Founder of Manhattan-based private equity firm charged in federal court with allegedly defrauding investors out of tens of millions of dollars

New York – Federal prosecutors have charged the founder and managing partner of a Manhattan-based private equity firm with a sweeping fraud scheme that allegedly siphoned tens of millions of dollars from investors under false pretenses, using the funds instead to bankroll personal expenses, unrelated ventures, and what authorities describe as Ponzi-like repayments to earlier backers.

The charges were announced by the United States Attorney for the Southern District of New York and senior leadership from the Federal Bureau of Investigation, following the unsealing of an indictment against Jay Lucas, 71, of Portsmouth, New Hampshire. Lucas is the founder and managing partner of Lucas Brand Equity LLC, known as LBE, and oversaw multiple private investment funds that prosecutors say were used as vehicles for fraud dating back several years.

According to federal authorities, Lucas raised more than $50 million from investors by portraying himself as a seasoned private equity executive with deep experience in growing early-stage health and wellness companies. Investors were told their money would be strategically deployed to help promising brands scale, gain market share, and eventually deliver returns. Instead, prosecutors allege, much of the money never reached those investments at all.

“As alleged, 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 Jay Clayton. “Instead, Lucas allegedly lied, frittered away investor money on personal vanity projects, and betrayed his obligations to his investors. With the assistance of our dedicated law enforcement partners, our Office will continue to aggressively prosecute fraud in our public and private markets.”

Read also: Students at School No. 5 step into leadership roles as Mayor Malik Evans administers the oath of office during a special school ceremony

The indictment outlines a long-running pattern of alleged deception beginning in or around 2017. Lucas is accused of fabricating credentials, including falsely claiming he had co-founded a well-known private equity firm. That claim eventually drew the attention of the firm’s legal team, which reportedly issued a cease-and-desist demand. Despite this, prosecutors say Lucas continued to market himself to investors as an experienced dealmaker with a proven track record.

Lucas managed three private funds under the LBE umbrella: Lucas Brand Equity LP, referred to as Fund One; L.B. Equity Emerging Growth LP, or Fund Two; and L.B. Equity Wellness Growth L.P., known as Fund Three. Investors were told the funds shared a common strategy focused on identifying emerging brands, providing hands-on support, and preparing companies for profitable exits.

In reality, authorities allege, investor money was routinely diverted for purposes that had little or nothing to do with legitimate fund operations. Prosecutors say Lucas spent large sums on personal expenses, including rent, alimony payments, political consultants, and a newspaper project in his hometown that served no investment purpose. At the same time, new investor funds were allegedly used to make payments to earlier investors, creating the appearance of activity while draining the funds of capital.

The FBI described the alleged conduct as both systematic and deeply damaging to those who entrusted Lucas with their money. “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 G. 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. The FBI remains committed to investigating any business executive who abuses their authority to satisfy selfish interests at the cost of others.”

A significant portion of the indictment focuses on Lucas’s alleged use of investor funds to support Immunocologie, a luxury skincare company operated by his wife. Prosecutors allege that investor money was funneled into the business without proper disclosure, and that much of it was spent on marketing activities such as parties and trips to high-end resorts, framed as efforts to build brand awareness.

According to the indictment, many investors were unaware that the skincare company was run by Lucas’s wife, and some did not know of the personal connection at all. Prosecutors further allege that Lucas structured the ownership of Immunocologie in a way that benefited him personally. Instead of the investment funds holding majority equity, Lucas allegedly arranged for LBE itself to take control, effectively cutting investors out of meaningful ownership while still using their money.

Read also: State Police in Troop G report a series of DWI arrests following traffic stops and crash investigations between December 9 and December 16

Beyond the alleged misuse of funds, the indictment paints a picture of a firm struggling internally as capital dried up. Prosecutors say the funds and their portfolio companies were chronically undercapitalized and often unable to pay basic expenses, including employee salaries. As financial pressure mounted, LBE employees reportedly confronted Lucas about his spending habits and questioned the legality of his actions.

Internal communications cited in the indictment reveal growing alarm among staff. Employees described Lucas’s spending as “not spending on LBE,” “literally fraudulent,” and “a huge betrayal of investor trust and most likely illegal.” Despite repeated warnings, prosecutors allege Lucas dismissed these concerns. Over time, employees feared that pushing back further would jeopardize their jobs.

As of the date the indictment was unsealed, prosecutors say none of the funds’ investments had generated returns, and no investors had been paid profits. The funds and portfolio companies were described as hemorrhaging cash, unable to meet even basic financial obligations, while Lucas and his family allegedly continued to benefit personally from investor money.

Lucas was arrested and is expected to be presented in the District of New Hampshire. The case has been assigned to U.S. District Judge Jennifer L. Rochon. He faces one count each of securities fraud, wire fraud, and money laundering, all of which carry maximum potential sentences of 20 years in prison. He is also charged with investment adviser fraud, which carries a maximum sentence of five years.

Federal prosecutors emphasized that the potential penalties are set by Congress and are provided for informational purposes only. Any sentence, if imposed, would ultimately be determined by a judge after considering the facts of the case and applicable sentencing guidelines.

The investigation was led by the FBI, with assistance from the U.S. Securities and Exchange Commission. U.S. Attorney Clayton praised the work of both agencies, noting the importance of coordination in complex financial investigations involving private investment vehicles.

The prosecution is being handled by the Securities and Commodities Fraud Task Force within the U.S. Attorney’s Office for the Southern District of New York. Assistant U.S. Attorneys Adam S. Hobson and David J. Robles are leading the case.

Authorities stressed that the indictment represents allegations, not proof. Lucas is presumed innocent unless and until proven guilty in court. The case now moves into the judicial process, where prosecutors will seek to prove that the promises made to investors were part of a deliberate and sustained fraud, rather than failed business judgment.

For investors and regulators alike, the case underscores ongoing concerns about transparency and oversight in private equity and alternative investment funds, particularly those marketed on the strength of personal reputation and claimed experience. As the proceedings continue, the outcome may carry broader implications for enforcement efforts aimed at protecting investors in private markets.