Now that she's a millionaire, Detroit-area lottery winner and former public-assistance recipient Amanda Clayton is getting a lesson in how the other half lives.
In just a few months, Ms. Clayton has gotten a rough introduction to some of the less desirable aspects of coming into wealth — high taxes, public scrutiny and resentment from much of society.
She hasn't particularly helped her own cause.
First, the lottery winner triggered a minor uproar because the unemployed single mother continued to take public assistance after winning the jackpot. When a local news station confronted her after she used her public assistance card in a grocery store purchase, she argued that she still needed the money because of bills she had to pay.
Further adding fuel to the fire: Her mother explained in a later interview that after paying taxes and the lump-sum discount, Ms. Clayton received only around $500,000. She added that her daughter had already spent money on a house and a new car.
That didn't help. While Ms. Clayton had done nothing illegal, she was roundly criticized for taking advantage of a legal loophole that doesn't count lottery winnings as disqualifying income. The public outcry eventually led the state's Department of Human Services to cut the sweepstakes winner from the program this week.
Moreover, one investment adviser said Ms. Clayton has done just about everything wrong from a financial standpoint since she won $1 million jackpot in the state's Make Me Rich program in the fall.
“When someone who is not working has a windfall, there tends to be an issue with squandering,” said investment specialist Anthony Agbay, senior vice president of investments at Leonard & Co. Inc., the largest independent brokerage in Michigan. “She should be getting guidance to do what's right, not just for today.”
Taking the lump sum was her first mistake, Mr. Agbay said. “If she had taken the 20-year payment plan, we wouldn't be having this discussion,” he said. Most lottery winners choose to take the lump sum, and a large percentage of them blow through their fortune fast.
“My guess is that she didn't consult with anyone except a friend who said, 'Take it and we'll get to spend it,'” he said. Even investment advisers are sometimes guilty of that, he said. “We bill on assets under management,” he said. “Some might advise taking a lump sum even when it is not in the client's best interest.”
Mr Agbay would counsel the lottery winner to work to improve her credit by taking out a small loan, perhaps secured by some of her winnings, and taking training to prepare herself for a career.
Attempts to reach Ms. Clayton for comment were unsuccessful.
For several years, Leech allegedly favored some clients in trade allocations, at the cost of others, amounting to $600 million, according to the Department of Justice.
