SEC letter - How BOK and Cimarron Business Capital obtained unearned tax credits (cont)
Ongoing tax credit investigation and achievements
A variety of financial shell games is used to misrepresent investments; most typically, as with BOK, secured interest bearing loans are claimed to be at risk investments. State authorities are more than willing to turn their backs, accept claims at face value, and holding all information in strictest confidence.
This investigation has already led to exposing similar cases, including former First State Bank Altus Oklahoma, whose then president. Paul Doughty and others, are currently under investigation, for a variety of financial activities.
These efforts were instrumental in convincing the FDIC and Federal Reserve Board to examine Doughty's doings. A full scope audit of the bank ensured; later the, FDIC seized the bank; and rolled over into an investigation, which based on my understanding is still ongoing.
More telling was discover of $643 million in fraudulent loans. Doughty made.
As disconcerting as it was for state and federal banking regulators to have not caught Doughty's illegal activities; the bank forensic auditors missed the $643 million in fraudulent loans. Doughty had made the loans to six LLCs he managed. Doughty claimed these loans as investments to obtain tax credits under another Oklahoma tax credit program. Fundamentally the same as BOK
The loans showed up as "unused loan commitments" often more than 2,000 percent more than typical "unused loan commitments" for similar sized banks.
That speaks very clearly to systemic failures in public oversight practices; and the fact this information has been provided to state officials, only to be totally ignored. Madoff, was not the exception, but rather the rule.
For that and other reasons, I make it a practice to post all information gathered, including information of this nature reported to authorities, online for the world to see. That practice has proven very fruitful, in obtaining evidence.