Archive for the 'Spin Doctors' Category

The Ben Stein-Ray Lucia Mutual Admiration Society

April 4, 2012, by Seth Hettena. 5 Comments

Actor and corporate pitchman Ben Stein charges more than $50,000 for a single speech, according to his page at the Keppler Speakers Bureau.

If that’s the case, I would love to know how much he charges Ray “Buckets of Money” Lucia for making numerous appearances each year at Lucia’s free seminars and lauding him in The New York Times as a “guru.”

Let’s face it: it’s Stein, not Lucia, who is the big draw at the seminars. Stein has made a career out of being a bow-tied smartypants ever since he famously played a dull economics teacher in the movie Ferris Bueller’s Day Off. He even sued over his signature look in this lawsuit in which he describes himself as “the most famous economics teacher in the world.” In the public’s mind, Ben Stein is what an economist looks like.

The public doesn’t know or care that Stein is a securities lawyer by trade whose credentials as an economist amount to a famous economist for a father and a bachelor’s degree in economics. Never mind that to the folks I know in the finance world think Lucia and his buckets are a joke. Never mind that anyone at Goldman Sachs who starts blabbing about buckets of money will be shot at dawn.

I doubt that Stein truly believes that the “genius” of Ray Lucia is his bucket strategy. His genius such as it is lies in his salesmanship. Lucia understands that regular people don’t want to read financial reports and SEC filings. They want to see a man who plays an economist on TV. They want to hear jokes get some free advice about what to do with their retirement nest eggs. They want a show.

So they come for a show and they leave with a new money manager, Lucia’s son, Ray Jr. It will take a while before these unsuspecting investors realize that Lucia Jr. has drilled holes in their buckets with his company’s high fees and questionable investments such as non-tradeable REITs that earn Lucia huge commissions.

Stein provides his pal Lucia an additional, equally valuable service — repeatedly dropping Lucia’s name in his business columns in The New York Times and elsewhere. Stein’s shilling got him canned from the Times, so now he name drops Lucia in his American Spectator diary.

Stein will say almost anything if you pay him. He served as an expert witness for lawyers at Milberg Weiss until the firm went down under federal indictment for bribery and fraud. He has pitched Comcast, eye drops, cars, office equipment. So it’s no surprise that Stein praises Lucia as a “guru” or a “genius” in the same breath as Warren Buffet.

But this is a particularly insidious form of advertising. If you repeat something enough times, goes the old saw, it becomes truth. Especially when you can repeat it in The New York Times.

I happened to be sitting at Morton’s restaurant in Beverly Hills a few days ago with Mr. [Phil] DeMuth and with another financial adviser for whom I have high esteem, Raymond J. Lucia (for whom – full disclosure – I am about to give a speech or two urging people to save for retirement).

Ray and Phil said something like this to me: “You know there are not a lot of shows on TV that actually teach the viewer how to be a better investor. There is a lot of stock picking and predicting what can’t be predicted, but there is not a lot that tells the ordinary Joe or Jane how to save for retirement.”

Ray and Phil were right. And they will keep being right.
~ The New York Times, Feb. 27, 2005

I was recently on a panel with the stock guru Ray Lucia, who offered overwhelming data about how impossible it was to pick stocks, trade in and out of them and fare as well as the market. His data was terrifying.
~ The New York Times, Oct. 14, 2007

I checked with my investment gurus, Phil DeMuth, Raymond J. Lucia and Kevin Hanley. None of us could see how Mr. Madoff could do what his friends said he could do.
~ The New York Times, Dec. 26, 2008

I am to give a speech at a huge gathering hosted by my pal Ray Lucia. It is about investing. He has an immense crowd of well over 1,000 people today and my job is not really to sell them anything, but to give them a general overview of the economy.
~The American Spectator, May 2010.

Now, to pack and prepare to go see my pal Ray Lucia. Ray is simply the best wealth manager I know of. He knows more about personal finance than any other person I have ever met. His advice — lots of liquidity and very wide diversification — is so sensible it has saved me from suicide many a night. This guy is a lifesaver where managing money is concerned. We are colleagues, so I am not disinterested, but even before we were colleagues, I was learning from him and being guided by him.
~The American Spectator, June 1, 2010.

