Involved in stealing OK state tax revenue theft and hiding, but not charged
- QMA tax credits - $66 million in tax credits for claiming to invest $221 million - technically claiming to invest $32 million and adding a bogus bank loan.
- Stealing QMA employees payroll deduction theft
- Crimes in CO
- Crimes in Alabama
Department of Justice
U.S. Attorney's Office
Western District of Oklahoma
FOR IMMEDIATE RELEASE
Friday, July 1, 2016
Altus Business Partner pleaded Guilty to Bank Fraud Conspiracy in April
Oklahoma City, Oklahoma –PAUL HAROLD DOUGHTY, 67, of Edmond, Oklahoma, the former president and chairman of First State Bank of Altus ("FSB"), was convicted today on ten charges of bank fraud, conspiracy to commit bank fraud, misapplication of bank funds, making a false bank entry, and unauthorized issuance of a bank loan in connection with FSB and various loan schemes, announced Mark A. Yancey, Acting United States Attorney for the Western District of Oklahoma. On April 14, 2016, FRED DON ANDERSON, 67, of Eagle Point, Oregon, pleaded guilty to one count of conspiring with Doughty to commit bank fraud. Anderson partnered with Doughty in several businesses headquartered in Altus. In July 2009, state banking regulators closed FSB due to the bank's loan losses, and the Federal Deposit Insurance Corporation was appointed as the bank's receiver.
In April 2015, a federal grand jury charged Doughty and Anderson with fraud related to three alleged loan schemes: (1) a series of FSB loans to finance a real estate development in Routt County, Colorado; (2) a series of "senior life settlement loans" from FSB to support an Altus aerospace company; and (3) a $2 million unauthorized loan from FSB to a company under Doughty and Anderson's control.
The jury heard that in 2006 and 2007, Doughty and Anderson recruited buyers for 19 Colorado real estate lots priced at approximately $700,000 each. Doughty approved and issued 14 lot loans to buyers, totaling more than $10,000,000 in loan proceeds for the seller, Mountain Adventure Property Investments, LLC ("MAPI"). MAPI was a Colorado company that Anderson had an indirect ownership interest in and where he served as president and manager. Evidence at trial showed that each loan exceeded Doughty's individual lending authority at FSB, and most of the loans were issued without approval of FSB's loan committee, including a $580,000 loan to Anderson's personal company. The jury heard that Doughty and Anderson presented lots to borrowers as "zero money down" investments, and that the down payments for the purchases were often advanced or refunded to the buyers by Anderson on behalf of MAPI. Doughty and Anderson also assured the buyers that MAPI would make all payments on the loans to the bank. The jury heard that on the few occasions when Doughty presented a Colorado loan to FSB's loan committee, he misrepresented the source and amount of borrowers' down payments and the borrowers' responsibility for making payment on the loans. In connection with these Colorado lot loans, the jury convicted Doughty of one count of bank fraud conspiracy, four counts of bank fraud relating to separate lot loans, and one count of unauthorized issuance of a loan to Anderson's personal company.
Second, trial evidence showed that Doughty funded five so-called "senior life settlement" loans through FSB in 2008. Each loan was $2.5 million, and one of the loans went to Anderson's personal company. Doughty and Anderson recruited borrowers to take out these "self-paying" loans to provide money for investments in Altus-based Quartz Mountain Aerospace, Inc. ("QMA"). Evidence at trial showed that a portion of the loan proceeds was invested in QMA, and another portion would pay the loan's interest. The remaining proceeds on the loans would buy and maintain third-party life insurance policies, where the death benefits on the third parties were intended to repay the loan's principal. The jury heard that each loan exceeded Doughty's lending authority, and that he issued at least $10,000,000 in senior life settlement loans without FSB's loan committee or board approval. With each loan, Doughty and Anderson directed $125,000.00 in "service fee"" to Altus Ventures, a company under their control. The jury heard evidence that at the time the loans were issued, the fees to Altus Ventures were not disclosed to FSB or to the borrowers taking out those loans. In connection with the senior life settlement loans, the jury convicted Doughty of one count of misapplication of bank funds and one count of a false entry in bank records related to the concealment of the fees to Altus Ventures.
Third, the jury heard evidence that in January 2008, Doughty arranged a $2 million loan from FSB to Ethanol Products Group, LLC ("EPG"), a startup company in which both Anderson and Doughty had ownership interests. Evidence showed that Doughty advanced the $2 million from FSB, above his individual lending authority, without approval by FSB's loan committee or board. Soon before issuing the loan, Doughty e-mailed Anderson his "cash strategy" for two other companies they controlled; the "strategy" showed all the EPG loan proceeds would be directed to companies controlled by Anderson and Doughty, ultimately diverting $100,000.00 in "officer bonuses" to Anderson and Doughty. The jury found Doughty guilty of one count of unauthorized issuance of a loan and one count of misapplication of bank funds related to the EPG loan.
The jury heard evidence over seven days, and deliberated approximately seven hours before reaching a verdict this afternoon. The jury acquitted Doughty on three charges.
On April 14, 2016, Anderson pleaded guilty to a one-count Information charging him with conspiring with Doughty to commit bank fraud. As part of the plea agreement, the government agreed to dismiss at sentencing the charges against him from the indictment. Anderson testified as a witness for the government at Doughty's trial. At sentencing, Anderson faces up to five years in prison and a fine of $250,000.
Doughty faces up to 30 years in prison and a fine of $1,000,000.00 for each of the ten counts of conviction. Under federal law, each defendant will be required to pay restitution and to forfeit to the government the amount of the proceeds of the fraudulent schemes.
These convictions are the result of an investigation conducted by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation - Office of Inspector General. The case was prosecuted by Assistant U.S. Attorneys Chris M. Stephens and K. McKenzie Anderson.