1 00:00:05,930 --> 00:00:10,450 In this episode of American Greed, if there's one name in Albuquerque real 2 00:00:10,450 --> 00:00:15,310 estate that's as solid as a rock, it's Doug Vaughn. We trusted him. We really 3 00:00:15,310 --> 00:00:16,029 trusted him. 4 00:00:16,030 --> 00:00:21,210 His real estate investment program takes in $75 million from more than 600 5 00:00:21,210 --> 00:00:25,230 investors. What Doug did was he took their money and simply... 6 00:00:25,550 --> 00:00:27,530 created the largest Ponza scheme in New Mexico history. 7 00:00:27,810 --> 00:00:32,310 But hanging over this dream landscape of never -ending profits, a storm is 8 00:00:32,310 --> 00:00:35,610 coming. I recognize that I do face some serious challenges. 9 00:00:35,970 --> 00:00:40,130 Everything was great, and then all of a sudden, boom! Talk about a crash and 10 00:00:40,130 --> 00:00:43,910 burn. When Vaughn's only chance of keeping his head above water is to steal 11 00:00:43,910 --> 00:00:48,070 money, he pulls the most vulnerable of New Mexicans down with him. 12 00:00:48,310 --> 00:00:49,690 By the end, he's desperate. 13 00:00:49,890 --> 00:00:53,090 By the end, he'll take anybody with a pulse and a checkbook. 14 00:01:13,520 --> 00:01:18,680 Today's date is October 30, 2009. The time is approximately 1023 hours. 15 00:01:19,060 --> 00:01:22,460 This is Senior Special Agent Daniel Tanaka of the New Mexico Securities 16 00:01:22,460 --> 00:01:23,460 Division. 17 00:01:23,600 --> 00:01:28,980 I'm going to be attending a meeting with Doug Vaughn of the Vaughn Company to 18 00:01:28,980 --> 00:01:31,360 discuss investing in Vaughn Capital. 19 00:01:31,800 --> 00:01:34,200 I'll be using the undercover name Daniel Thomas. 20 00:01:35,100 --> 00:01:36,480 Autumn 2009. 21 00:01:37,420 --> 00:01:42,140 Senior Special Agent Daniel Tanaka drives from New Mexico Securities 22 00:01:42,140 --> 00:01:47,620 headquarters in Santa Fe, New Mexico, to meet with real estate mogul Doug Vaughn 23 00:01:47,620 --> 00:01:49,460 in his offices in Albuquerque. 24 00:01:50,140 --> 00:01:55,320 Tanaka suspects that Vaughn may be running a real estate scam, but wants to 25 00:01:55,320 --> 00:01:57,440 Vaughn's bank records to know for sure. 26 00:01:58,080 --> 00:01:59,080 Good morning. 27 00:01:59,920 --> 00:02:03,320 Yes, I'm Dan Thomas. I have a 1030 appointment with Doug. 28 00:02:03,880 --> 00:02:09,199 Posing as prospective investor Daniel Thomas, Tanaka walks into Vaughn's 29 00:02:09,199 --> 00:02:14,560 and agrees to invest $250 ,000, hoping he can coax Vaughn into giving up his 30 00:02:14,560 --> 00:02:18,320 bank account information so his office can subpoena his records. 31 00:02:18,780 --> 00:02:23,560 I'm very excited to get my 13%, and it sounds like you've got a really good 32 00:02:23,560 --> 00:02:25,800 business model here that's going to be very successful. 33 00:02:26,300 --> 00:02:31,580 I think we've been upon something, and you're the winner. 34 00:02:32,860 --> 00:02:37,440 Later that afternoon, Vaughn's office emails Tanaka the wiring instructions. 35 00:02:37,920 --> 00:02:42,400 When Tanaka subpoenas Vaughn's bank records, he begins to unravel the 36 00:02:42,400 --> 00:02:44,560 fraud in New Mexico's history. 37 00:02:45,060 --> 00:02:51,820 We were all shocked to find out that he owed over $75 million to well over 600 38 00:02:51,820 --> 00:02:52,820 victims. 39 00:02:53,240 --> 00:02:58,120 It's an unceremonious fall from grace for one of Albuquerque's biggest 40 00:02:58,120 --> 00:02:59,120 icons. 41 00:02:59,560 --> 00:03:00,680 Everybody knew. 42 00:03:01,740 --> 00:03:02,740 Doug Vaughn. 43 00:03:03,360 --> 00:03:08,820 Tom Joles is the news anchor for KOB -TV Eyewitness News in Albuquerque. 44 00:03:09,040 --> 00:03:13,660 There were probably more of his signs than any signs in the city because he 45 00:03:13,660 --> 00:03:14,820 to do these open houses. 46 00:03:15,520 --> 00:03:20,840 And there would be a Doug Vaughn sign like a mile away from the house. 47 00:03:21,200 --> 00:03:24,860 And as you get closer to the house, there would be more of them. And I asked 48 00:03:24,860 --> 00:03:29,080 of the realtors what this was about, and she said it was an open house on 49 00:03:29,080 --> 00:03:30,080 steroids. 50 00:03:30,190 --> 00:03:34,070 And that was Doug Vaughn. He was big. He was big in a lot of ways. 51 00:03:35,290 --> 00:03:40,870 Vaughn Company Realtors comes to encompass both residential and 52 00:03:40,870 --> 00:03:46,030 estate divisions, at one point employing more than 100 realtors, brokering sales 53 00:03:46,030 --> 00:03:50,090 of properties that shaped the face of a rapidly growing Albuquerque. 54 00:03:50,510 --> 00:03:54,310 For the late 90s, the Vaughn Company is the largest independent realty company 55 00:03:54,310 --> 00:03:58,310 in the city, and it's all due to the guidance of its charismatic owner. 56 00:03:59,020 --> 00:04:00,020 Doug Vaughn. 57 00:04:00,460 --> 00:04:05,100 Some of Doug Vaughn's personal accomplishments. He was the president in 58 00:04:05,100 --> 00:04:08,420 the Albuquerque Board of Realtors. Doug was formerly a major shareholder and one 59 00:04:08,420 --> 00:04:11,840 of the original founders of Albuquerque Title Company, at one time the number 60 00:04:11,840 --> 00:04:13,060 one title company in New Mexico. 61 00:04:13,360 --> 00:04:19,959 FBI Special Agent David Backlund traces Vaughn's fraud back to 1993, when Vaughn 62 00:04:19,959 --> 00:04:24,100 breaks away from the standard realty business and begins a new program that 63 00:04:24,100 --> 00:04:28,040 far less publicized. But he claims just as successful. 64 00:04:28,540 --> 00:04:33,940 What Doug did was he created an investment program in 1993 that he 65 00:04:33,940 --> 00:04:37,320 Promissory Note or the Deed of Trust program. 66 00:04:37,700 --> 00:04:42,340 Vaughn tells investors that instead of just brokering sales, he's going to use 67 00:04:42,340 --> 00:04:46,940 his considerable expertise in real estate to start investing in properties 68 00:04:46,940 --> 00:04:48,020 his own profit. 69 00:04:48,300 --> 00:04:51,120 He just needs some investors to provide the capital. 70 00:04:51,660 --> 00:04:56,300 In exchange, he gives the investor a promissory note that guarantees a 71 00:04:56,300 --> 00:05:00,400 interest rate on their investment, ranging from 8 to 20 percent. 72 00:05:00,660 --> 00:05:02,220 The agreement is simple. 73 00:05:02,480 --> 00:05:05,420 They're going to get their interest, and then at the end of the terms of the 74 00:05:05,420 --> 00:05:07,420 promissory note, they'll get their principal back. 75 00:05:09,720 --> 00:05:12,680 These came signed by Doug Vaughn. 76 00:05:13,040 --> 00:05:17,600 Tommy Hightower was Vaughn's high school football coach in the early 60s. 77 00:05:17,960 --> 00:05:22,520 More than 30 years later, they reconnect when Vaughn pitches Hightower his new 78 00:05:22,520 --> 00:05:26,680 program. I thought I'd give it a try, and if it paid all right, then I'd 79 00:05:26,680 --> 00:05:28,980 continue. And for 13 years, I did. 80 00:05:29,340 --> 00:05:34,000 Tommy Hightower receives his first two -year promissory note from Doug Vaughn 81 00:05:34,000 --> 00:05:39,060 1996 as he prepares to retire from the carpeting business he built from the 82 00:05:39,060 --> 00:05:40,060 ground up. 83 00:05:40,220 --> 00:05:45,260 He invests $25 ,000 and is guaranteed 14 % interest. 