Original subtitles

In this episode of American Greed, if there's one name in Albuquerque real

estate that's as solid as a rock, it's Doug Vaughn. We trusted him. We really

trusted him.

His real estate investment program takes in $75 million from more than 600

investors. What Doug did was he took their money and simply...

created the largest Ponza scheme in New Mexico history.

But hanging over this dream landscape of never -ending profits, a storm is

coming. I recognize that I do face some serious challenges.

Everything was great, and then all of a sudden, boom! Talk about a crash and

burn. When Vaughn's only chance of keeping his head above water is to steal

money, he pulls the most vulnerable of New Mexicans down with him.

By the end, he's desperate.

By the end, he'll take anybody with a pulse and a checkbook.

Today's date is October 30, 2009. The time is approximately 1023 hours.

This is Senior Special Agent Daniel Tanaka of the New Mexico Securities

Division.

I'm going to be attending a meeting with Doug Vaughn of the Vaughn Company to

discuss investing in Vaughn Capital.

I'll be using the undercover name Daniel Thomas.

Autumn 2009.

Senior Special Agent Daniel Tanaka drives from New Mexico Securities

headquarters in Santa Fe, New Mexico, to meet with real estate mogul Doug Vaughn

in his offices in Albuquerque.

Tanaka suspects that Vaughn may be running a real estate scam, but wants to

Vaughn's bank records to know for sure.

Good morning.

Yes, I'm Dan Thomas. I have a 1030 appointment with Doug.

Posing as prospective investor Daniel Thomas, Tanaka walks into Vaughn's

and agrees to invest $250 ,000, hoping he can coax Vaughn into giving up his

bank account information so his office can subpoena his records.

I'm very excited to get my 13%, and it sounds like you've got a really good

business model here that's going to be very successful.

I think we've been upon something, and you're the winner.

Later that afternoon, Vaughn's office emails Tanaka the wiring instructions.

When Tanaka subpoenas Vaughn's bank records, he begins to unravel the

fraud in New Mexico's history.

We were all shocked to find out that he owed over $75 million to well over 600

victims.

It's an unceremonious fall from grace for one of Albuquerque's biggest

icons.

Everybody knew.

Doug Vaughn.

Tom Joles is the news anchor for KOB -TV Eyewitness News in Albuquerque.

There were probably more of his signs than any signs in the city because he

to do these open houses.

And there would be a Doug Vaughn sign like a mile away from the house.

And as you get closer to the house, there would be more of them. And I asked

of the realtors what this was about, and she said it was an open house on

steroids.

And that was Doug Vaughn. He was big. He was big in a lot of ways.

Vaughn Company Realtors comes to encompass both residential and

estate divisions, at one point employing more than 100 realtors, brokering sales

of properties that shaped the face of a rapidly growing Albuquerque.

For the late 90s, the Vaughn Company is the largest independent realty company

in the city, and it's all due to the guidance of its charismatic owner.

Doug Vaughn.

Some of Doug Vaughn's personal accomplishments. He was the president in

the Albuquerque Board of Realtors. Doug was formerly a major shareholder and one

of the original founders of Albuquerque Title Company, at one time the number

one title company in New Mexico.

FBI Special Agent David Backlund traces Vaughn's fraud back to 1993, when Vaughn

breaks away from the standard realty business and begins a new program that

far less publicized. But he claims just as successful.

What Doug did was he created an investment program in 1993 that he

Promissory Note or the Deed of Trust program.

Vaughn tells investors that instead of just brokering sales, he's going to use

his considerable expertise in real estate to start investing in properties

his own profit.

He just needs some investors to provide the capital.

In exchange, he gives the investor a promissory note that guarantees a

interest rate on their investment, ranging from 8 to 20 percent.

The agreement is simple.

They're going to get their interest, and then at the end of the terms of the

promissory note, they'll get their principal back.

These came signed by Doug Vaughn.

