An Atlanta business man has been indicted in a Ponzi scheme that could reveal $7 million when the case is done.
Charles Michael Vaughn was accused last week in federal court of tricking 25 people in Georgia, Tennessee, Florida and North Carolina into investing into a bogus hedge fund run by his company CM Vaughn LLC from 2001 to 2010.
The federal indictment listed at least nine victims who invested roughly $1.5 million with Vaughn's firm between October 2006 and October 2007, promising monthly returns of between 2 and 3.5 percent, and annual returns of up to 50 percent. Rather than investing the money, Vaughn used the money to pay off previous investors and for personal uses, court records allege.
And when some of the investors requested their money be returned, Vaughn mailed them checks that bounced, according to the indictment.
While the federal indictment spells out the amount the nine victims lost, prosecutors hope to show that many more people were duped by Vaughn's scheme.
The indictment listed 14 counts against Vaughn, including wire fraud and mail fraud, each of which carries a maximum prison time of 20 years with up to $250,000 in fines.
One of Vaughn's alleged victims, Dan Johnson, wasn't listed in the indictment, but told Channel 2 Action News he was thrilled Vaughn was going to meet justice.
"I got in on it at the end, and I got taken down," Johnson said. "I won't say the exact figure (lost), but several hundred thousand dollars."
Martin Phanco, the postal inspector in charge for the Atlanta division of the U.S. Postal Service, said consumers are constantly warned about possibly bogus investment scams like this one.
"It only ends up with (consumers) losing their hard-earned money," Phanco said. "We will continue to be steadfast in educating investors and aggressively investigating those fraudsters who target them."
Vaughn was released last week from federal custody on $50,000 bond.
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