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

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Tuesday, March 1, 2011

New Mexico Real Estate Magnate Indicted for Operating a Ponzi Scheme

A federal grand jury in Albuquerque, New Mexico indicted former real estate magnate, Douglas F. Vaughan, for operating an approximately $75 million Ponzi scheme and for knowingly providing false documents to the SEC in the course of its investigation into Vaughan’s conduct in the fall of 2009.  The SEC filed a civil complaint against Vaughan and two of his entities on March 23, 2010, alleging violations of the antifraud and securities registration provisions of the federal securities laws and obtained a preliminary injunction, which remains in force. The SEC’s action is pending.

The federal criminal indictment alleges that, between 1993 and 2010, Vaughan raised approximately $75 million from investors through the issuance of promissory notes from his now-defunct real estate company, The Vaughan Company Realtors (“Vaughan Company”) and through the sale of interests in a separate entity called Vaughan Capital, LLC (“Vaughan Capital”). In both instances, the indictment alleges, Vaughan falsely told investors, among other things, that their funds would be used for real estate-related investments, when, in fact, he used their money to make principal and interest payments to earlier investors, to cover Vaughan Company’s mounting operating losses, and to support his own extravagant lifestyle, which included a mansion overlooking a golf course, a Ferrari, and frequent travel to Las Vegas, Nevada.

http://lawprofessors.typepad.com/securities/2011/03/new-mexico-real-estate-magnate-indicted-for-operating-a-ponzi-scheme.html

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