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.

According to the SEC's order, a backtest must utilize actual data from the time period in order to get an accurate result. Lucia and RJL have admitted during the SEC's investigation that the only testing they actually performed were some calculations that Lucia made in the late 1990s -- copies of which no longer exist -- and two two-page spreadsheets.

According to the SEC's order, the two cursory spreadsheets that Lucia claims were backtests used a hypothetical 3 percent inflation rate even though this was lower than actual historical rates. Lucia admittedly knew that using the lower hypothetical inflation rate would make the results look more favorable for the Buckets of Money strategy. These alleged backtests also failed to account for the negative effect that the deduction of advisory fees would have had on the backtesting of their investment strategy, and their "backtesting" did not even allocate in the manner called for by Lucia's Buckets of Money strategy.  The slideshow presentation that Lucia and RJL used during the seminars failed to disclose the flaws in their alleged backtests and was materially misleading.

According to the SEC's order, Lucia and RJL also failed to maintain adequate records of the backtesting as they were required to do under an SEC rule. The pair of two-page spreadsheets was the only documentation of their backtesting calculations, and those spreadsheets failed to duplicate their advertised investment strategy.

The SEC's order finds that RJL violated the Investment Advisers Act of 1940. The SEC's Division of Enforcement is seeking financial penalties and other remedial action in the proceedings.