I have done the best I can, with the help of some true geniuses of finance like Phil DeMuth, Chris DeMuth, Ray Lucia, Anil Vazirani, J.W. Roth and, supreme above all of them, John Bogle and Warren Buffett, to invest wisely.
~The American Spectator, Aug. 12, 2011


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If you don’t care about your Facebook privacy then carry on

November 29, 2011, by Seth Hettena. 0 Comments


Update: “Mr Zuckerberg’s latest mea culpa is unlikely to be his last,” The Economist

Facebook settled with the Federal Trade Commission today, admitting that its repeated assurances to its 500 million users that it would puyour private information in a secure little box were lies. Mark Zuckerberg calls them “mistakes.”

I’m posting this because this news might well be overshadowed by a well-timed leak to The Wall Street Journal that Facebook is hoping for a $100 billion initial public offering later this year.

The FTC complaint lists a number of instances in which Facebook allegedly made promises that it did not keep:

  • In December 2009, Facebook changed its website so certain information that users may have designated as private – such as their Friends List – was made public. They didn’t warn users that this change was coming, or get their approval in advance.
  • Facebook represented that third-party apps that users’ installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users’ personal data – data the apps didn’t need.
  • Facebook told users they could restrict sharing of data to limited audiences – for example with “Friends Only.” In fact, selecting “Friends Only” did not prevent their information from being shared with third-party applications their friends used.
  • Facebook had a “Verified Apps” program & claimed it certified the security of participating apps. It didn’t.
  • Facebook promised users that it would not share their personal information with advertisers. It did.
  • Facebook claimed that when users deactivated or deleted their accounts, their photos and videos would be inaccessible. But Facebook allowed access to the content, even after users had deactivated or deleted their accounts.
  • Facebook claimed that it complied with the U.S.- EU Safe Harbor Framework that governs data transfer between the U.S. and the European Union. It didn’t.

Carry on!

 


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Anwar al-Awlaki’s Death

September 30, 2011, by Seth Hettena. 1 Comment

The US is announcing the death of Anwar al-Awlaki, a U.S. citizen who moved to Yemen where he waged jihad against his former homeland. Assuming this is true — and not a repeat of what happened in 2009 when Awlaki was falsely reported as dead — it’s a major blow against one of al Qaida’s superstars.

What made Awlaki so dangerous wasn’t his so-called operational abilities, as the U.S. is now claiming, although no one is actually bothering to ask what that means. Awlaki was an intellectual, not a fighter. What made Awlaki so dangerous was his somewhat unique ability to inspire disaffected Muslims in the West to take up arms in the cause of jihad.

Awlaki may have rejected the West, but he knew how it worked. He spent many years here in San Diego and spoke both Arabic and English beautifully. Recordings of his sermons are very popular. He also knew how to use the Internet to reach people. I don’t think it’s a coincidence that U.S. counterterrorism officials started linking him to terrorism in the very same month that Awlaki started his now-defunct jihadist website.

What I always found fascinating about this so-called holy man got busted for prostitution twice in San Diego and was picked up by San Diego police for “hanging around a school.”  Maybe that’s why he needed his martyrdom, so he could wash his sins away. (I’ve written about him before here.  I also put together a comprehensive timeline.)

I won’t be shedding any tears for a man who plotted to kill Americans and praised the Fort Hood shooter Nidal Hasan as a “hero.” But Awlaki wasn’t Osama bin Laden. He wasn’t an Iraqi insurgent or a Taliban trying to kill U.S. troops. Awlaki a U.S. citizen.

He knew his death would point out the hypocrisy of a country with a constitution that guarantees its citizens due process of law and then goes out and assassinates them in Yemen with a drone strike. He knew we would succumb to our fears.

Like it or not, he was one of our own.


Who is Jim McCarthy of CounterPoint Strategies?

August 1, 2011, by Seth Hettena. 2 Comments

????????ikoniIf you’ve found your way to this page, there’s a good chance that you’re a journalist who has just had the pleasure of meeting an unusually aggressive PR flak named Jim McCarthy.

Don't let me scare you

First off, relax. If anything, the fact that you’ve run into Jim may be a good thing. This guy has represented some major league Wall Street crooks, so there’s a chance that you’re on to something.