84 00:05:47,230 --> 00:05:50,830 As near as I can remember, for 13 years, you miss a payment. 85 00:05:51,410 --> 00:05:55,830 After about 6, 8, 10 years, I didn't pay attention to it. I got a check every 86 00:05:55,830 --> 00:05:57,550 month, and what about my business? 87 00:05:58,670 --> 00:06:00,710 Everything seems to be going perfectly. 88 00:06:01,230 --> 00:06:02,530 There's just one problem. 89 00:06:03,390 --> 00:06:08,370 Doug Vaughn isn't actually investing in real estate. He's investing in a fraud. 90 00:06:08,890 --> 00:06:12,690 He took their money and simply created the largest Ponza scheme in Mexico 91 00:06:12,690 --> 00:06:13,690 history. 92 00:06:13,820 --> 00:06:18,400 When American greed returns, Doug Vaughn may appear to be sitting on the throne 93 00:06:18,400 --> 00:06:22,020 of a real estate empire, but the image doesn't match the reality. 94 00:06:22,420 --> 00:06:25,860 The truth is that if he wouldn't have been working so hard to portray this 95 00:06:25,860 --> 00:06:29,360 image, if he would have maybe bought the cheap pen instead of the gold pen, he 96 00:06:29,360 --> 00:06:30,600 might have been able to turn a profit. 97 00:06:43,470 --> 00:06:45,010 So slow way down. 98 00:06:45,950 --> 00:06:49,630 All right, now from right here, look over your left shoulder. Okay, make sure 99 00:06:49,630 --> 00:06:53,770 there's nobody coming. Does it look okay or not? David McGinnis owns the 100 00:06:53,770 --> 00:06:58,570 McGinnis School of Driving in Albuquerque, a family business his 101 00:06:58,570 --> 00:06:59,570 in 1964. 102 00:07:00,350 --> 00:07:04,790 Under his family's guidance, it eventually grows into one of the most 103 00:07:04,790 --> 00:07:06,510 driving schools in the country. 104 00:07:06,950 --> 00:07:08,450 This is my dad right here. 105 00:07:08,810 --> 00:07:10,810 This is back about 1984. 106 00:07:12,170 --> 00:07:16,660 Remember. We adjust them, but we never trust them. And to check the blind spot, 107 00:07:16,800 --> 00:07:18,100 we always look over our shoulder. 108 00:07:18,360 --> 00:07:22,360 We are the oldest and largest family -owned driving school in the nation. 109 00:07:22,580 --> 00:07:25,280 We've taught more people how to drive than any other driving school has in the 110 00:07:25,280 --> 00:07:27,640 history of driver education schools. 111 00:07:28,060 --> 00:07:33,200 The school's growth parallels the growth of another Albuquerque company, Vaughn 112 00:07:33,200 --> 00:07:34,400 Company Realtors. 113 00:07:35,160 --> 00:07:39,780 In the early 90s, Vaughn reaches out to McGinnis' father to tell him about a 114 00:07:39,780 --> 00:07:42,100 real estate investment program he's starting up. 115 00:07:42,430 --> 00:07:45,610 one that can guarantee him 20 % returns. 116 00:07:46,230 --> 00:07:52,570 I was there when Doug Vaughn approached him. And so he gave Doug quite a bit of 117 00:07:52,570 --> 00:07:54,370 money and started investing. 118 00:07:54,930 --> 00:08:00,030 The investment goes so well that David McGinnis begins to invest his own money, 119 00:08:00,150 --> 00:08:01,470 as does his brother. 120 00:08:01,770 --> 00:08:03,850 He always had a sterling reputation. 121 00:08:04,170 --> 00:08:10,550 I never had any doubt that he was a pillar of our community. 122 00:08:11,590 --> 00:08:16,250 McGinnis' beliefs are confirmed when month after month he finds a check 123 00:08:16,250 --> 00:08:17,510 for him in his mailbox. 124 00:08:18,270 --> 00:08:22,670 Right on time. Right on time. He said, I'd always get a check faithfully. 125 00:08:23,230 --> 00:08:28,450 For citizens of Albuquerque, an association with Doug Vaughn is a symbol 126 00:08:28,450 --> 00:08:29,450 success. 127 00:08:29,890 --> 00:08:34,270 I was quite proud of this. It says, Wayne Unzi, the most valuable associate 128 00:08:34,270 --> 00:08:35,270 the year, 2008. 129 00:08:35,850 --> 00:08:39,510 Wayne Unzi joins Vaughn Company Realtors in 1987. 130 00:08:40,460 --> 00:08:44,740 when he merges his business brokerage with the highly respected realty 131 00:08:45,080 --> 00:08:51,940 The Vaughn Company logo is the knight, and that was to signify security and 132 00:08:51,940 --> 00:08:57,160 trust. Anzi becomes the head of the business brokerage division of Vaughn 133 00:08:57,160 --> 00:08:58,160 Company Realtors. 134 00:08:58,640 --> 00:09:01,580 just one more branch of an ever -expanding empire. 135 00:09:02,060 --> 00:09:04,540 We had a mortgage company. We had a title company. 136 00:09:04,760 --> 00:09:07,780 We had all those different divisions within real estate. 137 00:09:08,000 --> 00:09:12,160 He had a property management company. I mean, all these different divisions, 138 00:09:12,400 --> 00:09:15,780 they're all profit centers, we think, so they're all contributing. 139 00:09:16,080 --> 00:09:20,820 And amazingly, Unzi doesn't even know about the biggest revenue source of all, 140 00:09:21,040 --> 00:09:22,700 the promissory note program. 141 00:09:23,450 --> 00:09:27,810 It was a little strange that he didn't say anything to me about it. And I don't 142 00:09:27,810 --> 00:09:31,310 just mean me. As far as I know, he never said anything to any of the managers 143 00:09:31,310 --> 00:09:34,130 about it. It's an odd but telling deception. 144 00:09:35,190 --> 00:09:38,110 We couldn't find one investor that was actually an employee. 145 00:09:38,330 --> 00:09:42,450 I have to assume that it was a calculated measure by Doug to hide the 146 00:09:42,450 --> 00:09:45,870 scheme from them because everybody else he ever encountered, he asked to invest. 147 00:09:46,470 --> 00:09:50,070 Perhaps he doesn't want people so close to the books to be able to see what he's 148 00:09:50,070 --> 00:09:51,070 up to. 149 00:09:51,130 --> 00:09:56,070 Because soon after starting the promissory note program, he starts 150 00:09:56,070 --> 00:09:57,870 the company's numbers from employees. 151 00:09:58,550 --> 00:10:04,630 It was probably after I'd been with Doug for 10 years, might not even have been 152 00:10:04,630 --> 00:10:10,510 that long, but all of a sudden we were having manager's meetings and no 153 00:10:10,510 --> 00:10:13,910 financials were being produced, which was a puzzle. 154 00:10:15,000 --> 00:10:19,900 Hiding the books isn't as much of a puzzle to Coach Lear and Michael D 155 00:10:19,900 --> 00:10:20,900 of the SEC. 156 00:10:21,540 --> 00:10:25,860 Vaughn has a little secret about his massive empire that he doesn't want 157 00:10:25,860 --> 00:10:30,740 out. The Vaughn company was not a successful business. It didn't make 158 00:10:30,740 --> 00:10:33,440 money to cover its expenses each year. 159 00:10:33,680 --> 00:10:38,580 They had been losing increasing amounts of money going back to 1993. Every year 160 00:10:38,580 --> 00:10:39,860 they were losing more than the year before. 