True Detective: Chicago, El Chapo, & Vince Vaughn’s Mom

Share on Facebook105Tweet about this on TwitterShare on Reddit17

vince-vaughnActor Vince Vaughn, in the news for his starring role in HBO’s True Detective and recent controversial statements advocating more guns in schools, now has a new source of notoriety guaranteed to keep him in face time: his family.

Vaughn’s mother, Sharon Vaughn, a sparkling and vivacious Chicagoland socialite, and his step-father, Stephen Ferrone, a lawyer and former brokerage manager, both have links to a criminal enterprise involved in the biggest seizure of drugs on a plane in Mexican history.

vaughn-gunsVince Vaughn’s intemperate comments spurred a second look at the financial fraud his mother was involved in seven years ago. That brought new details to light which finally bring some much-needed clarity to the case of the American-registered DC-9 busted in Mexico with 5.5 tons of cocaine,  first reported and investigated in dozens of stories published here.

sharon-vaughn2Sharon Vaughn, Vince Vaughn’s mother, was a longtime savvy financial consultant who once ranked 105th in the nation on Bloomberg Wealth Manager’s annual list of high-end personal money managers.

From her multi-million dollar mansion in the tony suburb of Lake Forest, near Chicago, she managed a hedge fund called Directors Performance Fund. In June of 2003  she made an unusual—and dubious—investment.

vaughn-house

According to a criminal affidavit filed by a Secret Service Agent,  she put $9.7 million into a recently-incorporated shell corporation called Argyll Equities LLC in Boerne Texas, a subsidiary of Argyll Group.

“According to the records of the Department of State of Delaware, Argyll Group was formally incorporated on April 25, 2003,” ” states a lawsuit filed by one of Argyll’s numerous jilted employees and investors. “The company was capitalized with funds borrowed from Director’s Performance Fund.”

Vince Vaughn’s Mom’s hedge fund capitalized a “bank” that specialized in loaning money to drug traffickers. And the fact that her husband Stephen Ferrone later went to work with the same people means—at the very least—she was closer to them than has been admitted.

 

The Bank That Wasn’t There

argyll-3Our story begins in 2003.

Argyll is a company with no assets that nonetheless bills itself as a “private investment bank.” Its top executives stole so much money from investors that when its President Doug McClain, Jr. was convicted in San Diego on every count of a 32-count indictment, on top of his 18-year sentence in federal prison the judge imposed an $81 million fine.

And McClain Jr. didn’t even control the company.

That honor belongs to his father, who ran Argyll from behind the scenes.  Douglas McClain Sr. is a man with a two-decade history as a grifter, racketeer, and swindler. Thanks to Sharon Vaughn’s largess, McClain can add “financier to the drug trade” to an already colorful resume.

Doug McClain Sr.Sharon Vaughn must have seen something in Argyll that ordinary mortals can’t.

Flush with Sharon Vaughn’s $9.7 million, the fledgling bank’s first big investment resulted in ownership of 21 million shares of stock in Sky Way Communications of St. Petersburg, a tiny company which got famous fast two years later in the iconic drug bust of our time.

 

Synchronized events over time and distance 

Michael-FarkasAt the same time —April 2003— that Argyll Equities is being incorporated in Delaware, a Miami attorney named Michael Farkas is doing a “reverse-merger” in Florida, taking an already-public shell corporation he owns and merging it with a private start-up called Sky Way Global.

The resulting company, called Sky Way Communications, becomes a publicly-traded company whose only business—besides owning drug planes—is selling pumped-up stock to hapless investors.

N900SA-PIC (5)Also in 2003, Sky Way Communications “acquires” (the term is used loosely) the now-famous American-registered (N900SA) DC-9 that took off from Clearwater-St. Petersburg Intl Airport, flew south to Colombia  and Venezuela, and stopped to refuel in Mexico on its return flight, where it was seized on the evening of April 10, 2006 in the Yucatan while carrying 5.5 tons of cocaine.

