Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Wednesday, March 24, 2010

SEC Charges New Mexico Realtor with $80 Million Ponzi Scheme

The SEC yesterday filed fraud charges against Douglas F. Vaughan, a prominent New Mexico realtor, and obtained an emergency court order to halt an alleged $80 million Ponzi scheme.  According to the complaint, Vaughan through his company — The Vaughan Company Realtors — issued promissory notes that he claimed would generate high fixed returns for investors. Vaughan also used another entity — Vaughan Capital LLC — to solicit investors for different types of real estate-related investments, such as buying residential properties at distressed prices. Vaughan relied entirely on new money raised from investors through both companies to fund Vaughan Company's ever-increasing obligations to note holders.

The U.S. District Court for the District of New Mexico granted the SEC's request for a temporary restraining order and asset freeze against Vaughan and his companies.

http://lawprofessors.typepad.com/securities/2010/03/sec-charges-new-mexico-realtor-with-80-million-ponzi-scheme.html

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