Ray Lucia And His Non-Traded REIT Dividend Double Talk

Ray Lucia And His Non-Traded REIT Dividend Double Talk

Postby REIT Wrecks » Mon Apr 02, 2012 1:25 am

If Ray Lucia and the "Brain Trust" choose to to give unsophisticated, income-oriented investors advice on non-traded REITs, shouldn't Ray and the "Brain Trust" tell the truth, the whole truth, nothing but the truth? That simple proposition seems simple enough for most people, but for certain financial advisors with 7% commissions at stake, bending the truth seems to be irresistible. Update: Ray Lucia permanently barred by SEC for making "knowingly" false statements.

In the course of answering the client's questions on valuations, Lucia compares Non-Traded REITs to bonds, which is misleading (and I personally have heard him refer to Non-Traded REITs as "Bonds on Steroids" in his well-scripted seminars). This statement vastly oversimplifies the risks related to Non-Traded REITs, and his full statement to "Susan" implies that if she would only hold her non-traded REITs to maturity, she will eventually recover 100% of principal, regardless of interim fluctuations in value. Try telling that to the hapless investors in Behringer Harvard Opportunity REIT I, who may never recover their principal, no matter how long they hold.

In the below clip from the full conversation -- in response to Susan's question about losses in her Non-Traded REIT portfolio -- Lucia says that the value of the REIT will "absolutely" go back up, "I would expect them to go back up!". Who is this guy, Carnac the Magnificent?? Interestingly, he refers to so-called "respectable" Non-Traded REITs in his answer. Which ones are they, Ray? And while you're at it Ray, which ones are NOT respectable?? More importantly, please tell us all how you are able to discern the difference.

Lucia also tells this obviously not so sophisticated investor that if she is receiving a dividend, it must mean that the REIT is healthy and "making money", because they "by law have to distribute to you 90% of their pre-tax income". Unfortunately, Ray failed to tell her the whole truth, and nothing but the truth, which is that Non-Traded REITs frequently pay dividends regardless of whether the REIT managed to produce any pre-tax income at all. So, it appears that the IRS REIT dividend requirement is being ridden by Ray and the "Brain Trust" like an old rented scooter, and it's all in the name of sales. If that's not the case, then Ray and the "Brain Trust" must not know what they're talking about, and I'm not sure which is worse.

Ray Lucia Imparts His Non-Traded REIT Wisdon.mp3 [ 1000.41 KiB | Viewed 5919 times ]

Ray Lucia and the "Brain Trust" should know better than to make the statements like these, and if they do know better, these statements imply that they are willing to look the other way when faced with the opportunity to be forthright and transparent.

N.B. the full, unedited recording has been downloaded and is safely archived in the REIT Wrecks Truth Vault.

User avatar
REIT Wrecks
Site Admin
Posts: 415
Joined: Wed Jan 27, 2010 2:31 pm

Re: Ray Lucia And His Non-Traded REIT Dividend Double Talk

Postby RealEstateGuy » Thu Apr 05, 2012 6:21 am

Do you know where this audio is taken from? Sounds like a group presentation, right? Anyhow, he should be reported to the regulators or somewhere for how he is answering this question - and I assume many others. I will say that he doesn't really say how much he expects them to come back up in value and doea add the "respectable" description.

Is there any record of which REITs he specifically has recommended over the years? Any other info on how he has managed money - or does he manage money at all?

Most "gurus" in the financial world are just puff and bluff once markets turn and their simpleton ideas go out of favor.

Posts: 16
Joined: Thu Sep 01, 2011 10:58 am

Re: Ray Lucia And His Non-Traded REIT Dividend Double Talk

Postby shettena » Thu Apr 05, 2012 9:39 am

My name is Seth Hettena and I've been a longtime lurker on this forum. I am a journalist who has been following Ray Lucia for a while ever since he threatened to sue me for defamation.

I don't make any money doing this and I'm not trying to sell anything. The only reason I follow him is because his attempt to bully me into silence pissed me off. You can see my other Lucia posts here.

RealEstateGuy, I think I can answer some of your questions

Any other info on how he has managed money - or does he manage money at all?

Lucia no longer manages money. The business he started, RJL Wealth Management in San Diego, is now run by his son, Ray Jr. RJLWM has about $279 million under management. For a while, RJLWM had a solicitor arrangement with Lucia Sr., meaning sonny paid pops for bringing in new clients. In addition to racking up the big non-tradeable REIT commissions, RJLWM often charges clients a 1.9 percent wealth management fee, which is pretty high.

Is there any record of which REITs he specifically has recommended over the years?

Lucia has recommended the following REITs:

    Behringer Harvard Multifamily REIT I
    Hines Global
    CB richard Ellis Realty Trust

I'd be curious to hear any thoughts you might have.

Posts: 2
Joined: Thu Apr 05, 2012 9:00 am

Re: Ray Lucia And His Non-Traded REIT Dividend Double Talk

Postby sdfinance73 » Wed Apr 18, 2012 10:43 am

What Lucia doesn't tell you is that he has most of his underlings do his dirty work. I've seen people who rolled over old 401(k) plans into IRAs invested in REITs with Ray. This was all the money they had. So he took 100% of their retirement assets and put it into a Wells REIT. Because the amount was under $100k, most attorneys won't both if the client wants to file a claim. Most complaints are handled by the firm with a response of "the market will shift and eventually recover, so please be patient."

He only uses his buckets strategy on large accounts. The people trying to save for retirement are unfortunately pushed into highly commissionable products to maximize his $$$. This guy spends millions on advertising and cannot make it back by just charging 1% on accounts. I'm surprised this guy is still a CFP considering the board's standards for ethics

Posts: 1
Joined: Wed Apr 18, 2012 10:11 am

Return to Ray Lucia & Non-Traded REITs (And Variable Annuities Too!)