THE MAN BEHIND THE MONEY PIT
By TJ Sullivan
Ventura County Star
Before the investors began demanding their dollars back, Donald Dayton Lukens enjoyed an enviable life enriched with the adornments of wealth — golden, wall-mounted towel warmers in his master bathroom … three housekeepers … an in-home, Las Vegas-style barroom.
The Oxnard financial adviser, 50, and his wife, Denise, 47, owned twin Jaguar automobiles.
He boasted of his associations with professional athletes, models and performers like boxing promoter Don King, actor Bill Cosby and musician Snoop Dogg.
He took $2,000-a-pop chartered flights to Las Vegas from Camarillo Airport and frequently returned to his hillside home in Ventura County with a briefcase full of cash.
But that was before he filed a bankruptcy petition saying he owed $47 million and had less than $1 million in assets left. It was before the FBI and the Securities Exchange Commission made apparent their criminal investigations into his numerous and sundry business dealings — an effort to find out where the money went. It was before a gang of Las Vegas casinos had him jailed for 26 days for allegedly writing them more than $230,000 in bad checks.
And it certainly preceded the night two months ago when he told a former investor that he was suddenly so poor that his wife had to disassemble, cook and serve for dinner a macaroni ornament that had once decorated the kitchen wall in his family's $2 million estate home.
"He was making out that they didn't have anything to eat, which was a bunch of stuff," said Margaret "Peggy" Barnes, who may lose her home as a result of money she lost investing with Lukens.
"He was saying that they didn't hardly have any food to eat, that he was missing his steaks."
Before all that, Lukens, known to friends as "Donnie," was living the life of a would-be legend.
He had a 17th-floor office in the tallest building in Ventura County — the Financial Plaza, 300 Esplanade Drive, Oxnard — a space decorated with pictures of celebrities and athletes, including a huge screen on which he projected the images of some of his better known clients. He delighted in mentioning the celebrities with whom he had deals and associations — people like Utah Jazz forward Bryon Russell, Tampa Bay Buccaneers defensive end Simeon Rice and Monday Night Football sideline reporter Eric Dickerson.
Former professional model Tiffany Gutierrez recalls the day Lukens sat in her Los Angeles apartment and pulled out a picture taken at his home of rapper Snoop Dogg.
"I asked him, 'Oh did he invest with you?' And he said, 'Oh, he was thinking about it … but his manager died,' " said Gutierrez, who invested and lost $180,000 with Lukens. "I thought that he was trying to impress me."
Donald Lukens got around.
Some say he mentioned meeting Bill Cosby in France at the Cannes International Film Festival, although Cosby's publicist for the past 28 years, David Brokaw of Brokaw Co., says Cosby never went to Cannes. Other investors remember Lukens telling them about the trips he took to exotic destinations, like Greece.
Then there were the weekend trips to Las Vegas.
Lukens took chartered flights to Vegas from Camarillo Airport — as frequently as twice a month for 12 years — trips that transported him from his coastal Shangri-La to a sea of lights and high-stakes gambling in the desert. Limousines met his plane on the tarmac and shuttled him to complimentary 3,000-square-foot suites. Sometimes he had rooms provided on the house by more than one casino at a time.
"He always got a suite," said Tom Driscoll, vice president of Channel Islands Aviation and Lukens' favorite pilot. "There were sometimes suites for me — and I was just the pilot."
Lukens was so well known as a Vegas high roller that casino entrepreneur Steve Wynn supposedly greeted him by name and shook his hand.
"When I saw Steve Wynn walk across a room to welcome (Lukens) I knew this was the real McCoy," said Kelly Stark, who met Lukens in Vegas through a mutual friend.
As if that wasn't enough, Lukens had a beautiful wife, Denise Ann Dufau, the daughter of a prominent Ventura County ranch family. Together they parented three daughters about whom neighbors and friends gush with praise.
Their home was a castle of sorts, a six-bedroom, 8,000-square-foot, hillside estate house that afforded a god's-eye view of the world below, a breathtaking panorama of rooftops, thousands of red-tile and gray-shingle patches on the Oxnard Plain.
The rooftops included the homes of Lukens' first investors, the people he met as a child and as an adult, at Channel Islands High School, at Ventura Missionary Church and various points in between. They were the people who gave him their savings accounts and pensions, their homes and life insurance policies. They helped him up into the house at the end of Corriente Court with its mahogany doors and Italian marble tiled floor, and they expected him to bless them with riches in return.
For many, the blessings never came.
Now, dozens of lawyers and lawsuits later, investors are trying to figure out where all the dollars really went, and just what happened to the Lukens they trusted.
