SANTA FE, N.M. — A federal judge Wednesday sentenced Ponzi schemer Doug Vaughan to 12 years in prison, saying the disgraced real estate executive’s scheme that bilked more than 600 investors out of $75 million has made him more notorious than famed New Mexico outlaws like Billy the Kid.
“I don’t think despicable covers it quite frankly,” U.S. District Judge Bruce Black said of Vaughan’s actions after reading letters from victims, many retired, who lost their life savings.
“Unfortunately, you have become the most infamous criminal in New Mexico history. You have exceeded Billy the Kid, (train robber) Black Jack Ketchum, others who have been notorious in this territory.”
The 64-year-old Vaughan has been under house arrest for nearly two years. He appeared gaunt, pale and on the verge of tears throughout the sentencing hearing. He looked down, often closing his eyes, as several victims talked of the betrayal of trust from the one-time family friend who has admitted running the scam that snared victims from Washington state to New Jersey.
Vaughan pleaded guilty to two felony charges as part of a plea agreement reached in December.
While some of his victims called for that agreement to be thrown out and the maximum possible sentence imposed, Fred Mossman of Albuquerque, told the judge Vaughan was a compassionate man who gave a lot to the community over the years. Vaughan made eye contact with him, nodding as he walked away from the podium.
Three other Albuquerque investors, however, told how they were ruined by their association with Vaughan.
“He financially devastated each and every one of us, stealing from us our life savings, security and trust,” said Don Duke, a retiree who was speaking for a group of Vaughan’s unsecured creditors.
“On a personal note, I find it nearly impossible to describe the excruciating pain I feel when I hear my wife quietly weeping in the middle of the night. Worse, we encouraged our children to invest with him.”
Philip Dugan questioned why Vaughan has received preferential treatment in that he was allowed to live with his girlfriend under house arrest with no bond since his arrest. Dugan also noted that Vaughan was able to negotiate a light sentence when others recently convicted of similar crimes have gotten life sentences or hundreds of years in prison.
Prosecutors said they agreed to the plea bargain because for a man of Vaughan’s age and health, it will likely be a life sentence. And a lengthy trial could cost taxpayers $1 million or more.
Additionally, U.S. Attorney Ken Gonzales noted, Vaughan has given up any right to appeal the criminal or civil actions against him. He has also agreed to make restitution, though prosecutors acknowledged that will never happen.
“He has incurred, I think, the full thrust of justice,” Gonzales said.
Duke said he would have liked to see him “get more years, but it is what it is.”
The judge rejected a defense request for a 10-year sentence and incarceration at a so-called federal prison camp rather than a traditional lockup, although he did allow Vaughan 48 more hours under house arrest to wrap up personal business before voluntarily surrendering.
Vaughan spoke briefly before his sentencing, apologizing to his victims, saying he has found the Lord and hopes to do God’s work while in prison. He also said his real estate investment scheme, which promised investors higher rates of return than traditional loans, was intended to be an alternative to traditional banks before it spiraled out of control.
Vaughan had victims in a number of states, including New Mexico, Arizona, Texas, Colorado, Wyoming, New Jersey, Oregon and Washington.
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