Former First State Bank of Altus president and chairman Paul Harold Doughty, 67, was convicted Friday 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.
Last year, a federal grand jury charged Doughty and his associate, Freddon Anderson, with fraud related to three alleged loan scams: a series of loans to finance a real estate development in Colorado, a series of “senior life settlement loans to support an Altus aerospace company, and an unauthorized loan of $2 million from the bank to a company controlled by Doughty and Anderson.
Prosecutors said that in 2006 and 2007, Doughty and Anderson recruited buyers for 19 Colorado real estate lots, each priced at around $700,000. Doughty approved and issued 14 lot loans, totaling more than $10 million in loan proceeds for the seller, Mountain Adventure Property Investments – a company in which Anderson had an indirect ownership interest. Each loan made exceeded Doughty’s individual lending authority at First State Bank of Altus, and most were issued without the approval of the bank’s loan committee. On the few occasions that Doughty presented a loan to the committee, he misrepresented the source and amount of borrowers’ down payments and the borrowers’ responsibility for making payments on the loans. in reality, the loans were presented to borrowers as “zero money down” investments, and down payments were often advanced or refunded to the buyers by Anderson, the U.S. Attorney reported.
Doughty also funded five “senior life settlement” loans in 2008, each for $2.5 million. One of the loans went to Anderson’s personal company, and with each loan, Doughty and Anderson redirected a $125,000 “service fee” to a company under their control. Again, each loan exceeded Doughty’s individual lending authority.
In 2008, Doughty made a $2 million loan to Ethanol Products Group, a startup in which he and Anderson had ownership interests. Again, he exceeded his lending authority and made the loan without approval of the bank’s loan committee.
In April, Anderson pleaded guilty to one count charging him with conspiring with Doughty to commit bank fraud. He testified against Doughty at trial, and faces up to five years in prison and $250,000 in fines. As part of a plea agreement, prosecutors agreed to dismiss other charges related to the case.
Doughty, meanwhile, faces a prison sentence of up to 30 years and a fine of up to $1 million for each of the ten counts upon which he was convicted.
The former president of an Oklahoma bank could spend the rest of his life in prison after being convicted of bank fraud and real estate fraud, according to the U.S. Attorney’s Office for the Western District of Oklahoma.