Tommy Hightower was Vaughn's high school football coach in the early 60s.

More than 30 years later, they reconnect when Vaughn pitches Hightower his new

program. I thought I'd give it a try, and if it paid all right, then I'd

continue. And for 13 years, I did.

Tommy Hightower receives his first two -year promissory note from Doug Vaughn

1996 as he prepares to retire from the carpeting business he built from the

ground up.

He invests $25 ,000 and is guaranteed 14 % interest.

As near as I can remember, for 13 years, you miss a payment.

After about 6, 8, 10 years, I didn't pay attention to it. I got a check every

month, and what about my business?

Everything seems to be going perfectly.

There's just one problem.

Doug Vaughn isn't actually investing in real estate. He's investing in a fraud.

He took their money and simply created the largest Ponza scheme in Mexico

history.

When American greed returns, Doug Vaughn may appear to be sitting on the throne

of a real estate empire, but the image doesn't match the reality.

The truth is that if he wouldn't have been working so hard to portray this

image, if he would have maybe bought the cheap pen instead of the gold pen, he

might have been able to turn a profit.

So slow way down.

All right, now from right here, look over your left shoulder. Okay, make sure

there's nobody coming. Does it look okay or not? David McGinnis owns the

McGinnis School of Driving in Albuquerque, a family business his

in 1964.

Under his family's guidance, it eventually grows into one of the most

driving schools in the country.

This is my dad right here.

This is back about 1984.

Remember. We adjust them, but we never trust them. And to check the blind spot,

we always look over our shoulder.

We are the oldest and largest family -owned driving school in the nation.

We've taught more people how to drive than any other driving school has in the

history of driver education schools.

The school's growth parallels the growth of another Albuquerque company, Vaughn

Company Realtors.

In the early 90s, Vaughn reaches out to McGinnis' father to tell him about a

real estate investment program he's starting up.

one that can guarantee him 20 % returns.

I was there when Doug Vaughn approached him. And so he gave Doug quite a bit of

money and started investing.

The investment goes so well that David McGinnis begins to invest his own money,

as does his brother.

He always had a sterling reputation.

I never had any doubt that he was a pillar of our community.

McGinnis' beliefs are confirmed when month after month he finds a check

for him in his mailbox.

Right on time. Right on time. He said, I'd always get a check faithfully.

For citizens of Albuquerque, an association with Doug Vaughn is a symbol

success.

I was quite proud of this. It says, Wayne Unzi, the most valuable associate

the year, 2008.

Wayne Unzi joins Vaughn Company Realtors in 1987.

when he merges his business brokerage with the highly respected realty

The Vaughn Company logo is the knight, and that was to signify security and

trust. Anzi becomes the head of the business brokerage division of Vaughn

Company Realtors.

just one more branch of an ever -expanding empire.

We had a mortgage company. We had a title company.

We had all those different divisions within real estate.

He had a property management company. I mean, all these different divisions,

they're all profit centers, we think, so they're all contributing.

And amazingly, Unzi doesn't even know about the biggest revenue source of all,

the promissory note program.

It was a little strange that he didn't say anything to me about it. And I don't

just mean me. As far as I know, he never said anything to any of the managers

about it. It's an odd but telling deception.

We couldn't find one investor that was actually an employee.

I have to assume that it was a calculated measure by Doug to hide the

scheme from them because everybody else he ever encountered, he asked to invest.

Perhaps he doesn't want people so close to the books to be able to see what he's

up to.

Because soon after starting the promissory note program, he starts

the company's numbers from employees.

It was probably after I'd been with Doug for 10 years, might not even have been

that long, but all of a sudden we were having manager's meetings and no

financials were being produced, which was a puzzle.

Hiding the books isn't as much of a puzzle to Coach Lear and Michael D

of the SEC.

Vaughn has a little secret about his massive empire that he doesn't want

out. The Vaughn company was not a successful business. It didn't make

money to cover its expenses each year.