161 00:10:40,280 --> 00:10:43,340 The company in total has lost over $60 million. 162 00:10:44,680 --> 00:10:48,880 If Vaughn doesn't keep getting money from investors to pay past debts, his 163 00:10:48,880 --> 00:10:50,520 business would immediately collapse. 164 00:10:51,740 --> 00:10:56,960 But from the outside, it looks like a hugely successful company. And in this 165 00:10:56,960 --> 00:10:59,060 fraud, image is everything. 166 00:10:59,680 --> 00:11:03,420 Your average investor is driving down a street and sees multiple Vaughn Company 167 00:11:03,420 --> 00:11:07,640 realtor signs, walks into a building with marble floors and a huge... 168 00:11:07,870 --> 00:11:12,150 $1 ,000 chair sits in a chair with Doug Vaughn where he tells them, look, I've 169 00:11:12,150 --> 00:11:14,630 paid on time for 20 some odd years. 170 00:11:14,910 --> 00:11:18,810 It lulls the investor into their confidence because they believe there's 171 00:11:18,810 --> 00:11:19,870 chance they could lose their money. 172 00:11:20,210 --> 00:11:23,670 And again, it really goes to show just how devious Doug Vaughn was. 173 00:11:24,670 --> 00:11:29,170 When American greed returns, Vaughn doesn't just flaunt his wealth to 174 00:11:29,370 --> 00:11:31,930 He wants the whole city to see what he's got. 175 00:11:32,520 --> 00:11:35,820 My personal belief is that Doug Vaughn needed to feel more important or better 176 00:11:35,820 --> 00:11:39,940 than everybody else, so he bought items that made him look extremely wealthy and 177 00:11:39,940 --> 00:11:40,940 extremely successful. 178 00:11:53,080 --> 00:11:57,800 In the mid -2000s, Doug Vaughn's investment program has everyone singing 179 00:11:57,800 --> 00:11:58,800 praises. 180 00:11:59,220 --> 00:12:03,460 He's offering investors anywhere from 10 % to 20 % interest on their 181 00:12:03,460 --> 00:12:06,220 investments. And what's more, he's delivering. 182 00:12:07,420 --> 00:12:13,420 By 2010, Vaughn has investors in 31 states and in countries as far away as 183 00:12:13,420 --> 00:12:17,620 Israel. And it seems all of them are willing to put in a good word for Doug 184 00:12:17,620 --> 00:12:21,300 Vaughn. They believed in Doug Vaughn because Doug Vaughn was a charismatic 185 00:12:21,300 --> 00:12:24,680 individual who was able to fool them. So they then went out and solicited 186 00:12:24,680 --> 00:12:27,760 investors and gave testimonies. You know, and these testimonies said one... 187 00:12:28,030 --> 00:12:31,310 central thing that matters for a Ponzi scheme, we always get paid. 188 00:12:31,990 --> 00:12:37,030 Philip Dugan is a retired Marine who served in both the Korean and Vietnam 189 00:12:37,390 --> 00:12:42,590 In 2008, he has some money he wants to invest for his grandchildren's 190 00:12:43,290 --> 00:12:47,390 He received several letters of endorsement from Vaughn Company 191 00:12:48,150 --> 00:12:51,030 I have personal knowledge of Doug Vaughn for 35 years. 192 00:12:51,290 --> 00:12:55,450 During that time, I have never known him to be anything other than honest and 193 00:12:55,450 --> 00:12:56,450 forthright. 194 00:12:58,320 --> 00:13:04,680 I checked with my broker and some other people in the real estate industry, and 195 00:13:04,680 --> 00:13:08,480 two things that they said about Doug Vaughn. One, he was a good businessman, 196 00:13:08,480 --> 00:13:10,140 the other thing, he was honest. 197 00:13:10,940 --> 00:13:15,460 Dugan gets enough positive feedback from other investors that he decides to meet 198 00:13:15,460 --> 00:13:16,840 with Vaughn face -to -face. 199 00:13:17,400 --> 00:13:22,140 Vaughn tells Dugan that he'll start him out with an annual interest rate of 12%, 200 00:13:22,140 --> 00:13:25,600 paid monthly, with a little sweetener as a guarantee. 201 00:13:26,480 --> 00:13:33,440 He said that if for some reason I miss one month, your rate will go from 12 % 202 00:13:33,440 --> 00:13:40,080 18%. If I miss two months in a row, it will go from 18 % to 24%. 203 00:13:40,080 --> 00:13:44,860 Dugan invests $50 ,000, and everything goes perfectly. 204 00:13:45,800 --> 00:13:49,480 So in a few weeks, I come back in with another investment, and it just 205 00:13:49,480 --> 00:13:55,610 progressed. Within two years, Dugan has $400 ,000 invested and is comforted to 206 00:13:55,610 --> 00:13:58,650 believe that his grandchildren's futures are secure. 207 00:13:59,470 --> 00:14:02,990 He never actually missed a full month with me ever. 208 00:14:03,390 --> 00:14:09,610 I was hoping he would because my interest would jump up to 16, 18%. Doug 209 00:14:09,610 --> 00:14:12,050 appears to be making his interest payments with ease. 210 00:14:12,450 --> 00:14:15,710 And judging by the rest of his lifestyle, it's no wonder. 211 00:14:15,930 --> 00:14:18,110 The man is swimming in money. 212 00:14:18,960 --> 00:14:22,140 He was big and he liked to live big, he liked to show off. 213 00:14:22,340 --> 00:14:27,920 One got the impression that he might have been maybe a little nerdy growing 214 00:14:27,920 --> 00:14:31,860 and was trying to compensate in some ways with the money and the flash. 215 00:14:32,300 --> 00:14:36,380 Well, he was very competitive, there's no doubt about it. I mean, he wasn't the 216 00:14:36,380 --> 00:14:40,520 glibest person in the world, he wasn't the handsomest man in the world, but he 217 00:14:40,520 --> 00:14:43,560 certainly had the persistence that led to his success. 218 00:14:43,940 --> 00:14:48,320 He bragged about the cars that he had, about the motorcycles that he had. 219 00:14:48,940 --> 00:14:49,940 Yeah, he had a jig. 220 00:14:50,120 --> 00:14:52,080 For a while he had, I think it was Ferrari. 221 00:14:53,960 --> 00:14:58,140 He had a big mansion, almost 7 ,000 square feet, lived by himself. 222 00:14:59,040 --> 00:15:03,600 Seven bathrooms, a wine cellar that would hold 400 bottles of wine. 223 00:15:04,040 --> 00:15:08,340 It's my understanding the two lions sitting out in front were imported at 224 00:15:08,340 --> 00:15:10,000 tune of about $25 ,000 apiece. 225 00:15:10,700 --> 00:15:14,380 Now, if he's going to put those on the outside, you've got to understand what's 226 00:15:14,380 --> 00:15:15,380 going inside. 227 00:15:15,620 --> 00:15:18,140 He had a pool table. He had a poker table. 228 00:15:18,600 --> 00:15:21,620 I'm sure he put the best furniture he could get his hands on in there. 229 00:15:22,180 --> 00:15:27,240 Jewelry for his girlfriend, luxury items, memorabilia in his house, a 230 00:15:27,240 --> 00:15:29,180 diamond, hourglass. 231 00:15:29,500 --> 00:15:34,180 The trappings were incredible, I have to say that. I mean, the tastes weren't 232 00:15:34,180 --> 00:15:37,400 exactly my taste, but I didn't have that kind of money either. 233 00:15:38,680 --> 00:15:43,640 It leaves observers in awe of the cash that must be flowing through Vaughn's 234 00:15:43,640 --> 00:15:47,920 business. You still scratch the back of your head and say, man, how much money 235 00:15:47,920 --> 00:15:50,200 would I need to support this lifestyle? 