Waseca, Minnesota, is grappling with the tragic and complex circumstances surrounding the death of John Priebe, a highly respected Senior Advisor at Principal Financial Group. Priebe, who allegedly died by suicide in January 2020, is at the center of a controversy involving the negligent investment of $26.4 million in lottery winnings entrusted to him by Paul Rosenau, a local lottery winner, and philanthropist. This news has sent shockwaves through the community and raised significant concerns about the responsibilities and ethical standards of financial advisors.
Five years before the tragic death of his beloved granddaughter, Paul Rosenau purchased a winning lottery ticket, an event he saw as divine providence. On May 3, 2008, Rosenau and his wife, Sue, watched the 10 o’clock news in their Waseca home as the anchorman announced that someone in Minnesota had won a record-high Powerball jackpot. Rosenau checked his ticket and realized that their lives were about to change forever.
Rosenau, a bulldozer and backhoe operator, won $180 million, the highest Powerball jackpot in Minnesota’s history at the time. Opting for an $88 million cash payout, the net amount after taxes was approximately $60 million. With their newfound wealth, the couple decided to give back to their community and invest in a cause close to their hearts.
The Rosenaus donated $26.4 million to the Rosenau Family Research Foundation, dedicated to fighting Krabbe disease, a rare genetic disorder that had claimed the life of their first grandchild, Makayla. The foundation, which supports research and initiatives to find a cure for the disease, has its own scientific advisory group and awards $1.5 million to $2 million annually to scholars across the United States. One of its significant achievements includes funding pre-clinical research that led to the development of a Krabbe disease medication currently under federal testing.
With no investment background, Paul Rosenau sought professional advice to manage their substantial funds. He hired John Priebe, a financial advisor from Waseca associated with Principal Financial Group, based in Des Moines. Priebe, who had a reputable standing and was voted Principal’s Agent of the Year in 2012, seemed like a trustworthy choice.
To express their gratitude, Principal flew the Rosenaus to Des Moines on a company plane to meet with senior executives. This gesture was meant to impress upon the Rosenaus the company’s capability to handle their financial needs. Over time, Rosenau and Priebe developed a working relationship, even traveling together to events such as Berkshire Hathaway’s annual meetings and leisure trips to Hawaii and Jamaica.
Despite the initially positive relationship, by spring 2017, the Rosenaus’ trust in Priebe and Principal Financial Group began to wane. According to legal documents from a Minnesota lawsuit against Principal Financial Group and a FINRA case against Principal Securities, there was a significant disagreement over the viatical sale of an insurance policy.
The foundation claimed that Priebe and Principal invested the funds in inappropriate and costly insurance products, specifically variable nonqualified annuities and eight life insurance policies. These investments, which were unsuitable for the tax-exempt foundation, led to significant financial losses. The foundation alleged that these investments generated high commissions for Priebe and Principal while depleting 99% of the foundation’s capital.
The Rosenau foundation, represented by Minneapolis attorneys Don McNeil and Patrick O’Neill, filed a complaint with FINRA in 2022, alleging that Principal Securities breached FINRA guidelines and U.S. securities laws. The foundation sought to recover $22 million for “loss of use of capital” or at least $6.8 million for inappropriate annuity and life insurance purchases.
On June 5, a panel of three FINRA arbitrators ruled in favor of the foundation, ordering Principal Securities to pay $7.34 million in compensatory damages. However, the panel did not award punitive penalties or legal expenses. Additionally, the Rosenau family filed a lawsuit against Principal Financial and its subsidiaries in Waseca County District Court, alleging negligence and fraud. This case involves separate life insurance trusts from the foundation’s assets.
John Priebe was not individually named in the lawsuits or the FINRA process due to his death in January 2020. Principal Financial Group had discharged Priebe in late October 2019, citing concerns about his business practices and lack of documentation. Less than three months later, Priebe, aged 49, died by suicide.
Priebe had a significant impact on his community. He was actively involved in various local organizations and contributed financially to numerous community events and youth sports groups. In May, the Waseca Area Foundation received a large cash gift from Priebe’s estate, establishing two funds to support community runs, outdoor events, bike paths, and K-12 education in Waseca and Janesville.
The financial mismanagement allegations have profoundly affected Paul Rosenau and his charitable foundation. The trust Rosenau placed in Principal Financial Group and John Priebe was betrayed, leading to substantial financial losses. Despite these setbacks, Rosenau remains committed to his philanthropic goals and continues to support research and initiatives to combat Krabbe disease.
Rosenau’s journey from lottery winner to philanthropist and now a litigant in a complex financial dispute underscores the challenges individuals face when managing significant sums of money without adequate financial literacy and safeguards.
The tragic death of John Priebe brings to light the importance of mental health awareness and ethical standards in the financial advisory profession. Priebe’s actions, whether driven by personal or professional pressures, had far-reaching consequences for his clients and his own life. This case serves as a stark reminder of the critical need for transparency, accountability, and mental health support within high-stakes financial environments.
As the community continues to process the events surrounding John Priebe’s death and the financial mismanagement allegations, there is a collective need to focus on healing and prevention. This includes providing support to the victims of financial mismanagement, promoting mental health awareness, and ensuring that financial advisors adhere to the highest ethical standards.
The legacy of this incident should be one of learning, support, and prevention, aiming to create a safer and more accountable financial advisory landscape for all.
The death of John Priebe and the subsequent revelations about the mismanagement of the Rosenau foundation’s funds are a profound tragedy for all involved. As the community navigates this complex situation, they are reminded of the importance of trust, ethical behavior, and mental health support in the financial advisory profession.
John Priebe’s contributions to his community and his professional achievements are now overshadowed by the allegations and his tragic end. Moving forward, the focus must be on ensuring justice for the victims, promoting mental health awareness, and upholding the highest standards of integrity in financial advising.
The obituary and funeral arrangements for John Priebe have been released by his family, allowing the community to pay their respects and reflect on the lessons learned from this tragic chapter.