The plane will later be discovered to have been part of a 50-plane fleet bought for El Chapo’s Sinaloa Cartel using money laundered through Wachovia Bank, which was shortly thereafter  forced to sell out to a bank which presumably exercised more adult supervision.

 

The most lucrative industry on the planet

Jose-SerranoSegoviaNor is this Argyll’s only foray into the highly lucrative drug trade. According to documents filed with the SEC in 2005, Argyll  “loaned” $23 million to Jose Serrano Segovia, a Mexican who is either A. A respected Mexican business tycoon; B. A major drug trafficker, or C. both.

The Wall Street Journal’s money, at least in April, 1998, before Rupert Murdock took over, was riding on “C.” A huge shipment of cocaine from Colombia was found on one of Serrano Segovia  cargo vessels in April 1998, the Journal reported, adding that the FBI was investigating Serrano Segovia for drug trafficking and money laundering.

grupo-TMMIn November 1999, Serrano’s company, Grupo TMM, which runs trucks and trains into the U.S. hundreds of times daily, informed US News & World Report and The Washington Post that they had engaged a lobbying firm to block a bill in the US Congress which aimed to impose sanctions on companies linked to drug trafficking. With bipartisan support, according to Mexico City newspaper La Jornada, they succeeded in stopping the bill.

And in Chile, the English language Santiago Times (on May 5, 1998) reported Serrano Segovia “provided significant capital” to Chilean narcotics trafficker Manuel Vicente Losada, who was arrested in Santiago after being “linked to a shipment of five tons of cocaine which U.S. drug enforcement officials in Miami intercepted on the MV Harbour as it headed toward Guantanamo Bay.”

jebFinally—and merely for anecdotal purposes—Serrano Segovia was one of a handful of Mexican “big corporate guns” lucky enough to have been feted at a private dinner hosted by then-Florida Governor Jeb Bush, who was leading a trade mission to Mexico.

Afterwards Joseph Lacher, Bell South’s Florida president, confided to The Miami Herald that “The evening turned into a kind of let’s-get-to-know-each-other-socially affair.”

“Men boasting CIA and FBI ties”

A powerful nationwide criminal enterprise composed of seemingly-disparate parts acting in concert was aided at every stage by rampant political corruption. It’s Roy Cohn-ish.

E. HolderEvidence of the bi-partisan nature of the corruption surrounding the group goes all the way to then-Attorney General Eric Holder, who personally interceded to keep an ex-FBI agent from being indicted in a similar financial scam in Newport Beach, California run by associates of the swindlers treating Sharon Vaughn’s hedge fund a piggybank in Chicago.

Holder countermanded the local US Attorney in charge of the case to squash the indictment. His move was disclosed in“Pyramid Scheme,” a Sept 29 2011 cover story in Orange County Weekly, whose sub-head succinctly sums up what was going on in both Chicago and Newport Beach:

Men boasting CIA and FBI ties met in Newport Beach to convince a mysterious billionaire to buy into a secret economy, and nothing was what it seemed.”

ware1There are, of course, numerous other places where “men boasting CIA and FBI ties” have turned up in our story. Like in  St Petersburg Florida, home of Sky Way Communications DC-9 caught with 5.5 tons of cocaine.

And even in Costa Rica, where a “former” CIA agent named Nicholas Ware worked with fraudsters, including the since-convicted Jonathon Curshen, who helped Sky Way executives by fronting for many of their phony press releases.

Ware even wrote a book about it later, titled “Surfing the CIA.”

 

No smoking gun, no mushroom cloud, one million dead

rove-luskinThe uses to which Sharon Vaughn’s hedge fund were being put surfaced in criminal indictments handed down by Patrick Fitzgerald, U.S. Attorney for the Northern District of Illinois.

Tomorrow, in “The Cowles Identity” we will see that Fitzgerald’s probe was foiled by Robert Luskin of powerhouse Washington D.C. law firm Patton Boggs.

Luskin had already successfully dueled with Fitzgerald while he was the Special Counsel in charge of the CIA leak grand jury investigation of the Valerie Plame affair, where Fitzgerald was charged with investigating who had put America’s national security at risk by leaking the identity of a CIA agent working undercover to stop nuclear proliferation in the Middle East.