They had been losing increasing amounts of money going back to 1993. Every year

they were losing more than the year before.

The company in total has lost over $60 million.

If Vaughn doesn't keep getting money from investors to pay past debts, his

business would immediately collapse.

But from the outside, it looks like a hugely successful company. And in this

fraud, image is everything.

Your average investor is driving down a street and sees multiple Vaughn Company

realtor signs, walks into a building with marble floors and a huge...

$1 ,000 chair sits in a chair with Doug Vaughn where he tells them, look, I've

paid on time for 20 some odd years.

It lulls the investor into their confidence because they believe there's

chance they could lose their money.

And again, it really goes to show just how devious Doug Vaughn was.

When American greed returns, Vaughn doesn't just flaunt his wealth to

He wants the whole city to see what he's got.

My personal belief is that Doug Vaughn needed to feel more important or better

than everybody else, so he bought items that made him look extremely wealthy and

extremely successful.

In the mid -2000s, Doug Vaughn's investment program has everyone singing

praises.

He's offering investors anywhere from 10 % to 20 % interest on their

investments. And what's more, he's delivering.

By 2010, Vaughn has investors in 31 states and in countries as far away as

Israel. And it seems all of them are willing to put in a good word for Doug

Vaughn. They believed in Doug Vaughn because Doug Vaughn was a charismatic

individual who was able to fool them. So they then went out and solicited

investors and gave testimonies. You know, and these testimonies said one...

central thing that matters for a Ponzi scheme, we always get paid.

Philip Dugan is a retired Marine who served in both the Korean and Vietnam

In 2008, he has some money he wants to invest for his grandchildren's

He received several letters of endorsement from Vaughn Company

I have personal knowledge of Doug Vaughn for 35 years.

During that time, I have never known him to be anything other than honest and

forthright.

I checked with my broker and some other people in the real estate industry, and

two things that they said about Doug Vaughn. One, he was a good businessman,

the other thing, he was honest.

Dugan gets enough positive feedback from other investors that he decides to meet

with Vaughn face -to -face.

Vaughn tells Dugan that he'll start him out with an annual interest rate of 12%,

paid monthly, with a little sweetener as a guarantee.

He said that if for some reason I miss one month, your rate will go from 12 %

18%. If I miss two months in a row, it will go from 18 % to 24%.

Dugan invests $50 ,000, and everything goes perfectly.

So in a few weeks, I come back in with another investment, and it just

progressed. Within two years, Dugan has $400 ,000 invested and is comforted to

believe that his grandchildren's futures are secure.

He never actually missed a full month with me ever.

I was hoping he would because my interest would jump up to 16, 18%. Doug

appears to be making his interest payments with ease.

And judging by the rest of his lifestyle, it's no wonder.

The man is swimming in money.

He was big and he liked to live big, he liked to show off.

One got the impression that he might have been maybe a little nerdy growing

and was trying to compensate in some ways with the money and the flash.

Well, he was very competitive, there's no doubt about it. I mean, he wasn't the

glibest person in the world, he wasn't the handsomest man in the world, but he

certainly had the persistence that led to his success.

He bragged about the cars that he had, about the motorcycles that he had.

Yeah, he had a jig.

For a while he had, I think it was Ferrari.

He had a big mansion, almost 7 ,000 square feet, lived by himself.

Seven bathrooms, a wine cellar that would hold 400 bottles of wine.

It's my understanding the two lions sitting out in front were imported at

tune of about $25 ,000 apiece.

Now, if he's going to put those on the outside, you've got to understand what's

going inside.

He had a pool table. He had a poker table.

I'm sure he put the best furniture he could get his hands on in there.

Jewelry for his girlfriend, luxury items, memorabilia in his house, a

diamond, hourglass.

The trappings were incredible, I have to say that. I mean, the tastes weren't

exactly my taste, but I didn't have that kind of money either.