236 00:15:50,540 --> 00:15:55,500 And again, the assumption is that he was making it legitimately. 237 00:15:56,120 --> 00:15:58,180 If only that were true. 238 00:15:59,000 --> 00:16:03,480 From a Pontington situation, this is, in my estimation, one of the more simpler 239 00:16:03,480 --> 00:16:04,480 to understand. 240 00:16:04,880 --> 00:16:09,340 You take money for something and you use that money to pay the investors that 241 00:16:09,340 --> 00:16:10,179 are already invested. 242 00:16:10,180 --> 00:16:14,040 You're not doing anything legitimate with the money. You're simply using it 243 00:16:14,040 --> 00:16:15,740 pay existing investors. 244 00:16:16,660 --> 00:16:23,080 Since 1993, Doug Vaughn has raised more than $70 million from investors on the 245 00:16:23,080 --> 00:16:26,520 promise of delivering high rates of return on real estate investments. 246 00:16:27,580 --> 00:16:31,680 But the only investment he's made is in the belief that there will always be new 247 00:16:31,680 --> 00:16:33,240 investors to rope in. 248 00:16:34,120 --> 00:16:38,120 By late 2009, that belief begins to be shaken. 249 00:16:39,880 --> 00:16:43,860 David McGinnis and his family have been invested with Vaughn for nearly 20 250 00:16:43,860 --> 00:16:49,360 years. And for their entire relationship, McGinnis has access to his 251 00:16:49,360 --> 00:16:50,880 whenever he wants it. 252 00:16:51,120 --> 00:16:53,000 But suddenly, it's not there. 253 00:16:53,380 --> 00:16:56,400 Two or three times a year, I'd have to call him up and say, Doug, I need to 254 00:16:56,400 --> 00:17:01,680 up and pull out $20 ,000 or $50 ,000, $70 ,000, whatever it might be. But this 255 00:17:01,680 --> 00:17:02,720 time, I asked him. 256 00:17:03,380 --> 00:17:07,359 You know, Doug, I need to go tell 50 ,000. He says, David, I don't have it. 257 00:17:08,400 --> 00:17:12,140 McGinnis calls back a couple of weeks later and gets the same response. 258 00:17:12,960 --> 00:17:15,940 I said, Doug, I'm going to come down to your place right now. 259 00:17:17,339 --> 00:17:21,720 And if I don't have a check in my hand for that, I'm going to kick the whole 260 00:17:21,720 --> 00:17:22,720 side of your building out. 261 00:17:24,060 --> 00:17:25,380 And, you know, I went down there. 262 00:17:26,220 --> 00:17:28,079 Secretary went out and got him. 263 00:17:28,780 --> 00:17:33,270 And he came out. He said, David, he says, Here's a check. 264 00:17:34,890 --> 00:17:37,630 And it's not from what you want. 265 00:17:38,310 --> 00:17:40,630 But he says, that's the best I can do right now. 266 00:17:41,370 --> 00:17:42,930 And I knew something was wrong. 267 00:17:43,710 --> 00:17:45,310 I knew definitely something was wrong. 268 00:17:46,130 --> 00:17:49,050 David McGinnis doesn't know how right he is. 269 00:17:49,650 --> 00:17:54,010 Mr. Vaughn and his company were in debt up to their eyeball. 270 00:17:54,590 --> 00:17:59,370 And it appeared that Vaughn had obligated his company to make interest 271 00:17:59,370 --> 00:18:04,110 at that point in time that totaled more than $1 million a month. 272 00:18:05,890 --> 00:18:09,710 Even the land of enchantment isn't that enchanted. 273 00:18:10,290 --> 00:18:15,610 When American Greed returns, Doug Vaughn tries to lure in more investors, but he 274 00:18:15,610 --> 00:18:18,310 ends up hooking one fish he'd like to throw back. 275 00:18:18,890 --> 00:18:19,890 Yes. 276 00:18:21,230 --> 00:18:23,230 Very well, thank you. Good to meet you, too. 277 00:18:38,090 --> 00:18:40,870 Albuquerque real estate mogul Doug Vaughn is desperate. 278 00:18:41,810 --> 00:18:46,410 He's been promising investors returns on investments ranging anywhere from 8 to 279 00:18:46,410 --> 00:18:47,870 40 percent per year. 280 00:18:48,390 --> 00:18:53,190 But suddenly, after nearly 20 years, he can't pay on his promises. 281 00:18:53,750 --> 00:19:00,490 So in December of 2009, when he's telling old ladies and investors that 282 00:19:00,490 --> 00:19:05,470 everything's great, he needs to come up with $1 .1 million in money each month. 283 00:19:05,830 --> 00:19:07,590 Otherwise, the Ponzi scheme would collapse. 284 00:19:08,030 --> 00:19:13,910 Bond needs more investors, but in his desperation, he brings in the wrong one. 285 00:19:14,450 --> 00:19:19,070 Daniel Tanaka is a senior special agent for the New Mexico Securities Division. 286 00:19:19,770 --> 00:19:25,530 In September 2009, he gets word that a company named Integra Investment Group 287 00:19:25,530 --> 00:19:27,850 pitching questionable investment opportunities. 288 00:19:28,530 --> 00:19:33,350 Tanaka learns that its owner, Tony Oliva, isn't licensed to sell 289 00:19:33,870 --> 00:19:38,470 He reaches out to Oliva and records the conversation to see how deep this 290 00:19:38,470 --> 00:19:39,550 conspiracy may go. 291 00:19:40,190 --> 00:19:44,890 Oliva pitches one investment vehicle that particularly grabs Tanaka's 292 00:19:49,040 --> 00:19:51,400 company. Have you ever seen their signs throughout New Mexico? 293 00:19:51,640 --> 00:19:55,460 You can ask anybody about Doug Vaughn in New Mexico, and this guy's been around 294 00:19:55,460 --> 00:19:59,940 for 38 years with an impeccable, and I mean impeccable, career. 295 00:20:01,560 --> 00:20:04,600 Tanaka wants to know more about the Vaughn company. 296 00:20:04,860 --> 00:20:09,020 He creates an undercover identity and gives Doug Vaughn a call. 297 00:20:09,960 --> 00:20:10,960 Doug Vaughn speaking. 298 00:20:11,560 --> 00:20:13,880 Hello, Doug. This is Dan Thomas. How are you? 299 00:20:14,320 --> 00:20:19,960 I created the backstory of Daniel Thomas, a disabled former insurance 300 00:20:19,960 --> 00:20:23,840 who'd been in a terrible car accident and had received a large insurance 301 00:20:23,840 --> 00:20:29,800 settlement. And my undercover identity was looking for a safe, long -term, 302 00:20:29,800 --> 00:20:34,080 guaranteed investment that was going to provide me an income stream as long as I 303 00:20:34,080 --> 00:20:35,360 needed it, because I couldn't work. 304 00:20:35,600 --> 00:20:38,680 Within two minutes, Doug Vaughn begins his pitch. 305 00:20:54,470 --> 00:20:58,950 Immediately, Tanaka sees an opportunity to test Vaughn's willingness to stray 306 00:20:58,950 --> 00:21:00,510 from the straight and narrow. 307 00:21:00,810 --> 00:21:04,570 He happens to mention, just as an aside, that he's selling these investments to 308 00:21:04,570 --> 00:21:05,570 accredited investors. 309 00:21:06,750 --> 00:21:07,810 So I play dumb. 310 00:21:27,010 --> 00:21:31,690 Well, based on my cover identity, I don't meet any of these eligibility 311 00:21:31,690 --> 00:21:33,990 requirements. And I tell them that. 312 00:22:02,149 --> 00:22:06,670 It's disingenuous at that because he's telling me this is really just to make 313 00:22:06,670 --> 00:22:11,750 sure that elderly widows don't put their last $10 ,000 into this investment when 314 00:22:11,750 --> 00:22:16,310 he was doing exactly that, when he was taking elderly widows for their last $10 315 00:22:16,310 --> 00:22:17,310 ,000. 