"Unfortunately, you have become the most infamous criminal in New Mexico history. You have exceeded Billy the Kid, (train robber) Black Jack Ketchum, others who have been notorious in this territory."- United States District Judge Bruce Black
An Albuquerque man who masterminded the largest Ponzi scheme in New Mexico's history was sentenced to serve twelve years in prison. Doug Vaughn, 64, operated the scheme, which spanned decades, that scammed more than 600 investors nationwide out of approximately $75 million. After being charged in a 30-count indictment unsealed in early 2011, Vaughn pled guilty to wire fraud and mail fraud charges in December 2011. As part of the agreement, prosecutors agreed to recommend a prison sentence ranging from 10 to 12 years . While some victims urged United States District Judge Bruce Black to reject the plea agreement and give Vaughn the maximum sentence, Judge Black sentenced Vaughn to the high end of the range recommended by prosecutors, concluding that ""I don't think despicable covers it quite frankly."
Vaughn operated Vaughn Company Realtors ("VCR"), which was once the largest independent residential brokerage firm in New Mexico. Started in 1983,VCR, through Vaughn, solicited investments in the form of promissory notes, promising potential investors annual returns averaging 17.5%. In return, Vaughn represented that investor funds would be used for real estate investments. In total, VCR collected more than $86 million from investors in eight states.
However, rather than use the funds for real estate investments, authorities alleged that Vaughn used investor monies to (1) make Ponzi-style payments to investors; (2) pay himself under the guise of salary or bonuses; and (3) to prop up VCR corporate operations, which was not generating sufficient revenues through legitimate operations. Indeed, VCR was hemorrhaging money, losing $54 million from 2004 to 2009 and nearly $14 million in 2009 alone.
The scheme began to collapse in late 2009, with Vaughn unable to meet monthly interest obligations and unilaterally deciding which investors would receive checks. Finally, in February 2010, Vaughn filed for personal and corporate bankruptcy protection, claiming that nearly 600 investors were owed approximately $75 million.
Vaughn was given 48 hours to report to prison. Given his age, it is likely to be a life sentence.
A copy of the indictment is here.