It leaves observers in awe of the cash that must be flowing through Vaughn's

business. You still scratch the back of your head and say, man, how much money

would I need to support this lifestyle?

And again, the assumption is that he was making it legitimately.

If only that were true.

From a Pontington situation, this is, in my estimation, one of the more simpler

to understand.

You take money for something and you use that money to pay the investors that

are already invested.

You're not doing anything legitimate with the money. You're simply using it

pay existing investors.

Since 1993, Doug Vaughn has raised more than $70 million from investors on the

promise of delivering high rates of return on real estate investments.

But the only investment he's made is in the belief that there will always be new

investors to rope in.

By late 2009, that belief begins to be shaken.

David McGinnis and his family have been invested with Vaughn for nearly 20

years. And for their entire relationship, McGinnis has access to his

whenever he wants it.

But suddenly, it's not there.

Two or three times a year, I'd have to call him up and say, Doug, I need to

up and pull out $20 ,000 or $50 ,000, $70 ,000, whatever it might be. But this

time, I asked him.

You know, Doug, I need to go tell 50 ,000. He says, David, I don't have it.

McGinnis calls back a couple of weeks later and gets the same response.

I said, Doug, I'm going to come down to your place right now.

And if I don't have a check in my hand for that, I'm going to kick the whole

side of your building out.

And, you know, I went down there.

Secretary went out and got him.

And he came out. He said, David, he says, Here's a check.

And it's not from what you want.

But he says, that's the best I can do right now.

And I knew something was wrong.

I knew definitely something was wrong.

David McGinnis doesn't know how right he is.

Mr. Vaughn and his company were in debt up to their eyeball.

And it appeared that Vaughn had obligated his company to make interest

at that point in time that totaled more than $1 million a month.

Even the land of enchantment isn't that enchanted.

When American Greed returns, Doug Vaughn tries to lure in more investors, but he

ends up hooking one fish he'd like to throw back.

Yes.

Very well, thank you. Good to meet you, too.

Albuquerque real estate mogul Doug Vaughn is desperate.

He's been promising investors returns on investments ranging anywhere from 8 to

40 percent per year.

But suddenly, after nearly 20 years, he can't pay on his promises.

So in December of 2009, when he's telling old ladies and investors that

everything's great, he needs to come up with $1 .1 million in money each month.

Otherwise, the Ponzi scheme would collapse.

Bond needs more investors, but in his desperation, he brings in the wrong one.

Daniel Tanaka is a senior special agent for the New Mexico Securities Division.

In September 2009, he gets word that a company named Integra Investment Group

pitching questionable investment opportunities.

Tanaka learns that its owner, Tony Oliva, isn't licensed to sell

He reaches out to Oliva and records the conversation to see how deep this

conspiracy may go.

Oliva pitches one investment vehicle that particularly grabs Tanaka's

company. Have you ever seen their signs throughout New Mexico?

You can ask anybody about Doug Vaughn in New Mexico, and this guy's been around

for 38 years with an impeccable, and I mean impeccable, career.

Tanaka wants to know more about the Vaughn company.

He creates an undercover identity and gives Doug Vaughn a call.

Doug Vaughn speaking.

Hello, Doug. This is Dan Thomas. How are you?

I created the backstory of Daniel Thomas, a disabled former insurance

who'd been in a terrible car accident and had received a large insurance

settlement. And my undercover identity was looking for a safe, long -term,

guaranteed investment that was going to provide me an income stream as long as I

needed it, because I couldn't work.

Within two minutes, Doug Vaughn begins his pitch.

Immediately, Tanaka sees an opportunity to test Vaughn's willingness to stray

from the straight and narrow.

He happens to mention, just as an aside, that he's selling these investments to

accredited investors.

So I play dumb.

Well, based on my cover identity, I don't meet any of these eligibility

requirements. And I tell them that.