CounterPoint’s current and former clients include:

  • Elliott Broidy, a wealthy California investor who pleaded guilty to paying $1 million in bribes to influence former New York State Comptroller Alan Hevesi.
  • Ira Rennert’s Renco Group and its Doe Run subsidiary St. Louis, the largest lead producer in the Western hemisphere. Jim does not want you to watch this video about the company’s operations in Peru.
  • The Formaldehyde Council
  • The National Fisheries Institute (Think mercury)
  • Bond insurer MBIA.
  • The College Sports Council
  • Hedge fund founder Raj Rajaratnam, who was convicted of securities fraud. (Update: Raj Rajaratnam was sentenced to 11 years in prison.)
  • Dallas-based Kosmos Energy, majority-owned by private-equity firms Blackstone Group and Warburg Pincus.

I had the pleasure of dealing with Mr. McCarthy a few times when I was investigating one of those crooks, a guy named Elliot Broidy, so I decided to put together this handy-dandy guide for the perplexed:

Jim is president of CounterPoint Strategies, a public relations firm in Washington, D.C. that specializes in an aggressive, combative style of crisis management. Jim is the real-life version of the fictional tobacco flak in Christopher Buckley’s novel Thank You For Smoking. His job is to make your story about you.

He’s the son of liberal journalist and peace activist Colman McCarthy. The acorn fell pretty far from the tree in this case, although the dynamics of that relationship must be pretty interesting. Young Jim registered as a Republican at age 18.

Early in his PR career, Jim handled a variety of Fortune 500 and foreign government accounts for two public relations agencies in Washington, Ruder-Finn and Nichols-Dezenhall, the “brass-knuckled boys” of DC’s PR world.

Ready to pounce

In 1994, McCarthy started a boutique public relations agency, McCarthy Communications. McCarthy Communications reportedly billed one client, the Saginaw Chippewa Indian tribe of central Michigan, $280,000 for a media campaign designed to force out the head of the Bureau of Indian Affairs. Replying to a BIA spokesman who said he had never seen such tactics, McCarthy said, “I say to Mr. Hackler, welcome to the Beltway.”

A confidential McCarthy Communications proposal was obtained by The Washington Post. (See William Claiborne, “Tribe PR Drive Targeted BIA Head”, The Washington Post, Aug. 16, 1999)

McCarthy was hired by the Augusta National Golf Club in 2002 when the men-only club was under pressure by activist [[Martha Burk]] to admit women. McCarthy advised a “pugnacious” approach. “My clients appreciate that I like to get in the arena, take off the gloves and throw down,” McCarthy told Alan Shipnuck, who wrote a book about Augusta’s battle to keep women out. (See Taking on the Times”, Sports Illustrated, April 6, 2004.)

It’s the first time I’ve done this kind of media criticism as part of an overall strategy for a client, and I don’t know of any other PR firm that has done it. It’s pretty cutting-edge. Big PR firms are like large corporations in that they have always been afraid to take on the press directly, because there is this belief if you create an adversarial relationship, you will never be treated fairly again. But for a venerable institution like Augusta National to embrace that strategy, well, that has certainly opened some eyes. Now I’m trying to build media-crit-driven crisis management into stand-alone business. Who knows? Maybe I’ll be snapped up by a big, deep-pocketed PR firm.

In 2004, McCarthy co-founded Public Interest Watch, a Washington nonprofit heavily funded by Exxon Mobil. According to BusinessWeek, McCarthy’s ex-employer, renamed Dezenhall Resources, helped create PIW in 2002 specifically to prod the IRS to go after Greenpeace.

David "Nick" Nichols

Just as McCarthy had hoped, deep pockets did find him. McCarthy Communications was hired in 2004 to represent investor Kenneth Langone, who was named in a lawsuit by then-New York State Attorney General Elliot Spitzer. On Langone’s behalf, McCarthy has repeatedly attacked the credibility of Gretchen Morgenson, a Pulitzer Prize winning business journalist for The New York Times, saying businesspeople regarded her with “pure contempt.” Apparently, Langone didn’t like it that Morgenson pointed out how Langone was a poster boy for executive overcompensation.

