For almost four months now, the two gainfully employed, apparently competent men have been attempting to cut a simple business deal that would allow them to invest in real estate while the market is good.
Instead, they have found themselves trapped in a legal netherworld, fighting with the state attorney general over the interpretation of one seemingly innocuous phrase in the statute that established the state's lottery.
Even though one judge has already sided with the two men, the state still will not drop its efforts to block their deal.
"They're just jerking us around every way they can when it shouldn't be any business of theirs," says Bedford, a 36-year-old nursing assistant.
At issue is the $579,000 the two men won in the lottery six years ago.
Unlike now, jackpot winners then didn't have the choice of taking one lump-sum payment instead of a larger, 20-year payout.
Together, Bedford and Monteverde, a 39-year-old friend who works in the credit-card department of a bank, won the jackpot with a ticket they bought in 1987.
The state Lottery Commission set up an annuity with a private Georgia company. Each man was to receive about $14,000 a year for 20 years, minus state and federal taxes.
After taxes, the two men each now actually receive about $10,000 each July, Bedford says, which is a nice boost to the bank account but hardly extravagant wealth.
With 13 payments still to come, the long-term value of the pair's winnings now stands at about $360,000. But Bedford and Monteverde are willing to take less than half that much if they can have the money now and invest it while there are some smoking deals in real estate.
Therein the rub.
The two men are trying to sell the rest of their payout to someone else for cash now--specifically, Woodbridge Partners Group, a New York-based company that has recently gone into the business of cutting deals with people just like Bedford and Monteverde.
Bob Shapiro, the company's vice president, says it has purchased rights to annuities in 38 states over the past two years. In most cases, he says, lottery winners decide it's worth it for them to take cash up front, usually to cover unexpected expenses or make some sort of investment.
This summer, Woodbridge agreed to pay Bedford and Monteverde $125,000 if the men would assign all future payouts from their annuity to Woodbridge.
The arrangement, Bedford says, would cost the state and its taxpayers nothing, effectively just changing the name on the next 13 payout checks. In fact, Bedford notes, after the men bought some real estate in Phoenix, they would wind up paying more in taxes than they do now.
But the attorney general has managed to scuttle the deal so far, arguing that lottery winners have no legal right to assign their winnings to someone else.
The argument is largely over one phrase in the lottery statutes which states, "Payment of any prize drawn or the remainder of any annuity purchased may be paid to the estate or beneficiary of a deceased prize winner or to a person pursuant to an appropriate judicial order."
To Amy Schwartz, a Phoenix attorney hired by Woodbridge, the language clearly says that Bedford and Monteverde have a right to sell their annuity payoffs--as long as a judge checks out the deal and says it's okay.
This summer, Schwartz sought a summary judgment from Maricopa County Superior Court Judge Stanley Goodfarb to supply the "appropriate judicial order" that the statute calls for.
But the attorney general, acting on behalf of the Lottery Commission, challenged the request, arguing that annuity benefits can only be assigned to another party if the prize winner has died.
(Lottery Director Ralph Decker declined to comment on the case. Assistant Attorney General Mariannina Preston, who is handling the case, did not return a telephone call.)
In a court brief, Preston argued, among other things, that the annuity system is set up "as a form of protection for the fortunate winners," presumably to prevent big jackpot winners from blowing all their money at once.
The state has a legitimate interest in making sure that lottery winners can't sell their future annuity payouts, she wrote, because it might tempt them to squander their newfound wealth.
That argument, Schwartz says, rings pretty hollow considering that the Arizona lottery has since changed the rules and now hands out lump-sum payments itself.
"It can't be okay in one instance and not in the second," Schwartz says.
After reviewing the case, the judge agreed. In October, Goodfarb granted Schwartz's motion for summary judgment. In no uncertain terms, the judge ruled that the state had no business telling Bedford and Monteverde what to do with their financial matters.
The attorney general's arguments, Goodfarb wrote, "seem to represent a kind of feudal view that only an educated government elite can protect the 'uneducated' mass who would play lottery games."
Bedford and Monteverde thought the judge's ruling would clear the decks for their deal. No such luck. The Attorney General's Office has requested another hearing before Goodfarb so it can argue that the judge did not have the authority to issue his order.
What greater public good is being served by the state blocking a fairly cut-and-dried business deal? Schwartz says she cannot discern one.
"We are dealing with competent adults who have received outside advice," she says. "It appears to me that the [attorney general] is almost going out of the way to find some way to block this, without any public policy purpose behind it."
Although his company has had to go to court before in other states to buy annuities, Shapiro says, Arizona is proving particularly nettlesome.
"Arizona has been very arrogant. What possible harm are we doing?" Shapiro asks. "They [Arizona] offer a lump sum. What possible objection could they have to someone else doing it?