It's disingenuous at that because he's telling me this is really just to make

sure that elderly widows don't put their last $10 ,000 into this investment when

he was doing exactly that, when he was taking elderly widows for their last $10

,000.

In the meantime, the SEC has also caught wind of a possible fraud at Vaughn

Company Realtors, and they've opened an investigation of their own.

We were completely upfront with Mr. Vaughn that we wanted documents from him

relating to any kind of investments he was offering.

Lear has subpoenaed multiple records multiple times from Vaughn. But not only

does Vaughn continue to scam investors...

He seems to think that he can simply disregard the SEC's interest in his

by providing only a small portion of what they ask for.

I think what happened can be best described as a game of cat and mouse

Mr. Vaughn and his counsel and us.

And with each step, they would attempt to get us to back off, I think.

Enclosed are the following documents. As you can see, everything is above board,

and you can stop wasting your time investigating Mr. Vaughn.

The SEC doesn't buy it. They want bank records.

But Vaughn won't tell them where he holds his accounts.

That's where prospective investor Daniel Thomas, a .k .a. Special Agent Tanaka,

comes in.

He's in contact with the SEC and believes that he has a way of getting

account information they're looking for.

He puts on a wire and drives down to Albuquerque for a face -to -face with

Vaughn himself.

Good morning.

Yes, I'm Dan Thomas. I have a 10 .30 appointment with Doug. When the two sit

down together and Tanaka tells Vaughn his story, he gets an indication of just

how low Vaughn is willing to stoop to scam one more investor.

It was a very serious accident, and I spent months recovering just the ability

to walk normally.

I let Doug know, hey, I can't work.

This is all the money I have right now, and I may or may not be able to get

money in the future.

I'm painting the picture of a person that you don't want to rip off.

I'm painting the picture of a person who a legitimate person should walk away

from. Doug Vaughn should walk away from me and say, you know what, this is too

risky for you.

Frankly, we had very little discussion of risk at all. He never paused. He

offered any alternative. He just plowed forward with a sales pitch because he

wanted my money.

A 13 % fixed rate of return is really nothing to sneeze at. No, and I think

program is so successful.

Tanaka agrees to invest $250 ,000.

Now comes the fateful moment of his gambit. If he's going to get Vaughn's

information, now is the time.

If you're going to give us a check today, it's in today's date.

No, I'm going to have to wire you the funds.

When Vaughn emails Tanaka the wiring instructions, Tanaka gives the SEC the

information they've been waiting for.

It provides a roadmap for the entire fraud.

It really only took us a few hours of going through those documents to come to

the basic conclusion that this had been a Ponzi scheme.

And it's clear to them that this is a Ponzi scheme on the verge of collapse.

It's getting harder and harder for him to recruit new investors into the

and keep bringing enough money in to keep the ship afloat.

So by the end, he's desperate.

By the end, he'll take anybody with a pulse and a checkbook.

Next on American Greed, when Vaughn feels the vice of law enforcement

around him, will he be able to cover his tracks?

I'm very concerned that there's either been a compromise to the investigation

and that he's destroying evidence or that he's just proactively destroying

evidence. To hear more of Vaughn's meetings with Special Agent Tanaka, go

AmericanGreed .cnbc .com.

Want inside information from behind the scenes of the show?

Join the Greed social network.

Like us on American Greed's Facebook page. We'll be right back.

Real estate titan Doug Vaughn has been the model of success in Albuquerque for

almost four decades.

He's raised more than $70 million into his promissory note program.

But by the beginning of 2010, it appears the coffers are empty.

I think his financial statements for the Vaughn Company realtor showed his bank

account was overdrawn by $5 million.

All of the money was used to subsidize...

the failing company, Vaughn Company Realtors, to pay earlier investors their

returns with new investor money and to lead a very lavish, extravagant

lifestyle. That's where the money went.

Vaughn apparently believes that he's not only impervious to the arithmetic of a

checking account, but to economic realities as well.

