LOUISVILLE, Ky. (WDRB) -- Shively Police say they've arrested a 64-year-old man who engaged in ongoing illegal activity with his 11-year-old neighbor. Police say she would perform sexual favors for him for $20.

According to an arrest report, police spoke with the 11-year-old after someone contacted them to report what was going on. Police say the girl admitted that she had engaged in sexual intercourse with 64-year-old William J. Wallis on multiple occasions.

Police say Wallis is the girl's neighbor. He lives on Legene Drive, near the intersection of Rockford Lane and Dover Road, and had allegedly been "watching her on a regular basis."

"They are neighbors, not directly next door, but in close proximity to each other. Apparently the parents of the victim and he and his girlfriend were familiar with each other, friends with each other, and through the course of time, began to watch the child," said Shively Police Sgt. Josh Myers.

Police say the inappropriate relationship started when she was 9 years old.

"It's probably a classic scenario where there is a bit of grooming to earn the trust, and next thing you know, we're taking fun pictures. That progresses to something more serious, and ultimately in this case, it progressed to all the way," Myers said.

Police say Wallis paid her $20 and took her to places like McDonald's as a reward for taking sexually explicit pictures and videos that police found on his computer.

Police say Wallis told them he had sex with his young neighbor three times, and participated in other sexual acts with her twice.

"This is a tragic and hard case to imagine, much less deal with. The only thing I can say, at least he was honest and up-front with us and I don't know if that is due to guilt and remorse or what sort of combination," Myers said.

According to the arrest report, police searched Wallis' cell phone and residence after obtaining a search warrant and found sexually explicit photos and videos of the girl on his personal computer.

Wallis was brought into the police station for questioning and allegedly confessed to engaging in sexual intercourse with the girl on three occasions over the past year. The girl also told police that she engaged in additional sex acts on two occasions, according to the report.

Police say Wallis confessed to paying the 11-year-old $20 each time he took sexually explicit photos and videos of the girl or he would reward her with trips to places like McDonald's.

Wallis was arrested and charged with three counts of first degree rape, two counts of first degree sodomy, one count of viewing or possessing matter portraying the sexual performance of a minor and one count of use of a minor in a sexual performance. He pleaded not guilty to all of the charges.

His bond was set at $50,000 full cash. The judge ordered him to have no contact with any children.

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