It was the dirtiest political trick since the October Surprise. It flirted with treason. CIA Agent Valerie Plame’s identity was leaked while her husband, former U.S. Ambassador Joseph Wilson, was being pilloried for having the temerity to publicly speak the truth: that there was no evidence that yellowcake from the African nation of Niger had been sold to Iraq to produce nuclear weapons.

condoleeza_riceIn the aftermath, Robert Luskin successfully fended off attempts by Fitzgerald to charge Luskin’s client Karl Rove—who denied under oath being a source for the leak—with perjury in the case.

Today the only thing most people recall about the affair was the pithy but wildly-inaccurate statement by Condoleezza Rice:”We don’t want the smoking gun to be a mushroom cloud.”

 

Goat’s head soup meets the Osmond Brothers

goatThe still unnamed criminal enterprise also ripped off investors and shareholders in a half-dozen public companies for at least several hundred million dollars.

Argyll is just one example. Several years after wife Sharon Vaughn’s big investment,  Argyll’s assets were hurriedly transferred—one step ahead of its creditors—to a second public company it completely controlled, a phony pharmaceutical firm called Immunosyn.

In October 2007  Vince Vaughn’s step-father, Stephen Ferrone, became President and CEO of Immunosyn, the ‘entity’ which Argyll had morphed into, which was touting a cure for… well, just about whatever ails you. In addition to MS, the SEC said the company was marketing the “drug” as a cure for  AIDS, chronic inflammatory demyelinating polyneuropathy, diabetic neuropathy and diabetic ulcers.

Most egregiously, they induced sick and dying people into investing in a purported “cure” for MS consisting of goat’s blood, then got a group of sleazy stock promoters in Boston and New York to promote it. Even the Lieutenant Governor of the State of Utah was enthused. “I’m writing to let you know how excited I am,” writes Gary Herbert, “that your company has developed a new drug to…assist with the treatment of nerve-related disorders.” He’s even reminded of the “awe-inspiring…spirit and determination of mankind.

It’s enough to give anyone chills. Then there’s Alan Osmond, of the singing Osmond Brothers.

alan-osmond“I’ve still got MS, but MS doesn’t have me!” said Alan on Larry King Live.

The fraud was exposed on numerous websites.

“Alan Osmond, brother to the beauteous Marie, is an MS patient whose professional-looking website extolls the benefits of SF-1019. He does not disclose that he has received four million shares of Immunosyn,” wrote one outraged observer.

To which Osmond might have sneered,” Nobody goes to jail for conflict of interest. At least not in Utah.”

4 Rats…& a bevy of ethically-challenged homo sapiens

ferrone4Vince Vaughn’s step-dad was there for it all. Here’s a sample quote from Ferrone:

“The success of this phase of the trial is yet another substantial milestone in moving toward approval of SF-1019 in Europe for use with Diabetic Ulcers,” said Stephen D. Ferrone, President and CEO of Immunosyn. “We feel that beyond whatever the potential revenue might be for Immunosyn, from possible future approval and sales of SF-1019, is the significant and compassionate role that SF-1019 could eventually play in filling an unmet need in the arena of wound healing.”

In fact, there were no trials. The FDA banned them. Well, there was one… an unauthorized safety study in 2007. The draft report of the results stated “[the study] should not be used in any way, shape or form to advance product registration…with any regulatory agency. Four rats died during the safety study. To do so would invite problems. The deaths during the study are troubling.”

Stephen Ferrone was a graduate of Northwestern University and Loyola School of Law and began his professional career in Chicago, Illinois as a felony trial prosecutor for Cook County, according to a biography published by Immunosyn.

In other words, Ferrone had no excuse for not knowing better. Still, he has his defenders.

goat2

“Let me tell you about Stephen Ferrone,” a former executive of Sharon Vaughn’s hedge fund told me. “Stephen Ferrone is the straightest most honest person you’ll ever want to meet. He believed in the formula, the good it could do, and the potential of the company. His name should never be mentioned with the rest of those guys.”

