A real case of how sudden wealth and poor decisions destroyed a family's fortune
In 2016, a couple won a $435 million Powerball jackpot. After taxes and the lump-sum reduction, they received roughly $198 million. Within a few years, they had lost nearly all of it through a combination of bad investments, trusting the wrong advisors, and making decisions without proper research. Their story illustrates how having money does not teach you how to keep it — and how the pressure to invest quickly can lead to irreversible losses.
The couple's experience is not unique. Lottery winners, people who inherit large sums, and those who receive sudden payouts from lawsuits or business sales often face the same trap: they have capital but no experience managing it, and they encounter advisors who may not have their interests in mind. Understanding what went wrong in their case can help you recognize the warning signs if you ever face a similar situation.
Key Takeaways
- The couple invested heavily in real estate, restaurants, and other ventures without conducting proper due diligence or understanding the markets they were entering.
- They worked with advisors who were not fiduciaries — meaning those advisors were not legally required to put the couple's interests first.
- They made large, irreversible commitments quickly, without getting independent second opinions or taking time to learn before deploying capital.
- Sudden wealth creates pressure to "do something" with the money, but that pressure is often the worst time to make major financial decisions.
- A fiduciary financial advisor, a written investment plan, and a cooling-off period before major commitments can prevent similar outcomes.
How the couple lost their fortune: the sequence of events
After winning, the couple received their lump-sum payout and began making investments almost immediately. They purchased multiple properties, invested in restaurants and bars, and funded various business ventures. On the surface, diversification sounds prudent — but they did not have the expertise to evaluate any of these investments, and they did not hire people who did.
The real estate investments performed poorly. Some properties were in declining markets or required extensive repairs the couple had not budgeted for. Restaurant ventures failed because the couple had no experience in food service operations and did not hire experienced managers before opening. They also made personal loans to family members and friends, some of which were never repaid. Within five years, their $198 million had shrunk to a fraction of that amount.
The couple's situation was compounded by the fact that they did not have a written investment plan. They made decisions based on opportunity, emotion, and the advice of people around them — not based on a clear strategy for how to preserve and grow their wealth over time. This is a common pattern: lottery winners and sudden-wealth recipients often skip the planning stage because they feel pressure to act quickly.
The role of non-fiduciary advisors in their losses
One of the most damaging decisions the couple made was trusting advisors who were not fiduciaries. A fiduciary is legally required to put your interests ahead of their own. A non-fiduciary advisor has no such obligation — they can recommend investments that benefit themselves more than you, as long as the investment is not outright fraudulent.
The couple worked with people who sold them on deals that generated commissions for those advisors. In some cases, the advisors had financial stakes in the ventures they were recommending. The couple did not ask the right questions: "Are you a fiduciary?" "Do you have a financial interest in this investment?" "What fees are you charging, and how are you being paid?" These questions matter enormously when you are deploying large sums of money.
A fiduciary advisor would have been required to create a comprehensive financial plan before recommending specific investments. They would have had to explain the risks, discuss the couple's goals and time horizon, and recommend a diversified strategy rather than concentrated bets on restaurants and real estate. The couple's actual advisors did none of this.
Why real estate and restaurant investments failed
Real estate and restaurants are common targets for lottery winners because they feel tangible — you can see and touch the property or the business. But both are capital-intensive, illiquid (hard to sell quickly), and require operational expertise to succeed.
The couple's real estate purchases were made without proper market analysis. They bought properties in areas they did not know well, often at inflated prices because sellers knew they had money. Some properties sat vacant or required expensive renovations. Unlike stocks or bonds, you cannot quickly sell a property if you realize you made a mistake — you are locked in for months or years.
The restaurant investments failed because the couple treated them as passive income opportunities when restaurants require active, experienced management. They did not have restaurant industry experience, did not hire experienced operators before opening, and did not understand the thin profit margins in food service. Most restaurants fail within five years even when run by experienced owners. A lottery winner with no industry knowledge is at much higher risk.
The pressure to invest quickly and why it backfires
Lottery winners face intense pressure to make decisions fast. Family members ask for money. Advisors pitch opportunities. The winner feels that sitting on cash is wasteful or that they need to "put the money to work" immediately. This pressure is almost always counterproductive.
The couple felt this pressure acutely. They had won a massive sum and felt obligated to do something significant with it. They did not take time to learn about investing, to understand their own risk tolerance, or to develop a long-term strategy. Instead, they made large commitments within months of winning.
A better approach would have been to place the money in low-risk, liquid investments (such as money market accounts or short-term bonds) for six to twelve months while they educated themselves, hired a fiduciary advisor, and developed a written plan. This cooling-off period costs nothing and can prevent catastrophic mistakes. The couple's losses would have been prevented or minimized if they had simply waited.