316 00:22:18,220 --> 00:22:23,140 In the meantime, the SEC has also caught wind of a possible fraud at Vaughn 317 00:22:23,140 --> 00:22:26,860 Company Realtors, and they've opened an investigation of their own. 318 00:22:27,380 --> 00:22:33,400 We were completely upfront with Mr. Vaughn that we wanted documents from him 319 00:22:33,400 --> 00:22:36,900 relating to any kind of investments he was offering. 320 00:22:37,640 --> 00:22:42,960 Lear has subpoenaed multiple records multiple times from Vaughn. But not only 321 00:22:42,960 --> 00:22:45,300 does Vaughn continue to scam investors... 322 00:22:45,630 --> 00:22:49,970 He seems to think that he can simply disregard the SEC's interest in his 323 00:22:49,970 --> 00:22:53,570 by providing only a small portion of what they ask for. 324 00:22:53,770 --> 00:22:58,770 I think what happened can be best described as a game of cat and mouse 325 00:22:58,770 --> 00:23:01,670 Mr. Vaughn and his counsel and us. 326 00:23:02,320 --> 00:23:07,600 And with each step, they would attempt to get us to back off, I think. 327 00:23:07,860 --> 00:23:13,100 Enclosed are the following documents. As you can see, everything is above board, 328 00:23:13,240 --> 00:23:17,140 and you can stop wasting your time investigating Mr. Vaughn. 329 00:23:17,560 --> 00:23:21,180 The SEC doesn't buy it. They want bank records. 330 00:23:21,460 --> 00:23:24,060 But Vaughn won't tell them where he holds his accounts. 331 00:23:25,000 --> 00:23:29,820 That's where prospective investor Daniel Thomas, a .k .a. Special Agent Tanaka, 332 00:23:29,880 --> 00:23:30,880 comes in. 333 00:23:31,260 --> 00:23:35,540 He's in contact with the SEC and believes that he has a way of getting 334 00:23:35,540 --> 00:23:37,140 account information they're looking for. 335 00:23:37,600 --> 00:23:42,780 He puts on a wire and drives down to Albuquerque for a face -to -face with 336 00:23:42,780 --> 00:23:43,780 Vaughn himself. 337 00:23:44,120 --> 00:23:45,120 Good morning. 338 00:23:45,800 --> 00:23:50,420 Yes, I'm Dan Thomas. I have a 10 .30 appointment with Doug. When the two sit 339 00:23:50,420 --> 00:23:55,320 down together and Tanaka tells Vaughn his story, he gets an indication of just 340 00:23:55,320 --> 00:23:59,600 how low Vaughn is willing to stoop to scam one more investor. 341 00:24:00,850 --> 00:24:06,190 It was a very serious accident, and I spent months recovering just the ability 342 00:24:06,190 --> 00:24:07,330 to walk normally. 343 00:24:07,610 --> 00:24:10,370 I let Doug know, hey, I can't work. 344 00:24:10,870 --> 00:24:14,730 This is all the money I have right now, and I may or may not be able to get 345 00:24:14,730 --> 00:24:15,649 money in the future. 346 00:24:15,650 --> 00:24:18,830 I'm painting the picture of a person that you don't want to rip off. 347 00:24:19,690 --> 00:24:25,190 I'm painting the picture of a person who a legitimate person should walk away 348 00:24:25,190 --> 00:24:28,450 from. Doug Vaughn should walk away from me and say, you know what, this is too 349 00:24:28,450 --> 00:24:29,450 risky for you. 350 00:24:30,700 --> 00:24:34,900 Frankly, we had very little discussion of risk at all. He never paused. He 351 00:24:34,900 --> 00:24:38,820 offered any alternative. He just plowed forward with a sales pitch because he 352 00:24:38,820 --> 00:24:39,820 wanted my money. 353 00:24:39,840 --> 00:24:44,600 A 13 % fixed rate of return is really nothing to sneeze at. No, and I think 354 00:24:44,600 --> 00:24:45,800 program is so successful. 355 00:24:46,920 --> 00:24:49,900 Tanaka agrees to invest $250 ,000. 356 00:24:50,740 --> 00:24:55,240 Now comes the fateful moment of his gambit. If he's going to get Vaughn's 357 00:24:55,240 --> 00:24:57,580 information, now is the time. 358 00:24:58,430 --> 00:25:01,090 If you're going to give us a check today, it's in today's date. 359 00:25:01,290 --> 00:25:02,890 No, I'm going to have to wire you the funds. 360 00:25:03,190 --> 00:25:09,830 When Vaughn emails Tanaka the wiring instructions, Tanaka gives the SEC the 361 00:25:09,830 --> 00:25:11,450 information they've been waiting for. 362 00:25:11,890 --> 00:25:15,130 It provides a roadmap for the entire fraud. 363 00:25:15,730 --> 00:25:21,210 It really only took us a few hours of going through those documents to come to 364 00:25:21,210 --> 00:25:24,250 the basic conclusion that this had been a Ponzi scheme. 365 00:25:24,910 --> 00:25:29,090 And it's clear to them that this is a Ponzi scheme on the verge of collapse. 366 00:25:30,030 --> 00:25:33,630 It's getting harder and harder for him to recruit new investors into the 367 00:25:33,630 --> 00:25:37,930 and keep bringing enough money in to keep the ship afloat. 368 00:25:38,350 --> 00:25:40,430 So by the end, he's desperate. 369 00:25:40,690 --> 00:25:43,910 By the end, he'll take anybody with a pulse and a checkbook. 370 00:25:44,650 --> 00:25:49,050 Next on American Greed, when Vaughn feels the vice of law enforcement 371 00:25:49,050 --> 00:25:51,870 around him, will he be able to cover his tracks? 372 00:25:52,680 --> 00:25:55,920 I'm very concerned that there's either been a compromise to the investigation 373 00:25:55,920 --> 00:25:59,400 and that he's destroying evidence or that he's just proactively destroying 374 00:25:59,400 --> 00:26:04,100 evidence. To hear more of Vaughn's meetings with Special Agent Tanaka, go 375 00:26:04,100 --> 00:26:06,620 AmericanGreed .cnbc .com. 376 00:26:07,660 --> 00:26:10,800 Want inside information from behind the scenes of the show? 377 00:26:11,000 --> 00:26:12,880 Join the Greed social network. 378 00:26:13,380 --> 00:26:16,720 Like us on American Greed's Facebook page. We'll be right back. 379 00:26:25,480 --> 00:26:30,040 Real estate titan Doug Vaughn has been the model of success in Albuquerque for 380 00:26:30,040 --> 00:26:31,140 almost four decades. 381 00:26:31,680 --> 00:26:35,920 He's raised more than $70 million into his promissory note program. 382 00:26:36,420 --> 00:26:41,360 But by the beginning of 2010, it appears the coffers are empty. 383 00:26:41,860 --> 00:26:47,220 I think his financial statements for the Vaughn Company realtor showed his bank 384 00:26:47,220 --> 00:26:48,560 account was overdrawn by $5 million. 385 00:26:48,920 --> 00:26:52,380 All of the money was used to subsidize... 386 00:26:52,730 --> 00:26:57,410 the failing company, Vaughn Company Realtors, to pay earlier investors their 387 00:26:57,410 --> 00:27:03,090 returns with new investor money and to lead a very lavish, extravagant 388 00:27:03,090 --> 00:27:04,830 lifestyle. That's where the money went. 389 00:27:05,530 --> 00:27:09,810 Vaughn apparently believes that he's not only impervious to the arithmetic of a 390 00:27:09,810 --> 00:27:13,010 checking account, but to economic realities as well. 391 00:27:13,750 --> 00:27:18,090 Despite being in the middle of a cratered real estate market, he 392 00:27:18,090 --> 00:27:20,490 tell investors he's on the top of the mountain. 393 00:27:21,320 --> 00:27:27,760 I think Vaughn recycled the same newsletters and updates month after 394 00:27:28,260 --> 00:27:33,220 May 5th, 2009, it says, Dear Vaughn Capital Investor, please finally close 395 00:27:33,220 --> 00:27:34,220 profit and loss statement. 