a lottery winner’s windfall wholly into individual stocks.

He ended up losing something around $600,000 or more during the tech stock bust. He is now suing Smith-Barney for mismanaging his money with a court case due this year. He also was fined $240,000 by the IRS for misclassifying his lump sum buyout as capital-gains income.

Please remind me not to use his financial advisers or accountant if I ever win the lottery.

Lottery Story

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