Argyll Equities chief gets 15 years, must pay $81M restitution in fraud case

The president of an equity firm that did business in San Diego was sentenced Monday to 15 years in prison and ordered to pay more than $81 million in restitution after defrauding corporate executives in multiple countries, the U.S. Department of Justice said.

Douglas McClain Jr., 38, president of Argyll Equities, was sentenced in federal court for scheming victims in the United States, Canada, Mexico, Panama, China, England and Belgium. He will also have to forfeit several million dollars in assets that he earned from his illegal practices, including diamond jewelry, a luxury home in Florida, and other cash and securities.

In 2004, McClain conspired with loan brokers by falsely representing that Argyll was an institutional lender with significant cash to lend to corporate executives and other individuals, the Justice Department said. McClain and others then fraudulently persuaded corporate executives to commit millions of dollars worth of stock the executives held in publicly traded companies as collateral for loans by falsely claiming that the borrowers’ stock would not be sold unless there was a default on the loan.

But McClain immediately sold the stock and used the proceeds to create the appearance that Argyll had lots of cash to lend, the government said. McClain and others also got the victims to make monthly interest payments on their loans by falsely representing that the collateral was safe and would be returned as long as they didn’t default. But when the loan ended, McClain had no money to return and made fake excuses as to why he could not give back the stock.

McClain’s actions of selling unauthorized stock owned by insiders of publicly traded companies also caused stock prices to plummet, the Justice Department said.

U.S. Attorney Laura Duffy said the case is a reminder to be “extremely cautious when pledging property to unregulated third-party lenders.”