In 2008, McCarthy co-founded CounterPoint Strategies. McCarthy is the oversized face of CounterPoint, but behind the scenes is CounterPoint’s chairman, David “Nick” Nichols, a former investigative journalist who went on to found Nichols-Dezenhall, McCarthy’s old stomping grounds.

Before forming Nichols-Dezenhall, Nichols served as a campaign press secretary for New York City Mayor John Lindsay and then headed to Wisconsin where he served as a legislative staffer. Nichols also served for several as a senior media spokesperson for the Cuban-Haitian Task Force, which was charged with dealing with the thousands of refugees from Castro’s Cuba in the Mariel boat lift.

Share your McCarthy horror stories below:

 

 


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Dana Perino Out as Mina Lobbyist

August 24, 2010, by Seth Hettena. 1 Comment

Dana Perino

On July 26th, I broke the news on this blog that former White House Press Secretary Dana Perino had joined the team of lobbyists working for a secretive defense contractor that is at the center of a congressional investigation of a $1.4 billion contract to supply aviation fuel at the U.S. air base in Kyrgyzstan.

My scoop was very short-lived. Two days later — and one day after The Washington Post’s SpyTalk picked up the item — Perino’s employer, Hamilton Place Strategies LLC filed notice that it was no longer taking up the cause of the mysterious Mina Corp./Red Star.

Congress wants to know whether the sole-source, classified contracts awarded to Mina Corp., Ltd., and Red Star Enterprises Ltd., were a vehicle for the U.S. government to deliver payoffs to the family of Kyrgyzstan leaders who were ousted amid charges of corruption linked to the Manas air base.

Senate lobbying disclosure forms show that on July 12 Mina Corp. hired public affairs firm Hamilton Place Strategies to lobby Congress and the Defense Department. Hamilton Place filed its notice of termination on July 28. The firm’s income from Mina was less than $5,000.

Mina also lost the services of Tony Fratto, another former Bush White House spokesman, and W. Taylor Griffin, a McCain/Palin adviser.

Seriously, WTF?


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Carly Fiorina and the HP Pretexting Scandal

August 24, 2010, by Seth Hettena. 0 Comments

What's the pretext?

Did former chairman and chief executive Carly Fiorina play a role in the spying scandal that tarnished the once sterling reputation of Hewlett-Packard Corporation?

Revelations in 2006 that company investigators, using private and confidential information provided by HP, had posed as board members and journalists to obtain private phone records and e-mails created a public uproar. HP officials were hauled before Congress and California filed criminal charges against several company officials, including former Chairman Patricia Dunn.

There’s no evidence to suggest that Fiorina knew or condoned this practice, known as “pretexting” (aka lying). The HP board fired Fiorina more than a year before the scandal broke. Fiorina’s own phone records were obtained by HP investigators after she had left the company.

But that’s not the complete story. A look at the record shows that HP’s leak investigations began under Fiorina, who is now running as a Republican to unseat U.S. Senator Barbara Boxer, and employed the same security firm who worked for HP during Fiorina’s entire tenure as chairman. Furthermore, the board member Fiorina suspected as the source of the leak became the focus of the investigation.

In January 2005, Fiorina approached attorney Larry Sonsini, the board’s outside lawyer, for advice. Fiorina was extremely upset by a Wall Street Journal story that detailed sensitive internal board discussions about Fiorina’s performance.

Patricia Dunn, who succeeded Fiorina as chairman, testified under oath to Congress:

MS. DUNN: The first inquiry into leaks actually began under the administration of Carly Fiorina, who was Chairman and CEO until February of 2005. She asked Mr. Sonsini to talk with every director one-on-one about the functioning of the Board, and to seek the confession of whoever the person or persons were that were leaking this confidential information, as well as to reassert their commitment to confidentiality going forward. The reason why the Board, by the time I got involved, was so deeply concerned was because they knew that no one had come forward to admit their culpability.

After Fiorina’s ouster, seven of nine HP board members saw the case of the boardroom leak as “unfinished business” by a majority of board members, Patricia Dunn, who succeeded Fiorina as chairman testified to Congress.

Dunn enlisted the services of Security Outsourcing Solutions, a little-known private detective firm in Needham, Mass. SOS had done work for HP during Fiorina’s entire tenure as chairman. About half the company’s work came from HP.