396 00:27:34,500 --> 00:27:37,920 As you can see from the financial statement, we've done quite well. 397 00:27:38,240 --> 00:27:42,860 August 20th, 2009. As you can see from the financial statement, we've done 398 00:27:42,860 --> 00:27:45,220 well. December 14th, 2009. 399 00:27:45,420 --> 00:27:48,620 As you can see from the financial statement, we've done quite well. 400 00:27:49,880 --> 00:27:50,880 Not true. 401 00:27:51,400 --> 00:27:52,620 Yeah, it's just not true. 402 00:27:52,920 --> 00:27:57,020 His company was hemorrhaging money, and his pondering scheme was falling apart 403 00:27:57,020 --> 00:27:59,960 at the time he was doing that. And of course, when he's sending this out, he's 404 00:27:59,960 --> 00:28:03,780 not only sending to investors to keep them invested, he's sending out to new 405 00:28:03,780 --> 00:28:05,480 investors to solicit new money. 406 00:28:06,120 --> 00:28:11,400 Vaughn may be putting a brave face forward, but those closer to him see 407 00:28:11,400 --> 00:28:12,600 a man overwhelmed. 408 00:28:13,200 --> 00:28:19,240 I was at one party with him, and he really hit the sauce and got... 409 00:28:19,810 --> 00:28:23,610 Very, very drunk that night. And I'd never seen him drunk before. 410 00:28:24,430 --> 00:28:29,710 I mean, I've seen him drink before, but never totally wasted. And he was totally 411 00:28:29,710 --> 00:28:32,650 wasted. And that was a bad feeling. 412 00:28:33,430 --> 00:28:38,470 The stress mounds as Vaughn will go to any lengths to keep his head above 413 00:28:38,830 --> 00:28:44,350 We heard voicemails of Doug Vaughn soliciting $5 ,000 from elderly people 414 00:28:44,350 --> 00:28:48,330 end. Doug Vaughn would take money from anybody and didn't have any regards for 415 00:28:48,330 --> 00:28:49,330 how it affected him. 416 00:28:49,450 --> 00:28:55,410 By the middle of February 2010, $5 ,000 at a time isn't going to cut it, and 417 00:28:55,410 --> 00:28:57,150 Vaughn is having trouble making payments. 418 00:28:58,310 --> 00:29:03,210 He calls a handful of his top investors to his office to ask for patience. 419 00:29:03,610 --> 00:29:06,210 One of those investors is Phil Dugan. 420 00:29:06,470 --> 00:29:10,090 And he said that he was having cash flow problems, was not able to get the 421 00:29:10,090 --> 00:29:11,090 checks out. 422 00:29:11,230 --> 00:29:16,610 We all were so interested that we asked him, what could we possibly do to help 423 00:29:16,610 --> 00:29:18,730 you survive? Because if you survive, we survive. 424 00:29:19,280 --> 00:29:24,620 And you feel foolish about it now on something like that. And I'm going on 425 00:29:24,620 --> 00:29:31,220 camera with this about how stupid it was. But it just, his personality just 426 00:29:31,220 --> 00:29:32,220 by you. 427 00:29:32,700 --> 00:29:37,600 That he was just the brother that needed some help. 428 00:29:39,220 --> 00:29:42,900 Special Agent Daniel Tanaka is in no mood to help. 429 00:29:43,600 --> 00:29:48,120 By the middle of February, he is preparing search warrants for Vaughn's 430 00:29:48,120 --> 00:29:49,120 office. 431 00:29:49,260 --> 00:29:52,700 But before he can get them to a judge, the plan hits a snag. 432 00:29:55,980 --> 00:30:00,360 Another agent from this office, Special Agent Tim Fraser, went to the offices of 433 00:30:00,360 --> 00:30:02,760 the Vaughn Company Realtors to do some routine surveillance. 434 00:30:03,220 --> 00:30:10,100 And while he was there, he saw vehicles being loaded up with boxes of documents 435 00:30:10,100 --> 00:30:11,640 and being carted away. 436 00:30:12,200 --> 00:30:16,900 Despite being concerned that evidence is being destroyed, there's nothing Tanaka 437 00:30:16,900 --> 00:30:17,940 can do to stop it. 438 00:30:18,410 --> 00:30:20,190 The warrant's not signed yet. The warrant's not even done. 439 00:30:20,410 --> 00:30:21,990 We don't have our personnel ready. 440 00:30:22,890 --> 00:30:24,690 So we just had to let it go. 441 00:30:25,410 --> 00:30:29,830 Fortunately, it turns out that Vaughn isn't destroying records. He is 442 00:30:29,830 --> 00:30:31,190 consolidating his offices. 443 00:30:31,950 --> 00:30:35,470 The next morning, Tanaka and the rest of New Mexico learn why. 444 00:30:36,290 --> 00:30:42,310 On February 22, 2010, Doug Vaughn and the Vaughn Company Realtors file for 445 00:30:42,310 --> 00:30:43,310 bankruptcy. 446 00:30:45,870 --> 00:30:50,210 Special Agent Daniel Tanaka hasn't spoken to Vaughn since he left his 447 00:30:50,210 --> 00:30:53,170 that Friday in October under the guise of Daniel Thomas. 448 00:30:53,950 --> 00:30:59,350 But now he decides it's time to let Vaughn know who he really is and that 449 00:30:59,350 --> 00:31:01,190 there's a criminal investigation underway. 450 00:31:01,830 --> 00:31:06,970 He and another agent from the New Mexico Securities Division take a drive down 451 00:31:06,970 --> 00:31:11,710 to Albuquerque to visit him inside his gated community called Savignon. 452 00:31:12,010 --> 00:31:13,490 As we arrive... 453 00:31:13,820 --> 00:31:18,120 I notice immediately that there are security cameras on the facade of the 454 00:31:18,440 --> 00:31:21,600 So I figure that as soon as we pull into the driveway, we are under observation. 455 00:31:21,880 --> 00:31:22,980 He knows we're there. 456 00:31:23,640 --> 00:31:27,480 And then around the corner comes Doug Vaughn driving a black Jaguar. 457 00:31:27,800 --> 00:31:32,460 And at that point, I took out my badge and credential, and I held them up. 458 00:31:32,920 --> 00:31:36,920 I wave at Vaughn to stop so I can talk to him. 459 00:31:37,280 --> 00:31:39,860 And he looks me right in the eye and floors it. 460 00:31:40,640 --> 00:31:43,500 Tanaka and his partner get in their car and follow. 461 00:31:43,700 --> 00:31:47,100 And he drove at a fairly high rate of speed as he was fleeing. 462 00:31:47,520 --> 00:31:52,480 He eventually calmed down, slowed down, and began to drive more normally, and we 463 00:31:52,480 --> 00:31:53,359 followed him. 464 00:31:53,360 --> 00:31:57,540 Tanaka doesn't have an arrest warrant for the fraud, but he can arrest him for 465 00:31:57,540 --> 00:31:58,560 another transgression. 466 00:31:59,140 --> 00:32:04,040 His driver's license had been revoked because of an aggravated DWI arrest. 467 00:32:04,320 --> 00:32:09,000 So when I saw Doug Vaughn operating his Jaguar, he was committing a crime right 468 00:32:09,000 --> 00:32:09,839 in my presence. 469 00:32:09,840 --> 00:32:14,220 Vaughn eventually leads them to the parking lot of his title company and 470 00:32:14,220 --> 00:32:15,220 out of the car. 471 00:32:15,420 --> 00:32:21,420 So he pulls nose into a parking space, and we pulled up in a T right behind 472 00:32:21,440 --> 00:32:25,600 blocking his vehicle in. And at that point, I exited our vehicle, approached 473 00:32:25,600 --> 00:32:27,300 him, and placed him under arrest. 474 00:32:27,500 --> 00:32:31,600 And what was interesting at the time is that Doug Vaughn never asked why he was 475 00:32:31,600 --> 00:32:32,359 under arrest. 