ALBUQUERQUE (KRQE) - With his real-estate empire in ruins, Doug Vaughan now faces up to 12 years in federal prison for masterminding a Ponzi scheme prosecutors say defrauded at least 600 investors of more than $74 million.
In federal court early Wednesday afternoon Vaughan, 64, pleaded guilty to two counts of wire and mail fraud from a 30-count indictment handed up by a grand jury in February.
"He admitted completely the scheme that he perpetrated on a lot of very good people," said U.S. Attorney Ken Gonzales.
The plea agreement includes a money judgment against Vaughan of $74.7 million, which prosecutors say is a portion of the proceeds from the scam, and requires him to resolve a pending federal securities case and his personal and business bankruptcy cases.
The indictment accused Vaughan of taking money from investors for real-estate projects that never happened. Instead he used money from new investors to make dividend payments to earlier investors while pocketing the rest to support himself and his Albuquerque real-estate business.
As part of the deal, Vaughan was ordered to pay restitution, but the U.S. Attorney's Office conceded it is highly unlikely investors will get their money back.
"The money that they invested and trusted in Mr. Vaughan is gone forever," Gonzales said.
Vaughan's plea deal comes on the heels of a separate agreement worked out with his former accounting manager Martha Runkle.
She, too, was charged in connection with the Ponzi scheme, but earlier this month court documents were unsealed showing she had cut a deal with prosecutors that required her to testify against Vaughan.
Prosecutors said that changed the direction the case.
"The fact that Ms. Runkle was charged and pled, we do believe, was a significant turn in this particular case," said Gonzales.
Vaughan himself evaded cameras at the courthouse, ducking in and out of a nonpublic entrance.
News 13 caught up with his attorneys after the hearing, but they said they had no comment.
Gonzales said this is a a good deal for Vaughan considering he was facing 475 years in prison, but he said it is also a good deal for everyone else because it guarantees a conviction and prison time. A trial would could go either way no matter how strong the evidence is, he added.
"For a man such as himself who has been used to a very lavish lifestyle, I'm sure it's not anything he looks forward to," Gonzales said.
Vaughan has been called New Mexico's 'Mini-Madoff,' a reference to Wall Street money manager Bernard Madoff, who was sentenced to 150 years in prison after defrauding investors of at least $18 billion and perhaps several times that amount. Vaughan is to be sentenced in 2 1/2 months and remains free on conditions of release.
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