“Zero Down” Scheme Lands Bank President in Jail

Rachel Dollar —  February 13, 2017 — 1 Comment

Paul Harold Doughty, 67, Edmond, Oklahoma, the former president and chairman of First State Bank of Altus (“FSB”), was sentenced to 48 months in federal prison after a jury convicted him in July of 2016 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.  United States District Judge David L. Russell also ordered Doughty to pay $10,120,166.58 in restitution to the Federal Deposit Insurance Corporation (“FDIC”).  Fred Don Anderson, 67, Eagle Point, Oregon, was sentenced to 18 months in federal prison after pleading guilty to conspiring with Doughty to commit bank fraud. Anderson partnered with Doughty in several businesses headquartered in Altus, Oklahoma. In July 2009, state banking regulators closed FSB due to the bank’s loan losses, and the FDIC 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.

On July 1, 2016, after hearing seven days of trial evidence, a federal jury returned a guilty verdict against Doughty on ten counts relating to the three loan schemes. The jury acquitted Doughty on three charges. 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.

United States District Judge Russell sentenced Doughty to 48 months in federal prison, followed by three years of supervised release. Judge Russell also ordered Doughty to pay $10,120,166.58 in restitution to the FDIC. Doughty must report to federal prison on Monday, April 3, 2017.

Judge Russell sentenced Anderson to 18 months in federal prison, followed by three years of supervised release. Anderson was also ordered to pay $3,250,409.12 in restitution to the FDIC. 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.

The sentencing was announced Mark A. Yancey, United States Attorney for the Western District of Oklahoma.

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.

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Rachel Dollar

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One response to “Zero Down” Scheme Lands Bank President in Jail

  1. It’s the INVESTORS in the FRAUD so it’s the CRIMINAL ELEMENT itself that creates CONFLICT OF INTEREST in FRAUDCLOSURE by NON DISCLOSURE.

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