February 10, 2014
By Bob Coleman
Editor, Coleman Report
A KeyBank loan officer from Maine who ran a sophisticated multi-million loan fraud during the course of his career is heading to prison.
Scott Fox started his scam in 1995 by using the identities of others to fund his side boating supply business, a house for the mistress, family vacations and his kid’s education.
Here’s how he did it.
In 1999, Fox made a $950,000 loan secured by stock to MN, DBA Rochester Hills. Of course, everything was phony. In 2010, Fox increased the loan to $1.2 million, In 2012, he converted the loan to a term loan. He wrote a memo to file that MN was sick and her son had assumed responsibility for the loan. Actually, MN died in 2007.
In 1996, Fox forged the signature of an AR, DBA Jetco, for a $100,000 line of credit. During the next 16 years the line was increased 14 times until it reached $4 million. In 2000, Fox converted the line of credit from unsecured to secured, and pledged as collateral a fabricated investment account at Smith Barney valued at $1.1 million. Fox forged the signature or AR and a Smith Barney Vice President.
In 1996, Fox forged the signature of an EH, DBA H Enterprises for a $100,000 line of credit. During the next 16 years the line was increased 15 times to $4 million. The loan was secured by 34,000 imaginary shares of GE stock valued at $1.5 million at a fictitious Merrill Lynch account.
Finally, in 2003 there was another fictitious loan, this time collateralized by US Treasury bonds at Morgan Stanley. RR, DBA Jetco was the name.
Over the course of the fraud, Fox obtained $14 million. Of this, Fox paid back to KeyBank $5 million in interest and $720,000 in principal to keep the fraud going. He netted $8.1 million.
The sentence will be 8 to 11 years. The sentencing will be held on May 28, 2014.
Fox is out of $5,000 bail pending his sentence for bank fraud and income tax evasion.