Former East Millinocket Powerball winner, 90, sues son

[jpak]

https://www.pressherald.com/2019/04/12/powerball-winner-90-sues-son-says-money-invested-poorly/

ORLANDO, Fla. — A 90-year-old Florida woman who took home $278 million from a winning Powerball ticket six years ago is suing her son and his financial advisers, claiming the money was put into low-return investments while she was being charged $2 million in fees.

The lawsuit filed by Gloria Mackenzie last month in state court in Jacksonville against her son, Scott, and his financial advisers, alleges breach of fiduciary duty, breach of contract, negligence and exploitation of a vulnerable adult.

Scott Mackenzie had power of attorney over his mother’s finances.

As the widow of a mill worker, and with little money until she was in her 80s, Gloria Mackenzie says she had scant education in managing a large sum of money and relied on her son.

“Prior to her good fortune, Gloria was living in a small, rented duplex … for $375 a month,” the lawsuit said. “Her income was modest, fixed, and derived from her monthly Social Security and small widow’s pension.”

<more>

Don't think for a minute that your elderly parents make wise decisions with their Golden Years finances - and don't think for a minute that the Vultures won't take advantage of them.

Including "trusted" family members.

Just sayin'

[Shrike47]

1. Even a low rate of return on $278 million would be a hell of a lot of money.

[jpak]

2. I think the "fees" were an issue

And probably wiped out the returns.

[Blue_true]

10. The amount was less that $278 million due to the time value of money.

She unwisely took the cash option. She paid the federal tax on that because Florida does not have an income tax. Because she took the cash option, her payout was likely around $180 million. At a 35% federal tax rate, she would have gotten a check for around $117 million. But even with $117 million, she could literally have put the money into an interest bearing savings account, took half the annual interest and still had plenty of money to live off of.

Shame on her son, kids are supposed to protect their elderly parents, not prey on them. Thankfully some ethical person has stepped in to help the old lady. She should absolutely cut her son out of her will.

[A HERETIC I AM]

17. Think $30,000 per million.

The coupon on the 30 year Treasury Bond is currently 3%. That means for every one million in face value of those bonds held, you would receive $30,000 a year in interest payments.

$100 million held in that way would generate $3,000,000 a year in interest and you could liquidate them at any time and reinvest as you like or hold them and get your hundred million back after 30 years.

That's about the safest way to calculate it. If you go for the ten year, you are looking at $26,300 a year per million.

[Tipperary]

3. Stories like this make me sad.

A shame.

[Blue_true]

11. Me too. Children are supposed to protect their elderly parents. nt

[roamer65]

4. That was the line jumping Powerball winner.

Looks like dishonesty runs in the family.

No sympathy from me. She can go fuck herself.

[Blue_true]

13. What do you mean by line jumping?

If I saw a real old person in line behind me, I would let that person go first. Is that what you call line jumping. Even if she asked me to move in front of me and claimed an injury, I would have let her go first due to her age.

A lottery is a game of chance, the person that she moved in front of could have been the winner and she won nothing.

[A HERETIC I AM]

14. Come on. Really?

Winning one of these lotteries is so incredibly random, it could have just as easily been won by the next person. Or the tenth person.

I think you might be ascribing malicious intent where there was merely luck.

[Blue_true]

18. Plus, if you were in line and an 84 year old man or woman was behind you,

wouldn't you let him or her ahead of you? I certainly would.

[Midnight Writer]

5. Sounds to me like a "lawyer generated" lawsuit. She will likely get 0, lawyers will get big bucks.

[onethatcares]

6. he might have thought

he'd out live her. No harm/no foul..............fucking greed

[Mariana]

7. Whose greed?

There's nothing in the story that even remotely suggests the son was trying to rip off his mother, or even to increase his own inheritance.

[Blue_true]

19. Charging a $2 million per year service fee on no brainer investments?

He could have taken out passbook savings accounts and made almost as much. He could buy safe bond funds with a good performing mutual fund company and made 2 to 3 times a passbook rate. At 2% what she had in cash yielded around $3.4 million per year, at 3% it went up to $5.1 million per year. He was ripping her off.

[Mariana]

8. My in-laws paid way more in "fees" than they should have

on their investments. Nothing to be done about it now. They agreed to pay that much because they didn't know any better. They certainly didn't ask for any advice from the family. We had no idea those funds even existed until after they were dead.

Sounds like this woman shouldn't have left it up to her son. There's nothing in the story that even suggests that he tried to rip her off, but he probably didn't know any more than she did about how to go about investing that kind of money, and got taken advantage of.

[Blue_true]

20. If he was clueless, that will come out in Court.

I am suspecting otherwise.

People that get a massive lump sum payout should always take an annuity payout if that is possible.

