PORTLAND, Maine — A former Cumberland man and KeyBank executive was sentenced Thursday to 10 years in prison for authorizing more than $14 million in fraudulent loans and lines of credit over 16 years, spending nearly $8.2 million of the fraudulent proceeds on family vacations, private schools, sailboats and to support a mistress.
Walter Scott Fox, 56, also known as Scott Fox, pleaded guilty Feb. 4 to the federal charges of bank fraud and tax evasion.
On Thursday, U.S. District Court Judge D. Brock Hornby sentenced him to 10 years in prison plus three years of supervised release. Fox must also pay more than $9.5 million in restitution, according to a release from U.S. Attorney Thomas E. Delahanty II.
From 1995 to 2011, while Fox was loan officer at Casco Northern Bank and its successor, KeyBank, he authorized more than $14 million in fraudulent loans and lines of credit using the identifies of four real individuals, without their knowledge or consent.
Fox used more than $5.8 million to keep the loans current and prevent detection of the scheme, Delahanty has said.
In a sentencing memorandum filed Wednesday, Fox’s attorney, Thomas F. Hallett, wrote Fox obtained an average of $400,000 a year in illegal earnings throughout the course of the scheme.
He used the funds to finance his business, The Boathouse, in Falmouth, as well as to purchase 20 new cars, seven sailboats, annual vacations to Hawaii and other parts of the world, a Disney timeshare, a ski condominium, and spent $500,000 to finance two Olympic sailing campaigns for his children, according to the memo.
More recently, Scott developed “an addiction to escorts,” Hallett wrote, frequently exchanging sex for money and developing relationships with escorts. He eventually purchased a home and a car for one of the escorts.
Fox failed to report any of the fraudulent income to the Internal Revenue Service, which resulted in a loss in taxes of more than $1.3 million between 2006 and 2011, Delahanty said in February.
In 2012, when KeyBank denied an increase for one line of credit, the fraudulent loans fell into delinquency. A supervisor grew concerned about the delinquent loans and inquired about the status of Fox’s loan portfolio. Fox abruptly resigned his position.
Arguing for leniency, Hallett wrote in the sentencing memo that Fox “is extraordinarily remorseful for the harm he has caused to his victims and to his family.”
Fox was raised in a wealthy home with an abusive, alcoholic father who abandoned the family when he was an 18-year-old college student, according to Hallett.
“Scott’s thirst for providing for his family became virtually unquenchable,” his attorney wrote. “He felt that, to be a successful husband and father, he needed to provide not only emotional support but the types of possessions and experiences that his father had provided Scott before abandoning him.”
In his release Thursday, Delahanty wrote, “Judge Hornby observed that the sentence was needed to send a message, promote respect for the law and provide just punishment because Fox used the proceeds of his fraud to fund a lifestyle that most people cannot afford.”