What a sound investment strategy would have looked like
A fiduciary advisor working with the couple would have started with a written investment plan. This plan would have addressed several key questions: How much money do you need to live on each year? How long do you want the money to last? What is your risk tolerance? What are your major life goals over the next 10, 20, and 30 years?
Based on those answers, a sound strategy might have looked like this: place 60 to 70 percent of the money in diversified stock and bond funds; keep 20 to 30 percent in cash and short-term bonds for emergencies and opportunities; allocate 5 to 10 percent to alternative investments (real estate, private equity) only after the core portfolio is established; and avoid concentrated bets in any single business or property.
This approach would have generated substantial income without requiring the couple to become experts in real estate or restaurant management. A diversified portfolio of index funds and bonds would have grown steadily, and the couple could have lived comfortably on the dividends and interest without touching principal. Instead, they made concentrated bets that required expertise they did not have.
Red flags that should have stopped them
Several warning signs appeared before the couple lost most of their money, but they did not recognize them or chose to ignore them. Understanding these red flags can help you avoid similar traps.
Advisors who are not fiduciaries: If someone recommends an investment but will not commit in writing to acting as a fiduciary, that is a red flag. Ask directly: "Are you a fiduciary 100 percent of the time, or only for certain accounts?" If the answer is anything other than "100 percent of the time," walk away.
Pressure to decide quickly: Legitimate investments do not disappear if you take a week to think about them. If an advisor is pushing you to commit immediately, that is a sign they benefit more from speed than from your success.
Investments you do not understand: If you cannot explain an investment in plain language, you should not make it. The couple could not explain why the restaurants would succeed or why the real estate would appreciate — they just trusted the people selling the deals.
Concentrated bets instead of diversification: Putting 10 or 20 percent of your wealth into a single property or business is not diversification. It is gambling. Diversification means spreading money across many different types of investments so that one failure does not destroy your wealth.
How to protect yourself if you receive a large sum of money
If you win a lottery, inherit money, or receive a large payout, follow these steps before making any major investment decisions.
Step 1: Do not tell anyone except immediate family and a lawyer. Lottery winners who publicize their win face constant requests for money and pitches from people trying to sell them investments. Keep it quiet while you plan.
Step 2: Place the money in a safe, liquid account. Put it in a money market account or short-term Treasury bonds at a major bank. This is not forever — it is a holding place while you plan.
Step 3: Hire a fiduciary financial advisor. Interview at least three advisors. Ask each one: "Are you a fiduciary 100 percent of the time?" Get the answer in writing. Check their background through FINRA BrokerCheck or the SEC's Investment Adviser Public Disclosure database.
Step 4: Develop a written investment plan. Work with your advisor to create a plan that addresses your goals, risk tolerance, and time horizon. This plan should be in writing and should specify what percentage of your money goes into different types of investments.
Step 5: Wait at least six months before making any major commitments. This cooling-off period allows you to learn, to think clearly, and to avoid decisions made under pressure or emotion.
Step 6: Avoid concentrated bets. Do not put more than 5 to 10 percent of your wealth into any single investment, especially one you do not fully understand. Diversification is not exciting, but it is what preserves wealth.
Frequently Asked Questions
What is the difference between a fiduciary and a non-fiduciary advisor?
A fiduciary is legally required to put your interests ahead of their own and to disclose conflicts of interest. A non-fiduciary has no such obligation and can recommend investments that benefit themselves more than you. Always work with a fiduciary, and get the commitment in writing.
Why do lottery winners lose their money so quickly?
Lottery winners often lack experience managing large sums, face pressure from family and advisors, and make concentrated bets in areas they do not understand. They skip the planning stage and make emotional decisions quickly. A written plan and a cooling-off period prevent most of these losses.
Is real estate a good investment for someone with sudden wealth?
Real estate can be part of a diversified portfolio, but it should not be the primary investment for someone without real estate experience. Real estate is illiquid, requires expertise to manage, and ties up capital that could be deployed more flexibly elsewhere. Limit it to 5 to 10 percent of your total wealth.
How do I know if an advisor is trustworthy?
Check their background through FINRA BrokerCheck or the SEC's Investment Adviser Public Disclosure database. Ask if they are a fiduciary in writing. Interview multiple advisors. Avoid anyone who pressures you to decide quickly or who has a financial stake in the investments they recommend.
What should I do with money immediately after winning a lottery or receiving a large payout?
Place it in a safe, liquid account like a money market fund or Treasury bonds. Hire a fiduciary advisor. Develop a written investment plan. Wait at least six months before making major commitments. This approach prevents most of the mistakes lottery winners make.