Despite being in the middle of a cratered real estate market, he

tell investors he's on the top of the mountain.

I think Vaughn recycled the same newsletters and updates month after

May 5th, 2009, it says, Dear Vaughn Capital Investor, please finally close

profit and loss statement.

As you can see from the financial statement, we've done quite well.

August 20th, 2009. As you can see from the financial statement, we've done

well. December 14th, 2009.

As you can see from the financial statement, we've done quite well.

Not true.

Yeah, it's just not true.

His company was hemorrhaging money, and his pondering scheme was falling apart

at the time he was doing that. And of course, when he's sending this out, he's

not only sending to investors to keep them invested, he's sending out to new

investors to solicit new money.

Vaughn may be putting a brave face forward, but those closer to him see

a man overwhelmed.

I was at one party with him, and he really hit the sauce and got...

Very, very drunk that night. And I'd never seen him drunk before.

I mean, I've seen him drink before, but never totally wasted. And he was totally

wasted. And that was a bad feeling.

The stress mounds as Vaughn will go to any lengths to keep his head above

We heard voicemails of Doug Vaughn soliciting $5 ,000 from elderly people

end. Doug Vaughn would take money from anybody and didn't have any regards for

how it affected him.

By the middle of February 2010, $5 ,000 at a time isn't going to cut it, and

Vaughn is having trouble making payments.

He calls a handful of his top investors to his office to ask for patience.

One of those investors is Phil Dugan.

And he said that he was having cash flow problems, was not able to get the

checks out.

We all were so interested that we asked him, what could we possibly do to help

you survive? Because if you survive, we survive.

And you feel foolish about it now on something like that. And I'm going on

camera with this about how stupid it was. But it just, his personality just

by you.

That he was just the brother that needed some help.

Special Agent Daniel Tanaka is in no mood to help.

By the middle of February, he is preparing search warrants for Vaughn's

office.

But before he can get them to a judge, the plan hits a snag.

Another agent from this office, Special Agent Tim Fraser, went to the offices of

the Vaughn Company Realtors to do some routine surveillance.

And while he was there, he saw vehicles being loaded up with boxes of documents

and being carted away.

Despite being concerned that evidence is being destroyed, there's nothing Tanaka

can do to stop it.

The warrant's not signed yet. The warrant's not even done.

We don't have our personnel ready.

So we just had to let it go.

Fortunately, it turns out that Vaughn isn't destroying records. He is

consolidating his offices.

The next morning, Tanaka and the rest of New Mexico learn why.

On February 22, 2010, Doug Vaughn and the Vaughn Company Realtors file for

bankruptcy.

Special Agent Daniel Tanaka hasn't spoken to Vaughn since he left his

that Friday in October under the guise of Daniel Thomas.

But now he decides it's time to let Vaughn know who he really is and that

there's a criminal investigation underway.

He and another agent from the New Mexico Securities Division take a drive down

to Albuquerque to visit him inside his gated community called Savignon.

As we arrive...

I notice immediately that there are security cameras on the facade of the

So I figure that as soon as we pull into the driveway, we are under observation.

He knows we're there.

And then around the corner comes Doug Vaughn driving a black Jaguar.

And at that point, I took out my badge and credential, and I held them up.

I wave at Vaughn to stop so I can talk to him.

And he looks me right in the eye and floors it.

Tanaka and his partner get in their car and follow.

And he drove at a fairly high rate of speed as he was fleeing.

He eventually calmed down, slowed down, and began to drive more normally, and we

followed him.

Tanaka doesn't have an arrest warrant for the fraud, but he can arrest him for

another transgression.

His driver's license had been revoked because of an aggravated DWI arrest.

So when I saw Doug Vaughn operating his Jaguar, he was committing a crime right

in my presence.

Vaughn eventually leads them to the parking lot of his title company and

out of the car.

