Man who won $4-million in lottery sues investment adviser for $2.3-million in lost funds

A Vancouver man who won $4 million in the lottery put his faith in an investment adviser - he claims the move resulted in him losing more than half of those winnings.

Mohammed Shakil Khan is suing Catherine Jones, his former adviser, for allegedly making bad or unauthorized investments and causing him to lose $2.3 million.

Khan struck it rich in the Lotto 6/49 lottery on March 17, 2007 and initially put his winnings in high-yield short-term GICs earning about 4.5 per cent per year.

He met a number of investment advisers and decided several months later to transfer $3.5 million to a company called Leede Financial Markets Inc. so that Jones, one of the firm’s investment advisers, could invest those funds for him.

Khan wanted to have a steady income stream from the stock portfolio as he anticipated living off the revenue, according to a lawsuit he has filed against Jones and several companies she worked for.

Jones told him that the portfolio would be a mix of blue chip, dividend-paying stocks and high-performing bonds of established corporations and money market trading, says the lawsuit filed in B.C. Supreme Court.

Khan, as an unsophisticated investor, found that many of the initial stocks purchased were unfamiliar to him, and he relied heavily upon Jones, who assured him that his monthly take would be $50,000, says the suit.

Between May 2007 and April 2008, Jones engaged in a number of transactions without Khan’s consent, selling a number of blue chip equity-paying stocks and investing the funds in speculative ventures, says Khan.

Those investments had the effect of increasing the transaction fees and improving the commissions paid to Jones, and by April 2008, his investment of $3.5 million had dropped to $3.1 million.

“The plaintiff had no experience reviewing financial statements and relied on the defendant Catherine Jones to provide him with periodic updates as to the value of his portfolio,” says the suit.

“Throughout the course of her interaction with the plaintiffs the defendant Jones repeatedly overstated the value of the portfolio and told the plaintiff that his portfolio was worth a great deal more than what was contained in the financial statements.”