The initial work done by SOS in the pretexting scandal, Dunn testified, “was authorized — by whom I do not know specifically — as an extension to a pre-existing work order under which he was performing various investigative assignments for Hewlett-Packard.” (emphasis added)

Did any of these assignments involved pretexting?

Fred Adler, head of IT security investigations at HP, testified that one of the company’s investigators involved in the pretexting scandal had complained to his manager on previous occasions about the practice.

In her 2006 book, Tough Choices, Fiorina doesn’t mention pretexting or whether she ordered spying on journalists and board members. She did write in Tough Choices that she remained deeply suspicious of another board member, George Keyworth, who was not the source for the Journal article.

A 20-year HP board veteran, Keyworth was a driving force behind the board’s divisive efforts to remove Fiorina, who had aggressively championed a bitterly contested $19 billion merger with Compaq in 2002 that led to a proxy fight, court battle, wrenching layoffs, some cost savings but little in the way of profits.

Keyworth subsequently became a target of the pretexting investigation in a move that likely reflected the lingering bitterness over Fiorina’s ouster.


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Investoradio Interview

August 19, 2010, by Seth Hettena. 0 Comments

I’ll be on Investoradio this Saturday, Aug. 21, talking about Ray Lucia and high fees. You can listen online through this link. Just like Lucia, Investoradio hosts Tom Cock and Don McDonald run their own investment advisory, but their fees are less than 1 percent, compared to as much as 2.9 percent for RJL Wealth Management.

Here’s a link to the show.


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Palin spokesman also part of the Mina/Red Star team

July 27, 2010, by Seth Hettena. 0 Comments
W. Taylor Griffin

McCain/Palin campaign spokesman W. Taylor Griffin is coordinating the public relations response to Mina Corp., the secretive defense contractor that is the subject of a congressional investigation into its fuel contracts for a U.S. airbase in Kyrgzystan.

Griffin is a partner in Hamilton Place Strategies LLC, the PR firm that, as I reported yesterday, employs former White House Press Secretary Dana Perino and her former colleague, Tony Fratto.

As part of the Palin team, Griffin led a crisis communications team that dealt with the “Troopergate” affair.

Griffin was part of the communications team for the 2000 and 2004 Bush presidential campaigns, and did a stint in the Treasury Department’s Office of Public Affairs and the Senate Foreign Relations Committee.


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EXCLUSIVE: Secretive defense contractor hires Dana Perino in DC lobbying push

July 26, 2010, by Seth Hettena. 1 Comment
Dana Perino

A secretive defense contractor that is at the center of a congressional investigation of a $1.4 billion contract to supply aviation fuel at the U.S. air base in Kyrgyzstan has hired a powerhouse D.C. lobbying team that includes Dana Perino and others from the Bush White House.

Congress wants to know whether the sole-source, classified contracts awarded to Mina Corp., Ltd., and Red Star Enterprises Ltd., were a vehicle for the U.S. government to deliver payoffs to the family of Kyrgyzstan leaders who were ousted amid charges of corruption linked to the Manas air base.

Mina Corp.’s fuel contract, awarded last year, is worth up to $730.9 million over three years for services at the Manas, the only U.S. airbase in Central Asia outside of Afghanistan.

Kyrgyzstan has also opened its own investigation, prompting the U.S. Embassy in Bishkek to say that the contract was issued in accordance with U.S. and local laws. Mina Corp has told both governments that it has never directed U.S. government funds to Kyrgyz officials.

As Congress turned up the heat on Mina and Red Star in July, the companies sent Washington lobbyists to the Hill to plead their case.

Senate lobbying disclosure forms show that on July 12 Mina Corp. hired public affairs firm Hamilton Place Strategies LLC to lobby Congress and the Defense Department.

Senate filings show the Hamilton Place team includes Perino, now a Fox News political commentator, W. Taylor Griffin, a spokesman for the McCain/Palin campaign who handled the “Troopergate” affair, and Tony Fratto, who spoke for the president on issues including intelligence matters, terrorist financing and financial crimes.