476 00:32:32,360 --> 00:32:35,660 As the author of a $75 million fraud, 477 00:32:36,410 --> 00:32:40,550 Being arrested for a mere traffic violation seems to be the furthest thing 478 00:32:40,550 --> 00:32:41,730 Doug Vaughn's mind. 479 00:32:42,130 --> 00:32:45,630 I think he thought this was the end. I think as we were transporting him to the 480 00:32:45,630 --> 00:32:49,230 detention center, that he believed in his heart of hearts, that it was all 481 00:32:49,230 --> 00:32:50,810 and the world was crashing in on him. 482 00:32:51,410 --> 00:32:56,370 And when the realization hit him that we were arresting him for a misdemeanor as 483 00:32:56,370 --> 00:33:01,730 opposed to for perpetrating a $75 million Ponzi scheme, he immediately 484 00:33:01,750 --> 00:33:04,210 He became a different person in that moment. 485 00:33:04,890 --> 00:33:06,650 as he realized, oh, this isn't the big bust. 486 00:33:06,870 --> 00:33:08,270 They're not taking me down. 487 00:33:09,450 --> 00:33:13,930 Vaughn is allowed to walk out of the detention center on his own 488 00:33:14,030 --> 00:33:16,290 but he doesn't stay relaxed for long. 489 00:33:17,490 --> 00:33:22,010 Less than four weeks later, the SEC files a complaint in New Mexico's civil 490 00:33:22,010 --> 00:33:24,250 court that lays out the entire fraud. 491 00:33:24,710 --> 00:33:29,930 It claims Vaughn defrauded more than 600 investors of over $80 million. 492 00:33:31,150 --> 00:33:35,430 The SEC also gets a temporary restraining order and freezes all of 493 00:33:35,430 --> 00:33:40,350 assets. After all, Vaughn shows no signs of discontinuing his fraud. 494 00:33:40,910 --> 00:33:45,090 As late as maybe the third week in February, he is still taking in money. 495 00:33:45,410 --> 00:33:50,930 And so our job as a regulator is to stop it. In the meantime, Special Agent 496 00:33:50,930 --> 00:33:54,190 Daniel Tanaka continues his criminal investigation. 497 00:33:54,910 --> 00:33:59,550 And on April 21st, with the help of the Secret Service and U .S. Postal Service, 498 00:34:00,030 --> 00:34:04,530 He conducts a raid on Vaughn's home, collecting several documents related to 499 00:34:04,530 --> 00:34:08,630 fraud. But he soon finds out there's one place he didn't look. 500 00:34:09,090 --> 00:34:10,949 The search occurred without any incident. 501 00:34:11,190 --> 00:34:13,310 It unfolded how we expected it to. 502 00:34:13,670 --> 00:34:14,929 And as we were leaving, 503 00:34:15,650 --> 00:34:22,130 Mr. Vaughn's next -door neighbor approached one of the agents and asked, 504 00:34:22,469 --> 00:34:24,790 Hey, did you find the secret room? 505 00:34:25,370 --> 00:34:28,650 Tanaka calls all the agents back to the master bedroom. 506 00:34:29,360 --> 00:34:34,920 We all crowd upstairs into the master bedroom and form a semicircle around 507 00:34:34,920 --> 00:34:39,460 bookcase. There was a mechanism that was this recessed pin that I had to pull 508 00:34:39,460 --> 00:34:42,239 out in order to allow the door to swing open. 509 00:34:42,820 --> 00:34:49,420 So once I opened the door, all of us stood there staring at a fairly large 510 00:34:50,040 --> 00:34:55,800 As a locksmith is brought in to unlock the safe, visions of glory flood 511 00:34:55,800 --> 00:34:57,480 head. My heart was pounding. 512 00:34:58,120 --> 00:35:01,600 Because I had no idea what I was going to find once we opened that. Were we 513 00:35:01,600 --> 00:35:07,060 going to find a huge amount of cash or all kinds of other incriminating 514 00:35:07,060 --> 00:35:08,460 evidence? You just don't know. 515 00:35:08,680 --> 00:35:10,980 The reality is much less dramatic. 516 00:35:11,460 --> 00:35:16,180 We opened that door, and the safe was mostly empty, except for some high -end 517 00:35:16,180 --> 00:35:18,380 jewelry cases, some receipts. 518 00:35:18,780 --> 00:35:22,920 But no smoking gun, as we had supposed, might be in there. 519 00:35:23,310 --> 00:35:28,030 Vaughn's safe is as empty as his promises, and it's not the only thing 520 00:35:28,030 --> 00:35:29,030 been cleaned out. 521 00:35:29,430 --> 00:35:34,770 After raising more than $70 million from investors, the total amount of money in 522 00:35:34,770 --> 00:35:39,490 Vaughn's personal checking, savings, and investment accounts is less than $8 523 00:35:39,490 --> 00:35:40,490 ,000. 524 00:35:41,730 --> 00:35:43,250 When American Greed returns, 525 00:35:44,030 --> 00:35:47,130 Doug Vaughn may be cashed out, but he hasn't given up. 526 00:35:47,560 --> 00:35:52,980 Doug Vaughn is standing in the ruins of the Vaughn Company Realtors, and he has 527 00:35:52,980 --> 00:35:57,140 the audacity to start a brand new company in the hopes of resurrecting his 528 00:35:57,140 --> 00:35:58,140 business future. 529 00:36:08,960 --> 00:36:15,140 In the spring of 2010, Doug Vaughn's legal troubles and legal fees continue 530 00:36:15,140 --> 00:36:16,140 mount. 531 00:36:16,560 --> 00:36:20,620 He's navigating both a bankruptcy proceeding and a civil complaint from 532 00:36:20,620 --> 00:36:21,780 and federal court. 533 00:36:22,020 --> 00:36:26,520 And the New Mexico Securities Division is conducting a criminal investigation. 534 00:36:27,200 --> 00:36:29,660 He needs money to fend off the charges. 535 00:36:30,020 --> 00:36:33,620 And his entire life, he's only known one way to get it. 536 00:36:33,820 --> 00:36:39,960 So this here is Doug Vaughn's application to register a trade name. In 537 00:36:39,960 --> 00:36:41,640 case, it's Phoenix Development LLC. 538 00:36:42,440 --> 00:36:47,820 In April 2010, just weeks after he has served with the SEC complaint, Vaughn 539 00:36:47,820 --> 00:36:52,160 submits this document to the New Mexico Real Estate Commission, asking to open 540 00:36:52,160 --> 00:36:56,080 yet another real estate brokerage. The company has collapsed. 541 00:36:56,420 --> 00:36:59,260 The investment scheme has completely collapsed. 542 00:36:59,600 --> 00:37:03,960 He has declared bankruptcy both personally and on behalf of the Vaughn 543 00:37:03,960 --> 00:37:09,360 Realtors. And he had the audacity to start a new real estate brokerage 544 00:37:10,060 --> 00:37:14,620 The commission refuses to grant his request, but Vaughn's only getting 545 00:37:14,620 --> 00:37:17,520 up. He turns to the media to make his plea. 546 00:37:18,380 --> 00:37:23,060 We did a couple of stories on Vaughn, and then I'm in the newsroom after one 547 00:37:23,060 --> 00:37:28,680 our newscasts, and someone says, Hey, Tom, Doug Vaughn is on the phone, and he 548 00:37:28,680 --> 00:37:29,680 wants to talk to you. 549 00:37:32,020 --> 00:37:37,120 Good. Love to talk to him. If the public is waiting for a confession, they'll be 550 00:37:37,120 --> 00:37:38,120 sorely disappointed. 551 00:37:38,710 --> 00:37:43,430 From all appearances, Vaughn thinks he can sell Albuquerque a bill of goods one 552 00:37:43,430 --> 00:37:44,328 more time. 553 00:37:44,330 --> 00:37:48,970 I recognize that I do face some serious challenges, and I need to get my word 554 00:37:48,970 --> 00:37:51,470 out to people the best way I can. 555 00:37:51,710 --> 00:37:52,710 He was defensive. 