Ex-GOP candidate for governor facing fraud charges
Story by Beth Healy and Stephanie Ebbert
There was a time when John Lakian was a household name in Massachusetts political circles, a promising young Republican whose run for governor was eventually eclipsed by a very public battle over misrepresentations on his resume.
Now, more than 30 years later, Lakian, 72, is again publicly accused of deceit — this time in federal court in New York. He was arrested last week along with his girlfriend and charged with stealing more than $11 million from investors and allegedly trying to defraud banks of $8 million.
The indictment alleges that between February 2009 and July 2013, Lakian and Diane W. Lamm defrauded the investors and banks in three schemes.
They allegedly defrauded investors of a New York firm where Lakian was an owner, Pangea Capital Management, by promising to use their money to buy and consolidate other investment firms. The pair instead diverted funds to themselves, to restaurant businesses they controlled, and to pay Lakian’s home mortgage, according to the federal indictment.
In a second scheme, prosecutors allege, the pair drained a North Carolina fund that had 100 investors and again diverted the money to themselves and to their other business ventures. And between 2009 and 2012, Lakian and Lamm allegedly submitted fake tax returns and inflated pay stubs when they tried to obtain more than $8 million in loans from four banks in New York.
Lakian and Lamm are accused of preying on investors, “stealing their hard-earned money to use for their own purposes,’’ said Loretta E. Lynch, US attorney for the Eastern District of New York, in a statement. “They similarly disregarded the interests of lending institutions by submitting forged documents to banks.’’
Lakian’s attorney, Bruce Maffeo, said that Lakian pleaded not guilty. He was released on bail of $2 million.
“We look forward to what shall be a vigorous defense of the charges,’’ Maffeo said.
Daniel Ollen, a lawyer representing Lamm, declined to comment.
Lakian was once a bright light on the political landscape in Massachusetts, a self-made and charismatic businessman who in 1982 gave the tiny state Republican party real hope of capturing the governor’s office.
His candidacy was abruptly derailed when The Boston Globe reported that he had exaggerated details of his military service, schooling, and business activities.
“He came onto the political scene with a great deal of splash and just bravado,” recalled Leon Lombardi, a state legislator who was the GOP nominee for lieutenant governor that year. “He impressed a lot of people with the story that he told about his up-from-the-bootstraps background, and he lived a rather luxurious lifestyle. But no one was really too sure about where he came from and how he made his money.”
Andrew Natsios, who was then chairman of the Massachusetts Republican Party, compared Lakian to the classic F. Scott Fitzgerald character Jay Gatsby.
“He had a very opulent lifestyle — which he was very public about — and seemingly limitless ambitions,” Natsios said Wednesday.
“Lakian told a great story,” Natsios added. “The problem was, none of us were ever sure how much of it was true.”
In the 1982 Globe story, Lakian said that embellishment is an accepted part of politics.
“I think there’s that degree of slight fluff that’s put into every candidate’s brochure, every candidate’s advertisements,” Lakian said.
He also said: “It’s not that you take something that’s 50 cents and make it 100 cents, OK. It’s that you aggrandize a bit, OK. Every candidate does it. Everyone does it slightly. The key word there is slightly: You try and take something that’s 100 and make it 102. You make it 150 and you’re a liar.”
Lakian placed a distant second in the primary to GOP nominee John Sears. He subsequently filed a $50 million libel suit against the Globe that a state judge dismissed in 1985. Sears went on to lose in the 1982 general election to Michael Dukakis.
Lakian would recover from that political defeat and seek a second Republican nomination, this time for US Senate, in 1994. He lost that race to another wealthy businessman who had emerged on the scene in Massachusetts: Mitt Romney. Lakian captured just 18 percent of the vote in that primary, after spending $3 million, the Globe reported.
In recent years, Lakian has continued in the investment business and has appeared as a commentator on Fox News.
Meanwhile, since 2012 Lakian has been embroiled in a separate civil lawsuit brought by shareholders of Pangea Capital, who said he and Lamm got them to invest in another company, Capital L Group, that the two allegedly ran into the ground.
That case is currently in arbitration, according to published reports and Lakian’s lawyer in the criminal matter.
In a separate civil case filed in New York last summer, Lakian and Lamm’s insurance company said it had received claims for legal bills exceeding the $3 million coverage in their policy.
In the criminal case, the US attorney’s office in New York is seeking prison time and millions of dollars in fines if it wins guilty verdicts.
There are two counts of conspiracy to commit securities and wire fraud, two counts of securities fraud, and one count of bank fraud conspiracy.