Also joining the Mina Corp. team this month were McLean, Virginia-based Dudinsky, Lisker & Associates, which says it is “monitoring and reporting Congressional activity” on behalf of Mina.” Principal Joel Lisker is a former FBI agent who headed the Justice Department’s foreign agent registration unit in the Carter years. His investigation led the president’s brother, Billy, to register as a foreign agent for Libya.

Barbour, Griffith & Rogers’ Ed Rogers, a Reagan and Bush I White House veteran, and Morris Reid, registered July 20 as lobbyists for Mina to handle a House investigation regarding Department of Defense contracts to provide jet fuel to U.S. military base in Bagham, Afghanistan.

Jeff Stein at The Washington Post’s SpyTalk blog reported last wek that after weeks of tense negotiations, a House oversight subcommittee has gotten promises of cooperation from Mina and Red Star.

“The heart of the investigation,” a source told Stein, “is why Red Star and Mina Corp. were not investigated under” the Foreign Corrupt Practices Act, which forbids U.S. companies from paying bribes or kickbacks to foreign officials.”

Mina Corp. has also hired the D.C. law firm, Weil, Gotschal and Manges LLP. The Weil team includes partner William Burck, who served in the Bush White House Counsel’s office. Burck specializes in FCPA investigations among other things, according to his law firm biography.

In a press release announcing last week’s agreement between Mina, Red Star and the National Security and Foreign Affairs Subcommittee of the House Committee on Oversight and Government Reform, Burck said maintaining his client’s secrecy was a key to the deal.

“We’ve worked closely with staff to make sure the Subcommittee obtains the information it seeks while preserving the confidentiality of the companies’ operations and the privacy of its personnel.  Confidentiality is essential to permit the companies to meet the U.S. military’s needs in volatile areas of the world and supply vital fuel to our troops in the field.”

Burck and Perino have a close working relationship. They have penned regular columns critical of the Obama administration for National Review Online.

The Senate lobbying forms also raise fresh questions about who or what is behind Mina and Red Star.

The Defense Department has identified to Mina and Red Star Enterprises as companies based in Gibraltar. Mina Corp. was registered in London in 2003, records show.

The Senate lobbying disclosures identify Mina as a Dubai firm affiliated with “Mina Petroleum FZE” with an office in the Dubai Airport Free Zone. Companies operating within the free zone are treated as offshore, outside the United Arab Emirates.

Adding to the confusion, Mina’s webserver, minacorp.com, is registered in Vernier, Switzerland.


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Ray Lucia Defamation Threat

April 20, 2010, by Seth Hettena. 8 Comments

For more visit: A Professional’s View of Ray Lucia’s Non-Traded REITs

Investor and local radio talk show host Ray “Buckets of Money” Lucia has threatened to sue me for $300,000 for defamation over a blog post I wrote last month.

Robert K. Butterfield, a San Diego attorney, is outraged that I dared to besmirch the good name of Raymond J. Lucia, who dispenses financial wisdom on a daily radio show in several big media markets. This is after all the same man actor Ben Stein recently described in an opinion piece in The New York Times as a “stock guru.”

Attorney Butterfield insists that I must stop pointing out Lucia’s relationship to San Diego-based First Allied Securities, which recently agreed to pay nearly $2 million to settle U.S. Securities and Exchange Commission charges that it failed to supervise one of its employees.

He also demands that I never again repeat the blasphemy that fees for Lucia account run as high as 2 percent, paid quarterly in advance. (Lucia Defamation Threat Letter)

Your statement that Mr. Lucia’s company has never charged a management fee of 2% is completely false and another intentional malicious act. His company has never charged a management fee of over 1% even though they have the ability to charge up to 2% — but you did not bother to check this — did you?

Even though Lucia’s own SEC disclosure plainly states “The standard annual managed fees for RJL [Raymond J. Lucia] Adviser Directed accounts are 2 percent,” Attorney Butterfield has a point. Fees for one “wealth management” program pushed by Lucia actually run as high as 2.9 percent

That is an eye-popping number. It’s about half of the compound rate of return of the Dow Jones Industrial Average for the past 50 years. That fee is assessed on the entire value of whatever you invest with Lucia, even if he loses money. It makes me wonder whose wealth is really being “managed” here.

Continue reading ‘Ray Lucia Defamation Threat’


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