[Mariana]

31. Lots of people are clueless, so it wouldn't be terribly surprising.

The story says she is unsatisfied with the low rate of return and the fees for the investments he and the financial adviser chose for her. How could doing that benefit him in any way? She isn't accusing him of stealing from her. She thinks she should have been getting a higher yield. Anyway, you're right, it will come out in court.

[Blue_true]

9. My advice to anyone that wins more than a $30 million dollar lottery prize.

TAKE THE ANNUITY OPTION!! At the time of the win, an annuity is purchased to pay out the lottery winnings over 30 years. There is no "maybe the government won't pay out future winnings". When people take a onetime payment, they better really know both finance/asset management, and people because both can be pitfalls for them.

[TeamPooka]

12. and you can leave the rest to your heirs if you dobn't last the 30 years. Taking less is the sucker

option.
You won big but you'll take less?
Please.

[Blue_true]

21. Yes, I would take less. What is wrong with leaving money for heirs?

She won $278 million. Her first check would have been slightly more that 1/30th the $278 million, or around $9 million before taxes. $9 million before taxes is a lot of money for most people. Plus Florida has no tax on income, so she would likely have netted well over $5 per check for as long as she lived.

The only good thing is she sees that her son may be a rat. So he should get none of what is left.

[A HERETIC I AM]

15. Sounds as if the money was in a managed portfolio and the fees were out of whack with the return.

The low-return investments in CDs and money market accounts cost her tens of millions of dollars that she could have earned with another investment strategy, the lawsuit said.

If the broker put her in CD's and Money Market funds, there should have been minimal transactions fees and therefore very little commissions. If the broker had them sign a managed account type agreement, they should have known up front what the fees were going to be.

Something is missing in this story. OK, yeah, the broker had some previous history, but if they (or she) wanted conservative investments and didn't want to lose money, the safest bet is Certificates of Deposit, Money Market Mutual Funds or US Treasury Bonds. If that's what the broker did, but charged them 2 million to do it, then he is a fuckhead, UNLESS they all agreed up front.

If the broker said "I'll manage your money for two million dollars and you won't lose a cent" and they said "OK, SURE" and signed documents to that effect, then the lady doesn't have a leg to stand on.

[Flaleftist]

16. Is $2 million to manage an account that size over 7 years unreasonable?

The only complaint is the fees and that the money was invested in low interest bonds, which means low risk. Nothing was mentioned about the son misusing the funds. Maybe someone is convincing this lady to sue for their own personal gain.

[A HERETIC I AM]

22. Not really, no.

(I used to be in the business)

Typical fee for a managed account would be between 1 and 2% of invested assets.

So if the brokerage firm was managing the entire $270 plus million, then no, over ten years, 2 mill is not outrageous at all.

[Blue_true]

23. The way I read it was the $2 million was an annual fee.

That is out of line. He could have directed invested with a large mutual fund company and used a regular CPA to do taxes each year.

Again, unless something is a proven, surefire financial wizard, if they get a big cash award, alway take the annuity if the government is involved, like with lotteries, where states are involved.

[TexasBushwhacker]

25. It doesn't say annual

Even so, $2 Million is less than 1% of $278 Million. I think the problem is she gave half to one son with the understanding he would take care of her, but she has 3 other children.

[Blue_true]

27. She didn't get $278 million.

Due to the time discount of the lumps in payout and federal taxes (Florida has no income tax), she likely walked out of the lottery office with a check of around $117 million. Still plenty of money.

I honestly think that people that have never managed large amounts of money before should always take the annuity if they win a massive lottery prize. If the winner is old, their kids would be certain to get a lot of money one day, so there should be no need for them to do questionable things (of course they could do murder to rush things along, but how often have a known lottery winner died without someone asking questions?)

[TexasBushwhacker]

28. The jackpot was $590 million n/t

[Blue_true]

30. Ok, got it. nt

[TexasBushwhacker]

24. It says she took home $278 Million

$2 Million in fees is less than 1%. I suspect someone is trying to get that POA. Just a 3% return per year would give her $8 million a year without even touching the principal. Depending in the state she lives in, knock off a third for taxes maybe. Still plenty to live large.

Maybe Pat Robertson or some other minister is after it.

[Blue_true]

29. She lives in Florida, no income tax.

I guess I didn't read that her net check was $278, 3% per year on that would be indeed a very large amount of money. She could have even done tax free municipal bond, some risk, but tiny.

Does not seem like the family had much financial sophistication. Maybe the son, but the question on him is was he a rube that got suckered or was he in on defrauding his mom.

[elleng]

26. Hope they're subject, as

financial advisers been fighting against HAVING duties re: breach of fiduciary duty in recent years.