So he pulls nose into a parking space, and we pulled up in a T right behind

blocking his vehicle in. And at that point, I exited our vehicle, approached

him, and placed him under arrest.

And what was interesting at the time is that Doug Vaughn never asked why he was

under arrest.

As the author of a $75 million fraud,

Being arrested for a mere traffic violation seems to be the furthest thing

Doug Vaughn's mind.

I think he thought this was the end. I think as we were transporting him to the

detention center, that he believed in his heart of hearts, that it was all

and the world was crashing in on him.

And when the realization hit him that we were arresting him for a misdemeanor as

opposed to for perpetrating a $75 million Ponzi scheme, he immediately

He became a different person in that moment.

as he realized, oh, this isn't the big bust.

They're not taking me down.

Vaughn is allowed to walk out of the detention center on his own

but he doesn't stay relaxed for long.

Less than four weeks later, the SEC files a complaint in New Mexico's civil

court that lays out the entire fraud.

It claims Vaughn defrauded more than 600 investors of over $80 million.

The SEC also gets a temporary restraining order and freezes all of

assets. After all, Vaughn shows no signs of discontinuing his fraud.

As late as maybe the third week in February, he is still taking in money.

And so our job as a regulator is to stop it. In the meantime, Special Agent

Daniel Tanaka continues his criminal investigation.

And on April 21st, with the help of the Secret Service and U .S. Postal Service,

He conducts a raid on Vaughn's home, collecting several documents related to

fraud. But he soon finds out there's one place he didn't look.

The search occurred without any incident.

It unfolded how we expected it to.

And as we were leaving,

Mr. Vaughn's next -door neighbor approached one of the agents and asked,

Hey, did you find the secret room?

Tanaka calls all the agents back to the master bedroom.

We all crowd upstairs into the master bedroom and form a semicircle around

bookcase. There was a mechanism that was this recessed pin that I had to pull

out in order to allow the door to swing open.

So once I opened the door, all of us stood there staring at a fairly large

As a locksmith is brought in to unlock the safe, visions of glory flood

head. My heart was pounding.

Because I had no idea what I was going to find once we opened that. Were we

going to find a huge amount of cash or all kinds of other incriminating

evidence? You just don't know.

The reality is much less dramatic.

We opened that door, and the safe was mostly empty, except for some high -end

jewelry cases, some receipts.

But no smoking gun, as we had supposed, might be in there.

Vaughn's safe is as empty as his promises, and it's not the only thing

been cleaned out.

After raising more than $70 million from investors, the total amount of money in

Vaughn's personal checking, savings, and investment accounts is less than $8

,000.

When American Greed returns,

Doug Vaughn may be cashed out, but he hasn't given up.

Doug Vaughn is standing in the ruins of the Vaughn Company Realtors, and he has

the audacity to start a brand new company in the hopes of resurrecting his

business future.

In the spring of 2010, Doug Vaughn's legal troubles and legal fees continue

mount.

He's navigating both a bankruptcy proceeding and a civil complaint from

and federal court.

And the New Mexico Securities Division is conducting a criminal investigation.

He needs money to fend off the charges.

And his entire life, he's only known one way to get it.

So this here is Doug Vaughn's application to register a trade name. In

case, it's Phoenix Development LLC.

In April 2010, just weeks after he has served with the SEC complaint, Vaughn

submits this document to the New Mexico Real Estate Commission, asking to open

yet another real estate brokerage. The company has collapsed.

The investment scheme has completely collapsed.

He has declared bankruptcy both personally and on behalf of the Vaughn

Realtors. And he had the audacity to start a new real estate brokerage

The commission refuses to grant his request, but Vaughn's only getting

up. He turns to the media to make his plea.

We did a couple of stories on Vaughn, and then I'm in the newsroom after one

our newscasts, and someone says, Hey, Tom, Doug Vaughn is on the phone, and he

wants to talk to you.

Good. Love to talk to him. If the public is waiting for a confession, they'll be

sorely disappointed.

