News Release from the FBI, Omaha Division

Convicted Conman Found Guilty Again

U.S. Attorney’s OfficeFebruary 23, 2012

Northern District of Iowa(319) 363-6333

A man who defrauded numerous people out of thousands of dollars while on supervised release for a prior fraud conviction was convicted by a jury on February 22, 2012, after a seven-day trial in federal court in Cedar Rapids.

Donald K. Washburn, from Linn County, was convicted of 28 counts of wire fraud, five counts of money laundering, and 13 counts of making false statements to the United States Probation Office. The verdicts were returned in the afternoon of February 22, 2012, following about 10 hours of jury deliberations.

The evidence at trial showed Washburn falsely claimed he owned three mines, iron ore, and other valuable minerals. Washburn sought people to invest in the mines or minerals and used their investments for his own personal benefit. Washburn also falsely claimed he owned a casino dice game and sold exclusive licensing rights to the dice game to his victims. Portions of both the mining and dice game schemes occurred while Washburn was on federal supervised release for a prior fraud conviction. During the period of supervised release, Washburn was required to file monthly financial report forms to the United States Probation Office. Washburn’s monthly reports were false because he failed to disclose financial transactions related to his fraudulent mining and dice game schemes.

Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Washburn was ordered into the custody of the United States Marshal pending sentencing. Washburn faces up to 20 years’ imprisonment on each count of wire fraud, up to 10 years’ imprisonment on each count of money laundering, and up to five years’ imprisonment on each false statement count. Washburn also faces a fine of up to twice the amount of his financial gain, twice the amount of financial loss to his victims, or $250,000 per count of conviction.

The case is being prosecuted by Assistant United States Attorney Matthew J. Cole and was investigated by Federal Bureau of Investigation.

Man Sentenced for Ponzi Scheme

News release from the FBI:

Atlanta Man Sentenced for Operating Ponzi Scheme
Vaughn Received Over $10 Million from Victims

U.S. Attorney’s Office February 07, 2012

Northern District of Georgia (404) 581-6000

— filed under: Breaking News, Press Release, White-Collar Crime

ATLANTA—CHARLES MICHAEL VAUGHN, 43, of Atlanta, Georgia, was sentenced to federal prison today by United States District Judge Richard W. Story on wire fraud charges in connection with a $10 million Ponzi scheme.

United States Attorney Sally Quillian Yates said, “Despite the fact that Ponzi schemes are one of the oldest types of fraud schemes, they continue to be quite successful because of the creativity of the con artist, the slick presentations, and the promises of lucrative investment returns. 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. Potential investors should carefully scrutinize every aspect of a salesperson’s pitch before parting with their hard-earned money.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, said, “While Mr. Vaughn will now be held accountable for his elaborate fraud scheme, the many victims harmed in this matter are forced to rebuild their lives as best they can. Because of the victim impact often seen in such cases, the FBI will continue to aggressively pursue those individuals who engage in this type of high dollar investment fraud activity.”
United States Postal Inspector in Charge Keith Morris said, “Our Postal Inspectors are trained to follow the money, even if the paper trail is difficult to find. Innocent victims hand over their hard-earned savings, and criminals often only invest it in themselves. No matter how complex the case, our Inspectors will make every effort to help those victims, by bringing the fraudsters to justice.”

VAUGHN was sentenced to eight years and four months in prison to be followed by three years of supervised release, and was ordered to pay restitution in the amount of $8,833,686. VAUGHN pleaded guilty to the charges on October 24, 2011.

According to United States Attorney Yates, the charges, and the evidence presented in court: VAUGHN founded and operated “CM Vaughn, LLC,” a tax and financial consulting firm based in Atlanta, Georgia. From July 2004 through March 2008, VAUGHN sold investments in a pooled investment fund or “hedge fund” called “CM Vaughn Emerging Ventures Fund.” Over 50 individuals sent money to VAUGHN for purposes of investing in the fund.

VAUGHN falsely represented to investors that his fund earned from 15 percent to as much as 50 percent per year, and stated that their investments would be “insured” and could not decrease below a certain amount. He also prepared client statements that falsely indicated the current value of each investor’s accounts. While the statements generally showed substantial investment gains, the numbers included in the statements were false, as none of the investors’ monies had actually been invested in any fund. Instead, VAUGHN had used the investments to finance a lavish lifestyle and to make payments to earlier investors. VAUGHN obtained over $10 million from his victims.

This case is being prosecuted through President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case was investigated by special agents of the Federal Bureau of Investigation and inspectors of the United States Postal Inspection Service.

Assistant United States Attorney Shanya J. Dingle prosecuted the case.