The Price of Investing in AIDS Denial Scams

Scam suspect claims he's paying back $200,000

By John Tedesco

San Antonio Express News

Accused of bilking nearly $200,000 from a partly paralyzed doctor, Douglas McClain Sr. said Friday he was no scam artist and intends to pay back Dr. Charles Arnold.

McClain, 61, said he's already paid back $15,800 — which was news to Arnold.

“That would be nice,” said Arnold, a 73-year-old neuropsychiatrist who was paralyzed in a motorcycle wreck several years ago. “But it isn't true.”

The criminal case is the latest legal headache for McClain, who owns a 3,600-square-foot home in Fair Oaks Ranch appraised by the county at nearly $410,000.

Over the years, angry investors have filed more than $7.8 million in civil court judgments against McClain at the Bexar County courthouse.

Last year, the U.S. Securities and Exchange Commission filed a lawsuit accusing McClain of falsely telling investors a drug derived from goat blood could potentially cure HIV and other diseases.

McClain sold $300,000 in stock shares to hopeful investors, some of whom were terminally ill patients at a Texas holistic clinic. He took their money but never gave them any stock, the federal lawsuit alleges.

McClain spoke to a reporter Friday for the first time after Kendall County deputies arrested him Aug. 10 at a UPS store in Boerne on theft charges in Arnold's case. He insists he's not the scammer Arnold claims.

“That is not true,” said McClain, who was waiting in District Court Judge Philip Kazen's courtroom for a hearing in the criminal case that was later rescheduled. “I've known the family for over 10 years.”

Asked why investors kept suing him, McClain said the civil judgments against him are much higher than the actual amount investors lost because he didn't contest them in court.

“The amount of judgments wasn't anywhere near the money that was either invested or borrowed,” he said. “They're default judgments. I didn't fight them. It costs more money to fight them.”

McClain said he was “getting ready to settle all those” cases and declined to talk about the federal lawsuit alleging he tricked terminally ill patients.

“I actually can't discuss that because of the SEC,” McClain said.

Arnold said McClain gained his trust last year after he helped Arnold mend frayed relationships with his children. McClain presented himself as an affable, Bible-quoting businessman who promised to sort out their differences.

The mediation sessions worked and Arnold was grateful. Then McClain asked for an $8,500 loan.

The money was supposed to be spent on business expenses while McClain went through the process of selling his family's coal mine in Kentucky, a deal McClain claimed was worth $41 million.

McClain put up a rifle as collateral for the loan and Arnold was more than happy to help. Over the months, McClain kept asking for more money. Arnold finally called police April 30 after loaning McClain most of his savings — nearly $200,000.

San Antonio police Detective Robert Sholund, who's assigned to the department's white-collar crimes detail, checked McClain's bank records and discovered the funds Arnold paid him “were being used for day-to-day expenses, such as eating, shopping, ATM withdrawals, medical payments, paying bills and wire transfers, to name a few,” Sholund wrote in an arrest warrant affidavit.