From all appearances, Vaughn thinks he can sell Albuquerque a bill of goods one

more time.

I recognize that I do face some serious challenges, and I need to get my word

out to people the best way I can.

He was defensive.

He seemed optimistic that he was going to get out of this bind that he was in.

And I personally thought he was delusional.

He even went to the point of soliciting donations from our viewers to help with

his legal defense.

If someone is that proud that they're afraid to ask for help, afraid to ask

assistance, afraid to get their word out, then, you know, that's not right

either. And I'm not that proud.

Clearly not.

Bond shows how far he's willing to go.

when he sends out a letter asking for financial assistance from the very same

people he's accused of ripping off.

Oh, yeah.

Yeah. He had the nerve to send that letter out to a bunch of the people. I'm

surprised that I received one. We laughed.

My wife and I laughed.

You know, you said, what does he think?

You know, well, has he given more money on top of that? Well, we laughed, too,

because we didn't have the doggone money to even give him.

Here he wipes this out and he wants to give them even more?

Eventually, Special Agent Tanaka and the New Mexico Securities Division combine

their investigation with the FBI and U .S. Attorney's Office.

Less than a year later, Vaughn is indicted.

And the man who had arrested him for driving with a revoked license now locks

cuffs to Vaughn's wrists that carry heavier weight.

It was February 25, 2011, one year to the day.

from the first time that I had arrested him, when I was arresting him again,

this time for 30 federal felonies.

On December 21, 2011, Vaughn pleads guilty to one count of mail fraud and

count of wire fraud.

Nine months later, he is sentenced to 12 years in prison.

The judge was very harsh on Mr. Vaughn. He told him that what he did was

disgraceful and that he compared him to Black Jack Ketchum and Billy the Kid.

as two of the worst criminals in New Mexico history and said that Mr. Vaughn

now more notorious than them.

It was a very powerful sentencing.

Not all agree.

We were asking for 50 years.

Philip Dugan invested his money with Doug Vaughn to pay for his

education. Now it's gone.

You can do what you want with me as a person and take the consequences.

But when you go in and you do something that affects a man's family, you stepped

across the line.

And he stepped across the line with me.

My friends, this isn't the first time we met Ryan, is it?

Okay, this is my baby boy.

Family business.

That's all it is, just plain family business, yeah.

McGinnis' father started the McGinnis School of Driving in 1964.

David McGinnis took over 12 years later, and he was hoping to pass it on to his

son in the next couple of years.

But with all his savings lost in Doug Vaughn's fraud, McGinnis is going to

to keep working.

And his son, Ryan, may not be able to wait around to inherit his father's and

grandfather's legacy.

You know, being only 26, he would eventually maybe get married and have

but he knows that's going to be very difficult to do.

The type of money he's making here at the driving school.

It's going to be difficult for McGinnis as well.

And the hypercarcinogen has been good to my family, my business.

That has not changed.

But personally, the bills are tumbling.

Chapter 7, probably here I come.

How long is it going to take?

You know, my crystal ball is broken.

I don't have any more.

Even if I had one, I don't think I'd trust it.

Because I looked in that crystal ball many years ago.

I thought it was working pretty good.

And it turned out he never saw anything.

The U .S. Trustee's Office is in charge of repaying victims out of whatever

bonds assets they can gather.

But at this point, it doesn't appear that there will be very much to collect.

I so wish that there was a pot of money hidden away somewhere for us to find so

that we can make the investors whole. But that's just not the case.

We've done a very extensive financial analysis.

And the best that the investors are ever going to see is a penny or two on the

dollar. It's the final legacy of a former legend of Albuquerque real

He could have been so much more.

But he wanted to be so much more.

And that was, I think, the problem.

He never wanted to be relegated to just a normal tycoon.

He wanted to be the elephant in the room.

And for a while he made it.

Doug Vaughn will be 77 years old when he is released.