A former KeyBank loan officer from Cumberland who embezzled $14 million in bank funds to pay for opulent possessions, exotic trips and prostitutes was sentenced to 10 years in prison Thursday in U.S. District Court in Portland.

Walter Scott Fox III, 56, used his position to concoct a fraud scheme to take out loans in other people’s names over 17 years. He used one loan to make payments on another, and netted about $8.2 million over the years to pad his annual salary of about $100,000 by an additional $400,000 per year, Assistant U.S. Attorney Halsey Frank said.

“It paid for a lavish lifestyle,” Frank said before Fox was taken into custody.

Fox, who is married and has two adult children, used the stolen money to pay for female escorts, cars and sailboats, a boating business called The Boathouse, private school education and college for his children, family vacations to Hawaii, a Disney time share, a ski condo at Sugarloaf, and some of his children’s expenses after college.

“It was an elaborate, sophisticated scheme over a long period of time that involved use of other people’s identities,” Frank said. “I think this defendant is someone who got away with massive fraud for a long time.”

U.S. District Judge D. Brock Hornby also sentenced Fox to serve three years of supervised release after completing his prison term, pay back $9,546,043 in restitution and back taxes, and undergo 500 hours of drug abuse treatment.

“By your criminal conduct, you funded a lifestyle that most honest people in Maine could not afford,” Hornby said in issuing his sentence.

Fox’s attorney, Thomas Hallett, argued that Fox’s crime was driven by his background as the son of a man who was prominent but also an abusive alcoholic who left his family: Fox, commonly called Scott, wanted to provide for his own family in a way that his own father didn’t, with gifts, possessions and affluent lifestyles.

“In later years of his scheme, Scott became increasingly unstable. One symptom of this instability … was an ‘addiction’ to escorts. He frequently obtained sex in exchange for money, and on two occasions, developed relationships with escorts,” Hallett said in a written argument filed with the court Wednesday.

Hallett also argued in court Thursday that Fox’s scheme was different from other fraud cases in that no individual victims were deprived of their life savings, only the bank.

“There was no vulnerable victim whose life was really irreparably harmed,” Hallett told the judge.

Fox also used the stolen money to support a mistress, Cherish Burgess, for whom he bought a car and a house, and gave spending money.

Fox first met Burgess, now 26, in December 2008. They began dating in January 2011 and broke off their affair in July 2012. She is now fighting to keep the house he bought her at 17 Critter Lane in Windham, while federal authorities are seeking to seize it. Her claim to the house is still pending before the court.

Fox, who worked at KeyBank’s headquarters in Portland, pleaded guilty Feb. 4 to federal bank fraud and tax evasion. His plea surprised many who knew him.

Although his attorney had approached the U.S. Attorney’s Office in September 2012 to discuss Fox’s years of theft from KeyBank, prosecutors did not charge Fox until he appeared in court to waive a grand jury proceeding and enter his guilty plea, according to court records.

The judge had allowed Fox to remain free on an unsecured bond of $5,000 from the time of his guilty plea until his sentencing. Fox has sold his house in Cumberland and lived during that time in Canton, Georgia, with his wife.

Fox, dressed in a dark suit and tie, used a tissue to wipe tears from his eyes throughout Thursday’s sentencing hearing. He stood and apologized to the court for the harm his actions brought to the people whose identities he used in the fraud scheme, his co-workers at KeyBank and to his friends and family.

“I was living a lie. I lived the lie so long, it became a reality,” Fox said.

Fox thanked his wife, Shirley, and daughter, Sara, for standing with him despite his failings and recounted how his son, Charlie, disowned him.

From 1995 until 2012, Fox originated KeyBank loans and credit lines using the identities of four people without their knowledge. One of the people named on loan papers died in 2007, and Fox wrote a memo saying the person’s son had taken over the loan, court records say.

Because Fox didn’t report that income to the Internal Revenue Service, he was charged with evading $1.3 million in taxes, the amount he would have owed on the money he obtained fraudulently from 2006 to 2011. Those years are not beyond the statute of limitations for tax offenses, prosecutors have said.

Fox’s scheme fell apart in 2012, when KeyBank denied an increase in one of his lines of credit – money he was counting on to keep the complex scheme going, according to the U.S. Attorney’s Office.

By that August, he was delinquent on all of the fraudulent loans, sparking the concern of a supervisor who started asking questions about his loan portfolio. Fox resigned from KeyBank the next month.

The Boathouse, on Foreside Road in Falmouth, closed last spring.

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