556 00:37:53,130 --> 00:37:59,710 He seemed optimistic that he was going to get out of this bind that he was in. 557 00:38:00,250 --> 00:38:03,510 And I personally thought he was delusional. 558 00:38:03,920 --> 00:38:09,980 He even went to the point of soliciting donations from our viewers to help with 559 00:38:09,980 --> 00:38:10,980 his legal defense. 560 00:38:11,000 --> 00:38:15,980 If someone is that proud that they're afraid to ask for help, afraid to ask 561 00:38:15,980 --> 00:38:20,400 assistance, afraid to get their word out, then, you know, that's not right 562 00:38:20,400 --> 00:38:21,900 either. And I'm not that proud. 563 00:38:22,600 --> 00:38:23,600 Clearly not. 564 00:38:23,960 --> 00:38:26,680 Bond shows how far he's willing to go. 565 00:38:27,230 --> 00:38:31,570 when he sends out a letter asking for financial assistance from the very same 566 00:38:31,570 --> 00:38:34,090 people he's accused of ripping off. 567 00:38:34,490 --> 00:38:35,490 Oh, yeah. 568 00:38:35,510 --> 00:38:39,150 Yeah. He had the nerve to send that letter out to a bunch of the people. I'm 569 00:38:39,150 --> 00:38:41,290 surprised that I received one. We laughed. 570 00:38:41,530 --> 00:38:42,670 My wife and I laughed. 571 00:38:43,470 --> 00:38:45,290 You know, you said, what does he think? 572 00:38:46,130 --> 00:38:51,650 You know, well, has he given more money on top of that? Well, we laughed, too, 573 00:38:51,670 --> 00:38:54,790 because we didn't have the doggone money to even give him. 574 00:38:55,370 --> 00:38:57,930 Here he wipes this out and he wants to give them even more? 575 00:38:58,590 --> 00:39:03,210 Eventually, Special Agent Tanaka and the New Mexico Securities Division combine 576 00:39:03,210 --> 00:39:06,930 their investigation with the FBI and U .S. Attorney's Office. 577 00:39:07,710 --> 00:39:10,590 Less than a year later, Vaughn is indicted. 578 00:39:10,870 --> 00:39:15,270 And the man who had arrested him for driving with a revoked license now locks 579 00:39:15,270 --> 00:39:18,490 cuffs to Vaughn's wrists that carry heavier weight. 580 00:39:18,950 --> 00:39:23,470 It was February 25, 2011, one year to the day. 581 00:39:23,930 --> 00:39:26,890 from the first time that I had arrested him, when I was arresting him again, 582 00:39:27,170 --> 00:39:29,490 this time for 30 federal felonies. 583 00:39:30,110 --> 00:39:36,110 On December 21, 2011, Vaughn pleads guilty to one count of mail fraud and 584 00:39:36,110 --> 00:39:37,110 count of wire fraud. 585 00:39:37,530 --> 00:39:41,530 Nine months later, he is sentenced to 12 years in prison. 586 00:39:42,510 --> 00:39:47,510 The judge was very harsh on Mr. Vaughn. He told him that what he did was 587 00:39:47,510 --> 00:39:53,130 disgraceful and that he compared him to Black Jack Ketchum and Billy the Kid. 588 00:39:53,870 --> 00:39:58,570 as two of the worst criminals in New Mexico history and said that Mr. Vaughn 589 00:39:58,570 --> 00:39:59,770 now more notorious than them. 590 00:40:00,330 --> 00:40:02,010 It was a very powerful sentencing. 591 00:40:03,370 --> 00:40:04,810 Not all agree. 592 00:40:05,550 --> 00:40:07,590 We were asking for 50 years. 593 00:40:07,970 --> 00:40:12,250 Philip Dugan invested his money with Doug Vaughn to pay for his 594 00:40:12,250 --> 00:40:14,210 education. Now it's gone. 595 00:40:14,990 --> 00:40:19,610 You can do what you want with me as a person and take the consequences. 596 00:40:20,360 --> 00:40:25,680 But when you go in and you do something that affects a man's family, you stepped 597 00:40:25,680 --> 00:40:26,680 across the line. 598 00:40:26,940 --> 00:40:28,920 And he stepped across the line with me. 599 00:40:29,560 --> 00:40:31,740 My friends, this isn't the first time we met Ryan, is it? 600 00:40:31,960 --> 00:40:33,120 Okay, this is my baby boy. 601 00:40:33,420 --> 00:40:34,420 Family business. 602 00:40:34,720 --> 00:40:37,200 That's all it is, just plain family business, yeah. 603 00:40:37,980 --> 00:40:41,820 McGinnis' father started the McGinnis School of Driving in 1964. 604 00:40:42,960 --> 00:40:47,580 David McGinnis took over 12 years later, and he was hoping to pass it on to his 605 00:40:47,580 --> 00:40:49,040 son in the next couple of years. 606 00:40:49,790 --> 00:40:54,710 But with all his savings lost in Doug Vaughn's fraud, McGinnis is going to 607 00:40:54,710 --> 00:40:55,710 to keep working. 608 00:40:56,230 --> 00:41:00,890 And his son, Ryan, may not be able to wait around to inherit his father's and 609 00:41:00,890 --> 00:41:02,010 grandfather's legacy. 610 00:41:02,970 --> 00:41:08,150 You know, being only 26, he would eventually maybe get married and have 611 00:41:08,330 --> 00:41:11,610 but he knows that's going to be very difficult to do. 612 00:41:11,910 --> 00:41:14,410 The type of money he's making here at the driving school. 613 00:41:14,770 --> 00:41:17,530 It's going to be difficult for McGinnis as well. 614 00:41:18,140 --> 00:41:20,580 And the hypercarcinogen has been good to my family, my business. 615 00:41:21,000 --> 00:41:22,160 That has not changed. 616 00:41:24,120 --> 00:41:25,920 But personally, the bills are tumbling. 617 00:41:27,040 --> 00:41:30,360 Chapter 7, probably here I come. 618 00:41:30,760 --> 00:41:32,080 How long is it going to take? 619 00:41:32,740 --> 00:41:36,200 You know, my crystal ball is broken. 620 00:41:38,200 --> 00:41:39,200 I don't have any more. 621 00:41:40,240 --> 00:41:42,380 Even if I had one, I don't think I'd trust it. 622 00:41:43,020 --> 00:41:46,260 Because I looked in that crystal ball many years ago. 623 00:41:46,680 --> 00:41:47,700 I thought it was working pretty good. 624 00:41:48,980 --> 00:41:52,060 And it turned out he never saw anything. 625 00:41:53,540 --> 00:41:57,980 The U .S. Trustee's Office is in charge of repaying victims out of whatever 626 00:41:57,980 --> 00:41:59,560 bonds assets they can gather. 627 00:42:00,020 --> 00:42:03,980 But at this point, it doesn't appear that there will be very much to collect. 628 00:42:04,900 --> 00:42:10,880 I so wish that there was a pot of money hidden away somewhere for us to find so 629 00:42:10,880 --> 00:42:13,660 that we can make the investors whole. But that's just not the case. 630 00:42:14,330 --> 00:42:16,610 We've done a very extensive financial analysis. 631 00:42:16,870 --> 00:42:20,850 And the best that the investors are ever going to see is a penny or two on the 632 00:42:20,850 --> 00:42:26,490 dollar. It's the final legacy of a former legend of Albuquerque real 633 00:42:26,950 --> 00:42:28,330 He could have been so much more. 634 00:42:29,370 --> 00:42:31,390 But he wanted to be so much more. 635 00:42:31,850 --> 00:42:33,590 And that was, I think, the problem. 636 00:42:34,150 --> 00:42:39,750 He never wanted to be relegated to just a normal tycoon. 637 00:42:39,990 --> 00:42:42,950 He wanted to be the elephant in the room. 638 00:42:43,560 --> 00:42:44,900 And for a while he made it. 639 00:42:45,440 --> 00:42:50,040 Doug Vaughn will be 77 years old when he is released.