All language subtitles for American Greed s07e05 Wild West Rip-Off.eng

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.

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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.

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