Ray Lucia Sr., an advisor cited by Ben Stein as "the best wealth manager I know" and as one who "saved me from suicide," has been charged by the Securities and Exchange Commission for spreading misleading information about his "Buckets of Money" strategy at a series of investment seminars.
The SEC's Division of Enforcement alleges Lucia and his company, formerly named Raymond J. Lucia Companies Inc. (RJL), claimed that the wealth management strategy had been empirically "backtested" over actual bear market periods.
"Lucia and RJL left their seminar attendees with a false sense of comfort about the Buckets of Money strategy," said Michele Wein Layne, regional director of the SEC's Los Angeles Regional Office. "The so-called backtests weren't really backtests, and the strategy wasn't proven as they claimed."
Lucia, who lives in the San Diego area, and his RJL allegedly presented a lengthy slideshow at the seminars indicating that extensive backtesting proved that the Buckets of Money strategy would provide inflation-adjusted income to retirees while protecting and even increasing their retirement savings. However despite the claims they made publicly, the SEC claimed Lucia and RJL performed scant, if any, actual backtesting of the Buckets of Money strategy.
According to the SEC's order instituting administrative proceedings against Lucia and RJL, they held the seminars highlighting their Buckets of Money strategy in an effort to obtain advisory clients who would be charged fees in return for their advisory services. They promoted the seminars on Lucia's radio show and on Lucia's personal and company Web sites. According to several published reports, Lucia's lawyer, Michael Perlis, says he plans to contest the charges.
Lucia no doubt benefited from his relationship with uber-celebrity Ben Stein, the self-proclaimed lawyer, economist, actor, screenwriter and financial commentator. Stein and Lucia formed a mutual admiration society of sorts. In 2001, The American Spectator quoted Stein as saying "his advice -- lots of liquidity and very wide diversification -- is so sensible it has saved me from suicide many a night." Both Lucia and Stein were serious advocates of various types of annuities and Stein even served as a spokesman for an annuity trade group.
Stein's precise relationship with Lucia was unclear but in The American Spectator interview he acknowledged it involved more than friendship. "We are colleagues, so I am not disinterested, but even before we were colleagues, I was learning from him and being guided by him," Stein said.
Stein isn't the only media personality who helped advance the San Diego advisor's career. According to Lucia's Web site, he is a regular on The Sean Hannity Show when it discusses personal finance on Fridays.
Financial blogger Seth Hettena has waged a long-running battle against Lucia, labeling his "Buckets of Money" strategy as "Buckets of Bull_ _ _ _." Hettena has claimed that Lucia's fees run as high as 2.9 percent and that his portfolios have contained non-traded REITs that have performed miserably. According to Hettena, Lucia has threatened to sue him for defamation.
That didn't stop Hettena from accusing San Diego radio host Roger Hedgecock and Stein, who called his friend a guru in The New York Times, of "shilling" for Lucia and wondering how much they received for appearing at Lucia's seminars. Today, Hettena, declared the SEC charges have restored his faith in government.