By DAMIEN FISHER, InDepthNH.org
Jay Lucas, the self-styled optimistic entrepreneur and owner of the now-defunct Eagle Times, might finally have to deal with some bad news as he’s been indicted on federal fraud charges.
“Jay Lucas promised investors he would use their hard-earned money to grow wellness businesses, with everyone sharing in the profits,” said U.S. Attorney for the Southern District of New York Jay Clayton. “Instead, Lucas allegedly lied, frittered away investor money on personal vanity projects, and betrayed his obligations to his investors.”
Lucas was arrested Thursday in New Hampshire on the indictment handed up by a New York grand jury. He is expected to appear in the United States District Court in Concord on Friday.
When he bought the Eagle Times in 2022, Lucas declared the local newspaper would focus on positive, uplifting stories. Lucas didn’t mention that he bought the paper with other people’s money, as alleged. Instead, he presented it as part of his Sunshine Initiative, a vaguely defined venture to revitalize the local area through happiness.
Lucas allegedly took millions from people to be invested in startup health and wellness companies. But the investment money he took instead went to pay alimony, rent, fund his purchase of the Eagle Times, and hire political consultants.
“Jay Lucas allegedly systematically misappropriated millions of dollars from his investors, diverting their money to personal expenses, repayments to other investors, and his wife’s business,” said FBI Assistant Director in Charge Christopher Raia. “As the fund’s managing partner, Lucas’s alleged deceit not only failed to sustain his company’s operations but also betrayed the trust of his clients and employees.”
Lucas, a Republican, self-funded an unsuccessful 1998 campaign for governor against then-incumbent Gov. Jeanne Shaheen, now U.S. Senator. He stayed part of New Hampshire politics as a big GOP donor and served as the state GOP treasurer.
Lucas used the investor cash to pump up a luxury skin care company called Immunocologie, owned by his wife, Karen Lucas, according to prosecutors.
“Most purported investments in Immunocologie went to ‘marketing’ expenses, such as parties and trips to luxury resorts where [Karen Lucas] promoted ‘brand awareness,’” prosecutors said in a statement. “Investors were unaware that Lucas was using their money to fund his wife’s social calendar, and many investors did not even know that the person operating Immunocologie was married to Lucas. Moreover, Lucas arranged for [his investment company] LBE, not the Funds, to take majority ownership interest in Immunocologie, giving himself and not his clients an equity interest in the business.”
Lucas founded LBE and three private funds: Lucas Brand Equity LP (“Fund One”), L.B. Equity Emerging Growth LP (“Fund Two”), and L.B. Equity Wellness Growth L.P. (“Fund Three”) in 2017. He used phony credentials to bolster his image and lure in investors, according to prosecutors.
“Lucas falsely claimed to have co-founded a well-known private equity firm, which he did not, eventually prompting a cease-and-desist demand from that firm’s lawyers,” prosecutors said.
Over the past several years, Lucas managed to operate the investment business without showing any real results, according to prosecutors. He allegedly used money from new investors to pay earlier investors in “Ponzi-like fashion,” prosecutors said. All the while he enriched himself and his family as the funds starved for money, prosecutors said.
“As of the date of this Indictment, none of the Funds’ investments have paid off, and no investors have received returns. The Funds and their portfolio companies have hemorrhaged cash and been unable to cover basic expenses while Lucas and his family have taken the Funds’ money to serve their own interests,” prosecutors said.
According to prosecutors, because of his schemes the LBE investment funds were “chronically undercapitalized and unable to cover basic fund expenses, including salaries for LBE employees.”
When confronted about his alleged misuse of investor money, Lucas dismissed the complaints, according to prosecutors.
“[E]mployees continued to express frustration about Lucas’s misuse of investor money, writing [internally] that Lucas’s spending was ‘not spending on LBE,’ was ‘literally fraudulent,’ and was ‘a huge betrayal of investor trust and most likely illegal.’ After multiple confrontations, employees feared pressing further would cost them their jobs,” prosecutors said.
The Eagle Times stopped publication this summer after staff walked out over lack of paychecks, and bills for phone and internet service going unpaid. Lucas tried to keep the paper going, but closed down operations indefinitely a few weeks later. The closure has left Claremont without a local news outlet.