SANTA FE (KRQE) - A federal judge Wednesday sentenced disgraced real-estate tycoon Doug Vaughan to 12 years in prison for his $75 million Ponzi scheme that cost some victims their life savings.
For some victims who lost everything, justice was not served, but the U.S. attorney said it's the best outcome possible.
Chief U.S. District Judge Bruce Black accepted a plea deal in which Vaughan admitted running the scam built on promissory notes he issued for real-estate investments that never happened.
Instead he operated a classic Ponzi scheme where money from later investors was used to pay dividends to earlier ones while he pocketed the difference.
Under the plea deal his sentence was limited to 10-12 years with his attorney arguing for the lesser time. Black imposed the maximum sentence and ordered Vaughan to make restitution of $74,745,723.93 to the victims.
Black didn't hold back in his words to the convicted Ponzi schemer.
He said Vaughan destroyed lives and betrayed friends and called him despicable and the most infamous criminal in New Mexico history.
The judge gave Vaughan 48 hours to surrender to U.S. marshals to begin serving his sentence.
"What we have here is a certain outcome that I think a lot of the victims out there can look to and hopefully use to get beyond this," U.S. Attorney Kenneth Gonzales said after the sentencing hearing.
Vaughan sold real estate investments across the country to about 600 investors promising big returns. He then used that money to pay earlier investors and fund a life of luxury.
The scheme fell apart in 2010. Vaughan has been ordered to pay 75 million in restitution, although victims likely won't see a dime until after Vaughan's prison term is up.
In court, Vaughan said he takes responsibility for his crimes, has found god and prays for the time to pay his victims back.
"He's given everything back to the trustees in this case," Amy Sirignano, Vaughan's attorney, said. "He's lost his house. He's lost all of his belongings. He's lost everything in his life, and now the government will get to support him over the next 12 years."
The U.S. attorney said while the victims may want a longer sentence, this was the best possible outcome given Vaughan's age and saving taxpayer dollars.
After the 12 years in prison, Vaughan will have six years supervised release. At the youngest he will be 75 when he gets out of prison.
The plea deal also resolves a civil case and bankruptcy cases against him as well.
Vaughan's attorney said her client will serve two years in a medium security prison and then be moved to a minimum facility for the rest of his sentence.
Four of Vaughan's victims spoke at the sentencing saying they'd been humiliated and financially ruined. One said there were not 600 victims but more like 6,000 as the damage extends to the children and grandchildren of the swindled investors.
Online: Reporter Katie Kim's live Tweets from the sentencing hearing
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