They want to know if he indeed lost the money, or if he put it somewhere.
"The federal agencies investigating Mr. Lukens have a good idea where the money went and I am of the impression that very little if any will be recovered," said Ventura attorney Brian Osborne, who represented one of Lukens' former high school friends in a lawsuit.
James Carter Allison, who graduated with Lukens in 1969 from Channel Islands High School and worked for him in the late 1990s, has been interviewed by the FBI, the SEC and the U.S. Attorney's Office.
"I'd really like to think that this isn't true," said Allison, who was the best man at Lukens' wedding and for whom one of Lukens' daughters — Allison — is named.
"Obviously, it seems like there's been some wrongdoing," Allison said from his home in Roscoe,Texas. "It's just hard for me to imagine this amount of dollars disappearing.
"I'm not happy with the man."
Several people are shouting "Ponzi scheme" — a form of investment fraud in which new investors' money is used to pay returns to earlier clients: "robbing Peter to pay Paul," as Osborne put it.
Lukens' public response to all these claims has been silence.
A call placed to Lukens' cell phone last week was immediately disconnected. Messages have been unreturned. Most of his attorneys and former business associates also failed to respond to the many telephone messages directed to them during the past three weeks.
Once described by his spouse as a financial wizard with a pedal-to-the-metal personality, Lukens has been forced to use a public defender to represent him against the bad check charges in Nevada.
Lukens' life has changed from what it was before.
Baseball — Lukens lived for the game.
As a student at Channel Islands High School in the late 1960s, Lukens was part of a team that won several league championships. His high school coach, Don Cardinal, thought so much of him that he kept in touch, even investing — then losing — money with him.
Lukens grew up in a modest home on the south side of Oxnard on what became Channel Islands Boulevard. His father, Frederick Lukens Sr., and mother, Dorothy Laverne Kesecker, had moved the family there from Virginia in the 1950s.
The family consisted of two daughters — Linda Lee Lukens and Jane Ann Kennedy — and another son, David, who was two years younger than Donald. The oldest boy, Frederick Jr., died in a car wreck in 1966.
High school was Donald Lukens' time to shine.
It was Southern California in the late 1960s and radios were alive with the music of Jefferson Airplane, Jimi Hendrix and Joan Baez. Students were wearing T-shirts and jeans to dances, but yearbook photos show Lukens in sport coats. In his junior year, Lukens escorted the junior class homecoming princess. In his senior year, he escorted the queen.
He graduated in 1969, but was not sent to Vietnam like some of his former classmates. He stayed in school, went right to Moorpark College, then California State University, Northridge, where he earned a degree in finance and played on the school's baseball team.
Along the way he met Denise Dufau, a Rio Mesa High School student three years his junior with stunning Basque features and dark hair. She was the head varsity cheerleader and the daughter of a prominent rancher, Jean Pierre Dufau, whose family roots in Ventura County extend back into the first quarter of the 20th century.
At one time Denise Dufau's father was director of the Green Bean Bargaining Association, the Seaboard Lemon Association and the Ocean View Municipal Water District. He had served as treasurer of the Ventura County Farm Bureau, secretary of the Ventura County Sheriff's Posse, and was on the board of directors of the Oxnard Savings and Loan.
Lukens married Denise Dufau on July 13, 1974, in Saticoy.
"He started out with nothing," said Ventura optometrist Robert Pazen, a friend of the couple. "He was driving this old, beat-up Chevy. I don't know if it was smoking but it was close."
Lukens' first job out of college was as an appraiser for the Ventura County assessor — a thorough education in the various documents and deeds necessary to move property from person to person.
But at the end of the 1970s, Lukens left his government job and moved into the insurance business, where he would begin advising people on their financial future.
Then, in 1981 he registered Community Group Funding as a business with the Ventura County Clerk's Office. In documents he listed its owners as himself, his father-in-law, Jean Dufau, and a man who lived across the alley from his boyhood home, Earl C. Rydberg.
Rydberg says that claim was false. "If I had been an owner I would have had to have known about it," Rydberg said in a recent interview.
Jean Dufau did not return telephone messages left at his home.
By the end of the 1980s Lukens and his wife moved out of what had been their home for several years — a two-story structure with shuttered windows off Highway 118 in Somis — and climbed the winding road up into the estate home above Camarillo.
Donald Lukens dealt in property. He also provided high-interest loans, some of which promised investors phenomenal returns — 18 percent, or more.
In one investment he told clients that their money was going into a resort project in its formative stages, anticipating big payoffs as the project matured.
