‘Ponzi-like’: Private equity founder admits swindling millions from investors
The founder and managing partner of several private equity funds has admitted to defrauding investors out of more than $50 million and spending most of it on a wide array of personal expenses, New York officials announced.
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According to a July 24 news release from the Southern District of New York U.S. Attorney’s Office, Jay Lucas, a 71-year-old Portsmouth, New Hampshire resident, founded the Manhattan-based private equity fund Lucas Brand Equity LLC, which promised to invest in fledgling health and wellness brands. However, instead of investor money going toward these companies, most of the funds were used to cover Lucas’ personal expenses, “promote unrelated ventures” and make “Ponzi-like” payments to previous investors, the release continued. Since 2017, Lucas has raised millions of dollars through his private funds, using LBE to pay rent and alimony, as well as set up a “vanity newspaper project in his hometown” and work with political consultants, the release said.
Jay also funneled money into his wife’s luxury skin care brand, Immunocologie, without disclosing a conflict of interest, and used it to pay for, among other things, trips and social events, the release continued. Subsequently, basic expenses couldn’t be covered, including the salaries for LBE employees. According to the release, workers internally described the misuse of funds as “a huge betrayal of investor trust and most likely illegal,” calling the activity “literally fraudulent.”
According to his firm’s website, brands in the company portfolio include anything from tattoo care products to cannabis-infused hand soap. Lucas’ bio says that he was a candidate for governor in 1998, and previously served two terms in the New Hampshire House of Representatives in college.
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Lucas has pleaded guilty to one count of securities fraud, one count of money laundering, one count of wire fraud — charges that carry maximum prison sentences of 20 years — and one count of investment adviser fraud, with a maximum term of five years, the release said.
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The U.S. Attorney’s office did not respond to SFGATE’s request for more information by the time of publication.
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