Question of the Day - 19 February 2023

Yesterday in Part 1, we saw how self-proclaimed “lottery lawyer” Jason Kurland duped the “Smiths,” who won the world’s third largest lottery jackpot in 2018, and wound up controlling hundreds of millions of their money. 

The Smiths paid Kurland $600,000 a year for his legal and management services, as well as providing “favors and luxuries,” according to LotteryPost, such as tickets to the Master’s Tournament and Kentucky Derby and autographed photos of sports stars.

He also, presumably, had a hand in the real estate transactions when the Smiths also bought several new houses, one in South Carolina, another elsewhere in the U.S., and a third abroad, plus “tens of millions on other real-estate transactions, including a hotel,” according to LotteryPost.

Meanwhile, supposedly following the Smiths instructions to handle the money very conservatively, Kurland invested in a diamond wholesaler, thoroughbred race horses, and a personal-protective equipment reseller -- not exactly the high-yield savings accounts and money-market funds, CDs, Treasury bills, notes, and bonds and corporate bonds, and dividend-paying blue chips that the Smiths had probably intended.  

He also put $30 million into two companies that “provide funds to other businesses in exchange for a percentage of their daily credit-card income.” These are fairly common merchant advances in which the businesses receive a lump sum in exchange for daily repayments as a percentage of the businesses’ direct credit- and debit-card bank deposits. Kurland promised 9% return on the investment to be put into a Smith family fund from which 10 family members would each receive $12,500 per month.

Kurland didn’t disclose that he had an ownership interest in both merchant-advance companies, nor did he divulge that the PPE investment was, according to LotteryPost, “a plan to recoup losses from a Ponzi scheme that had gone sour.”

Other developments also started to smell rotten. The payments from the merchant-advance companies to family members were sporadic and in inconsistent amounts. Then the FBI approached the Smiths about the diamond wholesaler, whom they were investigating for running that Ponzi scheme; it had duped investors out of $200 million in a three-year period. 

Finally, the trail led to Kurland himself and three “co-conspirators” who were defrauding and stealing from the Smiths and some of Kurland's other lottery clients. Kurland’s accomplices weren’t exactly reputable investment advisors. One was a former securities broker. The second was the son of a Colombo organized-crime boss; the third was a soldier in the Genovese organization. The three pled guilty, while Kurland loudly proclaimed his innocence, insisting he himself had been manipulated by the others.

With Kurland sitting in jail, the Smiths finally realized how deep they were in, essentially locked out of hundreds of millions of their own money. Also, according to LotteryPost, they feared that now that the jig was up, Kurland would “go rogue” and decimate their accounts. 
Luckily, they were able to jump through all the banks’ hoops and regain control of their funds. But that was when they saw the full extent of Kurland and company’s deceit. All told, prosecutors estimated that they’d defrauded the Smiths of $83 million and the other lottery winners of around $25 million. 

Kurland took his chances in court, obviously counting on some sympathy from the jury, but the 12 jurors came back with a quick verdict and, in July 2022, convicted him of five counts of wire fraud and money laundering. Since he didn't cop a plea like the others, he could be sentenced to as many as 20 years in prison. Currently, Kurland sits in jail awaiting that sentence.