But that's hardly all he did.
The businesses linked to Lukens are numerous and varied, but determining what they did is sometimes difficult.
El Corazon del Beisbol is one of them. With a name that means "the heart of baseball" in Spanish, some have speculated that it deals in some way with videos of Latin American baseball players, but even the company's former agent — Patrick M. Desmore — said he isn't sure of its purpose.
The list of companies is long: The Sinola Group Inc; Global Sports and Entertainment, Inc.; Prospective Draftees; and Newlywed, among others.
DAC Capital Inc. is a Nevada corporation, a possible reference to Lukens' three daughters — Daniele, Allison and Chelsie. His brother, David, once registered a company with the Ventura County Clerk named Dan-Al-Chel Financial Services.
CGF Inc., which bears the initials of California's Community Group Funding, was registered in Nevada in 1998.
J.C. Inc. is another Nevada company registered in 1998 and named for James Carter Allison, the best man at Lukens' wedding. Allison was working for Lukens when the company was formed, but Allison said he had little to do with its operation.
Allison said he saw money going into J.C. Inc, and saw it flowing out, sometimes into one of the companies Lukens used as a primary identity— Community Group Funding. Allison said he questioned the propriety of such moves and was assured by Lukens that they were legal.
"I trusted him," Allison said of Lukens. "He'd never given me any reason not to. He'd been a good friend all these years."
The number of businesses that Lukens used for his dealings is far more numerous than what's listed in California, said Desmore, a paralegal who severed his brief employment with Lukens in June 1999 because he "wasn't comfortable" with what he was seeing.
"You're not even close," Desmore said when read a list of business names during a telephone interview. Desmore declined to elaborate for publication.
Lukens was busy in the 1990s.
He started by seeking investors in Ventura County as Community Group Funding, but by 1995 advanced into pursuing sports figures by doing business as Global Sports and Entertainment.
His wife, Denise, even got into the act, setting up Dufau and Associates Marketing and Management, which promoted the Hollywood careers of some of the athletes who were investing money with her husband.
Celebrities were worn like jewelry, say several of those who knew Lukens.
Regina Rotar, a former employee of Dufau and Associates, said Lukens once asked her to place a call to rap musician Snoop Dogg for him.
"He was courting (Snoop Dogg) hot and heavy, having him over to the house," Rotar said. "Denise was nervous about the whole rap industry."
"It was sort of like bait, or something," said Gutierrez, a former model who was unimpressed by the display of celebrity photos in Lukens' office.
Rotar was amused by their perceived influence, particularly of a photo Lukens had of actor and comedian Bill Cosby.
"Oh, come on, I've got pictures of me with Bill Cosby," she said.
By far, the majority of celebrity investors appears to have been young athletes with promising careers.
Calls came in from people like fight promoter Don King and others, said Rotar.
"They had a lot of boxers they were dealing with," she said in a telephone interview from San Diego. "Most of them were amateurs who wanted to go pro."
One of the first was Oxnard boxer Fernando Vargas, whose eligibility for the 1996 Olympics was jeopardized by a contract his mother had signed with Lukens and another businessman, agent Robert Troy Caron of Oxnard.
Rookies offered promise because they hadn't already connected with people to handle their finances, Rotar said.
That's at least one of the reasons Lukens went to Las Vegas so frequently.
A prominent sports agent tells a tale similar to those of others.
Lukens was playing blackjack in the smoky din of a casino one day a few years ago and a small crowd had gathered around him.
When Lukens played blackjack, there were rules. Several people who saw him in Vegas say he never played at tables below a $500 minimum, and he never drank — gambling was business.
"He had a lot of chips in front of him, probably $10,000 or $20,000 worth of chips, a fancy watch," said Dwight Manley, an agent whose representation of professional athletes at one time included NBA star Dennis Rodman. Manley had never seen Lukens before that day.
Manley said Lukens was groomed, almost to the point of appearing fake. His hair looked like a toupee.
"He looked like a televangelist," Manley said.
Some of the young, professional athletes admired the amount of money being wagered, but Manley considered it unbecoming behavior for a financial adviser.
Not everyone saw it that way.
People talked about Lukens as though he had built a machine that made money. Who cared how it worked?
Prospective investors called Lukens up. Some borrowed money against the value of their homes, or rearranged finances to maximize the amount of money they could invest.
The pastor of Ventura Missionary Church, fellow parishioners and college friends joined the group. People who had been customers when Lukens was in the insurance business also invested.
Only the U.S. Mint seemed capable of making money faster.
