Teen-Agers’ Million-Dollar Lucky Break Breaks Down : Money: Dishonesty, bickering bedevil McDonald’s contest winners. Now the company has sued for fraud.

Sitting in the parking lot of a McDonald’s in Norwalk on Easter in 1987, 17-year-old James V. Beltran thought he held happiness in his hands.

He had just bought a Coke and picked up an instant game ticket worth at least $1 million in a restaurant chain promotional contest, and he remembers feeling awestruck. “I realized it would change my life,” he said. “I thought it would make me the happiest person I could be.”

There was just one problem that would cause Beltran’s sweet daydream to sour: As an assistant manager at the McDonald’s in his hometown of Montebello, Beltran was ineligible to collect the money. So, he asked 18-year-old Teresa J. Villafana, a friend at Montebello High School, to claim the winning ticket in return for half of the before-tax proceeds of $1,000 a week. “I totally trusted her,” he said.

But the apparent good fortune of Villafana and Beltran quickly turned bad, setting in motion a hellish swirl of greed, naivete and dishonesty between two working-class teen-agers for whom easy money had always seemed like an impossibly distant goal. Disagreements began almost immediately, and in 1990 Villafana filed a lawsuit claiming that Beltran had broken their contract.

Now, seven years after Villafana’s face was featured on McDonald’s posters in Latino neighborhoods as the lucky young woman who had beaten the odds and won a lifetime income, the company also has filed suit to make them give back more than $330,000. No one will say how, but the company found out in February about the agreement to split the winnings and filed a federal lawsuit in Los Angeles this month, charging that Villafana and Beltran had committed fraud.

The two said they no longer have the money. “You can’t get blood from a turnip,” said Carolyn Olivares, who with her husband, Tony, was Villafana’s guardian until she moved out of their Montebello townhouse soon after she began collecting the prize money. “There’s nothing left.”

McDonald’s spokesman Chuck Ebeling said the company filed the lawsuit on principle, to “see that the integrity of games or sweepstakes that we are involved in is maintained.” The money is also important, he said, but “it’s really a question of protecting participants’ rights” in contests.

The company also wants the defendants to pay its legal fees and punitive and other damages. The complaint filed by McDonald’s contends that Beltran broke the rules because he was an employee and because he gave the ticket to Villafana.

Attorney Ivan W. Halperin, who represents Beltran, said it will be difficult for the company to prove its fraud claim. Beltran said he obtained the ticket legitimately, winning against odds of 250,016,000 to 1, and that he did not know it was improper to give it to Villafana. Halperin also said his client gave it to his friend on the advice of his boss at McDonald’s. “With that set of facts, there’s no fraud here,” Halperin said.

Villafana’s attorney, Emilio T. Gurrola, declined to comment, saying that he was trying to negotiate a settlement with the restaurant giant.

Villafana said in a brief telephone conversation that things had not turned out as she hoped they would when Beltran came to her with the proposed agreement. But she referred other questions to Gurrola.

The Olivareses said arguments between them and Villafana over how to handle the monthly checks for $4,333.33 got so bad that she moved out and did not speak to them for a year.

The problem, said Tony Olivares, was that both Beltran and Villafana were young and had no clue about how to handle taxes, insurance, savings. Discussions over the money “drove a wedge between us at first because she didn’t understand what we were trying to do” to help her, said Carolyn Olivares.

From the time she moved out, said Carolyn Olivares, “it went downhill very rapidly” for Villafana.

She felt as though Beltran was bullying her and began to worry that something wasn’t right, according to legal papers that are part of the Los Angeles County Superior Court lawsuit she filed against Beltran in 1990. And, she said, Beltran fed those worries by telling her that what the two had conspired to do was illegal and that she could go to jail if it were discovered.

Villafana also said in legal papers that those fears caused her to agree to Beltran’s demands that she sign papers so that the insurance company that issued the annuity would send a check directly to him, with him promising to give her a share. Soon afterward, in 1989, Beltran cut her off.

“Every time it seemed like they had this resolved, he seemed to jump in and muck it up,” said Carolyn Olivares.

When Beltran stopped giving her money, Villafana’s problems mounted. She lost two apartments because she failed to pay the rent. Her car, a Toyota Corolla she had purchased soon after receiving her first check, was repossessed. A boyfriend ran up big bills on her credit cards and then disappeared.

Her birth mother had surfaced, and asked for money to go to Mexico to tend to Villafana’s dying grandmother. With the money going for that, Villafana fell behind in her taxes and eventually had to work out a repayment agreement with the federal government.

Although Beltran received far more money--about $237,000, compared to $94,000 for Villafana--he also has had difficulties. He will not say that he regrets ever obtaining the money, but he agrees that his eyes have been opened. “I learned a lot from all this,” he said. “I’ve gotten a lot of wisdom.”

He said problems began almost as soon as Villafana received the first check in August of 1987. In court papers, she said she made partial payments to Beltran. The Olivareses said she paid Beltran in cash so that he would not be connected to her when he cashed checks. But Beltran now claims that he got almost nothing.

“I never thought she would do that, but I guess it’s true that money really does change you,” he said.

A year later, he persuaded Villafana to assign the annuity payments to him. And, he acknowledged, once that happened he stopped splitting the money with her. “I felt no obligation to give her more,” he said in an interview.

He used the money to buy a Toyota Supra and move out of his parents’ house. He traveled some, and then attended Pierce College in Woodland Hills. Still chasing happiness, he said, he moved to Bellevue, Wash. “I always felt empty no matter what I did,” he said. “I thought there had to be more.”

In May, 1992, a Superior Court judge endorsed an out-of-court settlement of the lawsuit Villafana filed against Beltran that gave him about three-fourths of the money. Villafana’s share was to be about a fourth.

But by then, the annuity had shrunk too. The insurance company that issued the annuity, Executive Life, had been forced by its own financial problems to reorganize. As a result, the value of the monthly check varied each month, dropping as low as $2,500 for the two of them to split.

Even so, for a year and a half after the court settlement, things seemed to improve and Villafana and Beltran began getting their lives on track. She was getting less than $200 a week after taxes but she had gotten a clerical job at a grocery company, enrolled in East Los Angeles College and begun performing in the campus dramatic group.

Beltran said he rediscovered his Christian faith, which he had abandoned not long after winning the money, and moved back to Montebello. “Now I know I am living my life for the greater glory of God,” he said.

In January, the money stopped altogether, because of Executive Life’s troubles. And in February, McDonald’s filed suit.

“They would have had it made,” said Tony Olivares, shaking his head in wonderment at how things turned out. “There was enough money for both of them.”