July 5, 11

NEWS / Atlanta Man Indicted for Defrauding Investors in Ponzi Scheme

ATLANTA—CHARLES MICHAEL VAUGHN, 42, of Atlanta, Georgia, made an initial appearance yesterday before a United States Magistrate Judge after being indicted earlier this week by a federal grand jury on charges of wire fraud and mail fraud arising from a $7 million Ponzi scheme.

“Postal inspectors continue to warn consumers about fraudulent investment scams and Ponzi schemes. It only ends up with them losing their hard earned money and causing them grief. We will continue to be steadfast in educating investors and aggressively investigating those fraudsters who target them.” said Martin D. Phanco, Postal Inspector in Charge of the Atlanta Division.

According to United States Attorney Yates, the charges, and other information presented in court: From July 2004 through at least March 2008, VAUGHN recruited at least 25 individuals in Georgia, Tennessee, North Carolina, Florida, Michigan, and other states to invest in a purported “hedge fund” operated by his company, “CM Vaughn, LLC,” based in Atlanta. VAUGHN falsely represented to investors that his fund generated returns of 2 to 3.5 percent per month, and from 15 percent to as much as 50 percent per year. VAUGHN further represented to his investors that their investments would be “insured” and could not decrease below a certain amount. In fact, VAUGHN never invested the funds given to him by his investors, and merely used their investments to pay his personal expenses and to repay earlier investors. VAUGHN obtained over $7 million from his victims. VAUGHN was neither licensed by the National Association of Securities Dealers nor a registered investment adviser.

The indictment charges five counts of wire fraud and nine counts of mail fraud. Each count carries a maximum sentence of 20 years in prison and a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

This case is being 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 is prosecuting the case.

For further information, please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

http://www.fbi.gov/atlanta/press-releases/2011/atlanta-man-indicted-for-defrauding-investors-in-ponzi-scheme