"Each one of us invested for the same reason — high interest," said Ventura resident Bessie Carter, who met Lukens many years ago. "We all knew when you're getting that kind of interest a bank isn't going to lend the borrower money. We all knew it. I knew it was a high-risk investment. Iguess avarice had something to do with it on my part."
Gutierrez, the former professional model, met Lukens through a friend who boasted of how much she was making.
"He gave me an example of a hotel that was, like, a resort that was being built," Gutierrez said. "It was something, like, in Rio, or out of the United States. He was explaining to me that the return would be, like, triple."
So she reluctantly gave him $180,000 after he sat beside her for hours in her living room.
"He sat and he told me about how he would be like a father figure to me and that he had a lot of clients like myself,"she said. In soft tones Lukens assured her that she was still young and beautiful and that this wasn't the only money she would have in her life.
"I signed the paperwork and I didn’t even read it," she said. "It means nothing. I'm not a lawyer. He was, like, 'You can completely trust me.' "
She received her interest payments of $3,000 a month for eight months. Then the payments stopped.
"I used to call him every day ... and fax him letters, horrible letters," she said. "He would send my letter back to me, cross out something and say 'I'm sorry you feel this way. I’m doing everything I can.' "
He made similar comments in a later conversation.
"And I thought, 'That's got nothing to do with nothing. You stole my money!' "
In the midst of what appeared to be the most lucrative of years, there were hardships and conflicts.
In October 1996, Lukens' mother, Dorothy, died at the age of 75 of liver cancer.
Then, one month later Lukens sued his younger brother, David, for what amounted to less than $1,000 — rent on a Port Hueneme residence that Lukens didn't even own. He had sold the property to his secretary's son six years earlier.
David Lukens died three years later, in October of 1999, of a gruesome condition that affects heavy alcohol users, causing them to vomit blood until they die.
The late 1990s also saw the near breakup of Donald Lukens' marriage.
In October of 1997 Denise Lukens petitioned for a divorce, charging that Lukens had relationships with "other women" and had made a mistress of an office employee.
Property records indicate that a year prior to the filing of the divorce petition, a woman by the same name as that of the accused mistress purchased a home in a gated portion of prestigious Spanish Hills. Among the various deeds and court documents related to the sale were links to Lukens: His longtime assistant, Roberta "Bobbie" Aldrich Abraham, notarized some of the documents, and one of Lukens' attorneys, Kenneth L. McDonald, signed them.
Denise Lukens said in the divorce petition, which she later abandoned, that her husband frequently shouted vulgar language, screamed, shoved and threatened her and the children. She said he took the prescription drug Ritalin to control his "violent personality" and hyperactivity, and said he threw her out of a car in July 1997.
Rotar said Denise Lukens just stopped coming to work after the divorce papers were filed.
Her business closed up.
That same year, Donald Lukens surrendered his real estate broker's license, which was first issued in 1985. He could have fought, but chose not to oppose accusations that included charges he had moved trust funds without first obtaining the owners' written consent.
Not long after that some clients began asking, then screaming, for their money.
Torrance attorney Jeff Stark recalls the day he was driving in Camarillo, speaking on his cell phone with Lukens about one of his investments in the community of Palm Colony. Stark wanted his money back.
"He told me it was a model (home) and it was up for sale," Stark said.
So Stark went to the house and knocked on the door.
"There was a couple living there," Stark said. "I foreclosed on my trust deed."
He got his money back, but not all investors were as fortunate.
Lawsuits began to increase in frequency.
Nicole Contreras, a Los Angeles model and actress, filed one — based on money she invested in 1997.
The lawsuit said Lukens told Contreras his investments "never failed" and that her principal was always recoverable.
Lukens didn't attend a September 2000 hearing in the case, causing Judge Lorna Parnell to remark that such a lack of concern was "something new in my experience."
The court ordered Lukens to return Contreras' initial investment — $450,000 — plus the promised interest and other fees for a total of $636,540.39.
Her attorney, Nicholas Siciliano, declined comment.
Some of the investors won't talk.
Russell, the Utah Jazz forward who is shown to have lost more than $500,000, wouldn't even address the subject.
"I don't want to say nothing about the dude," Russell said.
People in Ventura County who lost money react in different ways.
A couple, like Albert Chang, who was Lukens' chiropractor, say they aren't mad.
"I still cherish the friendship," said Chang, who has documents that give him title to all the contents of Lukens' former estate home. "We've been friends a long time."
Still more are furious.
John Silva, 49, who played on the same basketball team with Lukens in 1969, says he's homeless because of Lukens.
