Ex-NH GOP Candidate Jay Lucas Guilty in $50M Fraud Scheme

Jay Lucas, a former Republican gubernatorial candidate in New Hampshire, pleaded guilty last week to wire fraud, securities fraud, money laundering, and investment advisor fraud in connection with a $50 million investment scheme, prosecutors said.

According to the Justice Department, Lucas raised money from victims by falsely telling them their funds would go to early-stage health and wellness companies. Through his private equity fund, Lucas Brand Entity, he instead used the money for personal expenses and to pay earlier investors in a Ponzi-like fashion, the DOJ said.

Court documents show that starting in 2017, Lucas used three funds he managed to raise money from retail investors. He treated the funds as a personal "cookie jar," prosecutors said. Lucas was not registered with federal regulators, but the DOJ argued he acted as an investment advisor and owed a fiduciary duty to clients.

In marketing materials, Lucas told investors their money would go to "small to mid-size emerging brands" that he would "differentiate and catalyze growth to a sufficient scale for exit." Instead, prosecutors said, he used the funds for alimony payments and personal expenses, including rent and political consulting fees.

Lucas claimed to have co-founded a famous private equity firm to bolster his credentials. He did not. Lawyers from that firm sent him a cease-and-desist demand, according to court documents.

Lucas also channeled investor money to Immunocologie, a luxury skincare business operated by his wife, Karen Ballou. The DOJ said about 40% of the investor funds that actually reached portfolio companies were diverted to Immunocologie, which had limited revenue and never turned a profit. Most of that investment went to marketing expenses, including parties and trips to luxury resorts where Ballou promoted brand awareness, the DOJ said.

Lucas arranged for his firm, not the funds themselves, to take majority ownership of Immunocologie. That gave Lucas an equity interest in the business and created a conflict of interest he did not disclose to clients, prosecutors said.

The fraud often left the funds undercapitalized. The firm struggled to pay basic expenses, including employee salaries. Staff at the Eagle Times, a New Hampshire newspaper Lucas purchased in 2022, said Lucas did not pay bills and often asked employees not to cash their paychecks, according to New Hampshire Public Radio. The paper went dark after employees quit. Employees at Lucas Brand Entity told NHPR that Lucas's spending was "literally fraudulent" and "likely illegal," but many felt afraid to speak out, worried it would cost them their jobs.

Lucas has a political history in New Hampshire. He was elected as a state representative at age 19 and served two terms, according to the New Hampshire Journal. In 1998, he spent $1 million of his own money to win the Republican gubernatorial primary, then lost to incumbent Democratic Gov. Jeanne Shaheen. He remained a donor and activist in the party. His son served in the New Hampshire House as a Republican from 2018 to 2020.

In federal court in the Southern District of New York, Lucas pleaded guilty to one count each of securities fraud, wire fraud, money laundering, and investment advisor fraud. The first three charges carry maximum prison terms of 20 years. The investment advisor fraud charge carries a five-year maximum. Sentencing is scheduled for Nov. 12.