Tax credit fraud money trail: bank fraud, to obtain tax credits, exchange for tax refunds!
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President, First State Bank Altus, commits bank fraud
OTC authorizes $60 million in fraudulent tax credits
Chaparral invests $15 million, gets $30 million in tax refunds
Other tax credit schemes

Step by step, trail of evidence showing how one tax credit fraud scheme worked.

Oklahoma's largest uncovered case of tax credit fraud was the Altus Venture and Affinity Ventures scheme both operated by Paul Doughty, who as president of First State Bank Altus, was in a postion to create the counterfeit loans.

  • The first step was to commit bank fraud to create bogus loan documents. Click to view
  • Second, the Oklahoma Tax Commission (OTC) allowed the bogus loan documents to qualify as investments to obtain unearned tax credits.
  • To cover up identities of those benefiting OTC hid certain tax credits. Click to view
  • Finally OTC would divert incoming tax revenue to issue tax refund checks. This would keep the entire scheme off the books.

Summary

Here we will use evidence found on FDIC and SEC websites, non-public OTC reports, and internal OTC emails, to retrace the complete trail starting with bank fraud; OTC authorizing tax credits for false claims; where tax credits were sold at one-half face value through the back side (as an immediate 200% return on investment) of the same bogus investment scheme used to obtain the tax credits; how OTC hid the fraudulently obtained tax credits and identities of those receiving the tax credits; where the tax credits were exchanged under the table for tax refunds. Tax refunds paid out of incoming tax revenue before any of this reaches the state financial system, leaving everything off the books.

In an effort to keep this simple, this explanation will focus on one issue only; using one recipient of unearned tax credits, in one case, that started in December 2005 and went through June 2009. For those who haven't followed all related issues and questions previously addressed, the information can be found at ProwlingOwl.com

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President, First State Bank Altus, commits bank fraud

December 2005, Paul Doughty, President, First State Bank, Altus, issued $643 million in fake loans. $507 million to one LLC and 3 investment funds he owned, and controlled; collectively Altus Ventures; $136 million going to two other funds, Doughty managed, for Affinity Ventures. View details.

Note: Bank fraud is only one of several approaches used in committing tax credit fraud. More

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OTC authorizes $60 million in fraudulent tax credits

OTC authorized Altus Ventures $60 million in tax credits for a claim it invested $200 million in QMA during 2006, when it invested nothing. Rather Altus Ventures provided OTC with a fraudulent loan document to provide OTC cover. The bogus claim was obvious to OTC on numerous fronts, including previous involvement with an Altus Ventures' investment, where numerous media articles were written, that included interviews with Paul Doughty and Tony Mastin, head of OTC; discussing previous inflated investment claims. View details.

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Chaparral invests $15 million, gets $30 million in tax refunds

March 30, 2006, Chaparral Energy, having recently issued an IPO, when news first broke, the morning of March 30 2006, files a report (see page F1-28) with the U.S. Securities and Exchange Commission disclosing it had invested in Altus Ventures and the Companys return on the investment will be receipt of tax credits.

September,2006, Chaparral Energy, would file a report (see pages 18, 21) with the SEC stating the Companys expected return on it $15 million investment will be receipt of $2 of tax credits for every $1 invested. The reference to investing in "two venture capital" LLCs, is common and Altus Venture's used two of its LLC's. More

Information found on reports Chaparral Energy filed with the U.S. Securities and Exchange Commission, March 2006, until June 2009 (see page 24) states, for investing $15 million, in 2006, Chaparral received $30 million in tax credits. Chaparral would return the tax credits to OTC, and receive $30 million in tax refunds, reported as gross production tax refunds, which are not publically reported. While only applying for $2.8 million through December 31, 2008; Chaparral would request and receive all $30 million in tax refunds before June 30, 2009.

More about Chaparral Energy SEC filings. View

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Other tax credit schemes

Bank fraud is only one of several approaches used in committing tax credit fraud. Other common schemes involve:

  • Claiming investments that were never made.
  • Misrepresenting loans backed by the business claimed to be receiving the investment as money invested at risk.
  • Business owners selling their business back themselves, and representing this as investing.
  • It would be unwise to assume there couldn't be some we have seen yet.
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