An Atlanta businessman will spend 8 years in prison and must repay nearly $9 million for duping investors caught in his Ponzi scheme, prosecutors said Tuesday.
Charles Michael Vaughn, 43, who operated a tax and financial consulting firm, persuaded 50 investors to invest millions in a pooled investment fund, or “hedge fund,” between July 2004 and March 2008, according to prosecutors and court testimony.
Vaughn told the investors that his fund, CM Vaughn Emerging Ventures Fund, earned from 15 percent to 50 percent a year and promised their investments were insured and wouldn’t drop below a certain amount, prosecutors said.
He provided financial statements that showed false returns because the money he received was never invested, prosecutors said.
“Fraudsters with a computer and printer can come up with phony spreadsheets and paperwork that make their investments look golden when really the returns are an illusion,” U.S. Attorney Sally Quillian Yates said.
Vaughn used the more than $10 million he received to keep the Ponzi scheme going by paying early investors and funding a lavish lifestyle, prosecutors said.
According to the indictment, his victims were in Georgia, Tennessee, Florida and North Carolina.
Vaughn was charged with five counts of wire fraud and nine counts of mail fraud. He pleaded guilty to the charges on Oct. 24. He could have received a maximum of 20 years on each count and a fine of up to $250,000.
Yates, who called the Ponzi “one of the oldest types of fraud schemes,” urged investors to scrutinize every aspect of investment sales pitches “before parting with their hard-earned money.”
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