“Anytime a case crosses your desk involving a member of the Osmond family and the blood of a goat, you figure somebody’s got a new conspiracy theory,” a retired San Antonio police detective told me. “But this once was real, and it was right here in San Antonio.”

Business journalists had a field day with the company. Not That You Were Waiting On FDA Approval To Inject Yourself With Goat Blood, But…” headlined Dealbreaker.

“It’s not like they were selling fake securities to dying people or anything, right?”

Which is, of course, exactly what they were doing.

 

“Bleed some goats. Spin out the blood cells. Dry it down. Sell it.”

goat3

When the SEC charged the company and its officers with securities fraud, their announcement stated, “[Argyll Chief Scientific Officer Douglas] McClain Sr. also made … misstatements in a 2008 presentation in which he sold his stock to individuals that attended the presentation at a Texas holistic clinic, some of whom were terminally ill patients at the clinic. McClain Sr. purported to sell Immunosyn stock to approximately 15 of these attendees at the presentation at the clinic, including some terminally ill patients, raising over $300,000 from them. He took their money but never gave them their Immunosyn stock.”

SECOf course it all ended badly.  Several top executive with the company are today in prison; one committed suicide.  But Ferrone was never charged, which will be a recurring pattern in the case.

Here’s a secret every American should know: There is a thing called the SEC. It has rules—quaint and amusing, and designed in the 1930’s—about how you can offer securities.

And they don’t work for shit. When the scandal broke, Immunosyn’s shares dropped 31.82 percent to $0.03 in pink sheet trading. All the executive had already cashed out.

 

Sharon ‘bets the ranch’

VINCE VAUGHN'S MOMThe fact that Vince Vaughn’s Mom’s hedge fund capitalized a “bank” specializing in goat’s blood and drug traffickers only received unwelcome attention—and any attention at all was unwelcome—because of Sharon Vaughn’s involvement in a much larger financial imbroglio.

In her still-unexplained investment in Argyll Equities, she “only “risked $9.7 million of her investors money.  But she will bet virtually everything in her hedge fund, according to federal investigators, almost $25 million, in her next big investment, with people who shared some of the same interests—and connections—as the people with Argyll.

Less than two years after Sharon Vaughn’s mysterious investment in The Bank That Wasn’t There, she did it again, making an even more bizarre investment of far more money than she gambled the first time.

Only this time she didn’t “just” put up $10 million. She went “all in.”

TOMORROW: “THE COWLES IDENTITY”

Daniel Hopsicker

Daniel Hopsicker is an investigative journalist and the author of two books on transnational crime, Welcome to Terrorland and Barry & the Boys.

You may also like...

6 Responses

  1. Brad Sargent says:

    Thanks once again Daniel. Between you and Greg Palast (and a few others) I manage to keep my head out of the fantasy land of the mass media.

    And let’s not forget the late Michael Ruppert.

  2. Gayle says:

    Have missed you and now I think you were MIA because you must have been working hard to put this together…great story!

  3. Linda Minor says:

    The money is being followed! I love it when the bad guys are exposed. They hide behind shells and shill for shysters, but in the end, they can be found. It just requires dedicated commitment and looking at life without rose-tinted lenses. Thanks again, Daniel, for your tireless efforts at exposing who it is who profits from the drug trade in this country.

  4. Weilunion says:

    Yes, good another episode exposed of psychopaths and sociopaths.  This is both the morality and eonomic system of capitalism.  'Free markets' is the mantra but of course with government help and protection.

  5. notjonathon says:

    Very glad to see you back and in good shape, journalistically at least. I hope your physical health has improved, too. Be sure to do all those things that make up a healthy lifestyle: exercise, Mediterranean diet, plenty of sleep. We need your work.
     

  6. Norman Koerner says:

    Dan, your research and exposure is so very precious in the struggle for the truth of what are the real workings of this system and your writing is as brilliant and enjoyable as ever. Please take care of yourself brother!  Best, Norman C. Koerner