Having been forced to move out of his home for a lack of money to pay his rent, Silva is sleeping at a friend's house. He has won a court judgment against Lukens, but still hasn't received his money.
A few years ago, Silva's brother, Greg, died, leaving him more than $200,000. Friends recommended he talk to Lukens, who looked like he was doing well.
Silva went to the 17th floor office and sat at a table with Lukens and another high school buddy — James Carter Allison. There, Silva turned over checks totaling $170,000 and signed documents.
When Silva suffered a knee injury and was in need of the money some time later, he couldn't get it.
As he had done with other investors, Lukens wrote Silva a note that called him "a dear friend" and advised that filing lawsuits "won't make any money materialize because I, too, am having cash flow problems."
"The dude even hugged me the last time I saw him," Silva said.
Peggy Barnes and her husband, Herbert, not only borrowed money against the value of their home to invest with Lukens, but when they won $300,000 in the Washington state lottery, they gave him that, too, less the government's portion for taxes and a few thousand to buy Peggy a new prosthesis to replace her amputated leg.
They suspect the worst, that the money is gone.
"Oh, this is going to make me cry," said Peggy Barnes, who helps support herself and her husband by restoring antique dolls. "I had to cancel my husband's life insurance. The payments were $200 … I have to do the dolls full time … and if I can't do the dolls there's a very good chance we could lose our home."
By the end of March of this year Lukens had seemingly lost it all, including his $2 million estate home, which was used to settle a debt with Kenneth Benefield, the chairman of the Channel Islands High School Physical Education Department when Lukens was a student and an athlete in the late 1960s.
The Internal Revenue Service filed a lien against the property in March and said Lukens owed the government $1.8 million in unpaid taxes for 1997.
The Lukens family moved out March 31, nine days before he faced his creditors in a Santa Barbara court and then was arrested on the Las Vegas bad-check charges.
Benefield, who retired as Channel Islands High School principal in 1993 after 19 years at the helm, put the property on the market in April for nearly $2 million.
Lukens has been released from jail on the bad-check charges in Nevada and was working toward a settlement with the casinos.
In June, he will face another hearing on the $47 million bankruptcy.
He has stated in documents that his income is about $11,000 a year.
Several investors say they've been interviewed by the SEC, the FBI and the U.S. Attorney's Office in the criminal investigation, but none of the agencies will comment.
After serving 26 days in jail awaiting arraignment on the bad-check charges, Lukens called James Carter Allison, his friend in Texas.
Allison said Lukens explained that he was back in Ventura County and asked who had been calling with inquiries about him.
Allison said he told Lukens of another high school friend, Alan Von Doeren, who claimed to have received a document related to his investment with Lukens. The document was signed by Allison in May 2000, more than a year after Allison left Lukens' employ.
"I brought that up to Don and Don told me that wasn't right," Allison said, his voice low and slowed by careful thought.
"I don't know what to believe."
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TJ Sullivan is a literary author, investigative journalist, photographer and college instructor whose work has been published in a myriad of newspapers and magazines, including the Los Angeles Times, Chicago Tribune, and The Detroit News, the latter of which he delivered while working as a paperboy during his childhood in the City of Detroit. Sullivan's writing has received many top national honors, including the Sigma Delta Chi Award, the second oldest journalism award in the United States after the Pulitzer Prize. Other state and national accolades include first-place awards from Best of the West, the American Association of Sunday and Feature Editors, the Associated Press News Executive Council and the Los Angeles Press Club. In 2006, Sullivan was commissioned a Kentucky Colonel, the highest title of honor bestowed by the Commonwealth of Kentucky, the home of his alma mater, the University of Kentucky. Sullivan's years as a full-time newspaper reporter were spent at several esteemed publications, including the Santa Fe New Mexican, The Albuquerque Tribune, and the Ventura County (CA) Star. Sullivan has also written for NBC Universal, The Dallas Morning News and the preeminent public affairs website LA Observed. Sullivan is frequently sought as an informative and entertaining speaker on the craft of writing, the art of investigative reporting, and the intricacies of state, county and municipal government. His presentations have been featured at professional development conferences conducted by both The Poynter Institute and the national Society of Professional Journalists. Sullivan has taught journalism courses and coached writers at UCLA's award-winning student newspaper, The Daily Bruin. He has also taught as a part-time faculty member in the Journalism Department at California State University, Northridge. And, in 2006, he was an adviser to SPJ's The Working Press, an internship program for college-level student journalists. Sullivan is currently at work on his third novel, [working title "Howard is Home from The Loop"]. He lives in Chicago, Il.