Paul Harold Doughty, Bank Fraud Scheme, OK 2016

Paul Harold Doughty, 67, of Edmond, Oklahoma, is behind bars after a federal jury convicted him of orchestrating a sprawling bank fraud scheme that gutted First State Bank of Altus. Sentenced today to 48 months in federal prison, Doughty — the former president and chairman of FSB — was found guilty in July 2016 on ten counts including bank fraud, conspiracy, misapplication of funds, false bank entries, and unauthorized loan issuance. The damage: over $10 million in losses, with U.S. District Judge David L. Russell ordering Doughty to pay $10,120,166.58 in restitution directly to the Federal Deposit Insurance Corporation.

The collapse of FSB traces back to a web of deceit spun by Doughty and his business partner, Fred Don Anderson, 67, of Eagle Point, Oregon. Anderson, who pleaded guilty to conspiring with Doughty, was sentenced December 2, 2016, to 18 months in prison. The duo ran multiple enterprises out of Altus and exploited Doughty’s position to push through risky and illegal loans. By July 2009, state regulators had seen enough — FSB was shut down, and the FDIC stepped in as receiver to manage the wreckage.

At the core of the fraud were three brazen loan schemes exposed during a seven-day trial. First, a real estate venture in Routt County, Colorado, where Doughty and Anderson lured buyers into purchasing $700,000 lots with promises of “zero money down.” Doughty approved 14 loans totaling over $10 million to buyers — all exceeding his lending authority and bypassing FSB’s loan committee. Down payments? Often phony, advanced or refunded by Anderson’s company, Mountain Adventure Property Investments, LLC (MAPI), where he served as president and held indirect ownership.

Doughty didn’t stop there. He misled FSB’s loan committee when he did bring proposals forward, falsifying down payment sources and shielding borrowers’ lack of responsibility. One loan — $580,000 — went directly to Anderson’s personal company, approved without authorization. The jury convicted Doughty on one count of bank fraud conspiracy, four counts of individual lot loan fraud, and one count of unauthorized loan issuance tied to this scheme.

The second major fraud involved so-called “senior life settlement” loans — five $2.5 million loans issued in 2008 through FSB. These were marketed as “self-paying” loans, with proceeds split between investments in Altus-based Quartz Mountain Aerospace, Inc. (QMA), interest payments, and third-party life insurance policies meant to cover principal upon death. One of those loans went straight to Anderson’s company. Every loan exceeded Doughty’s authority, and none had proper oversight.

The final scheme was a $2 million unauthorized loan funneled to a company jointly controlled by Doughty and Anderson. Prosecutors proved that Doughty abused his role at every turn, weaponizing his position to benefit himself and his co-conspirator. While acquitted on three charges, the convictions stand as a damning verdict on a man who treated a community bank like a personal piggy bank. The FDIC now faces the long haul of recouping $10.1 million from a system he helped destroy.