A former loan officer at Broadway Federal Bank who took more than $350,000 in kickbacks in exchange for considering mortgage applications submitted by churches in relation to a fraud scheme that resulted in losses of at least $4.2 million was sentenced today to 18 months in federal prison.
Paul Ryan, 49, of Torrance, was sentenced this morning by United States District Judge S. James Otero. In addition to the prison term, Judge Otero ordered Ryan to pay $353,925 in restitution to Broadway Federal Bank.
Ryan pleaded guilty in 2014 to one count of receiving bribes and rewards as a bank employee. During the time Ryan worked at the bank, from early 2007 until March 2010, the bank paid rebates to brokers who brought loans applications to the bank. Ryan “demanded from the brokers that all or part of that rebate amount be paid to him…intending to be rewarded and influenced in his processing and approval of these church loans,” according to the sentencing memorandum filed with the court.
Ryan worked with brokers and provided a template for presenting financial information for the churches that ensured the loan applications would be approved. Based on the false information concerning the financial status of the churches, Broadway Federal Bank issued loans to the churches.
One of the brokers who paid kickbacks – Chester Peggese, 59, of Los Angeles – was sentenced in February to one year and one day in federal prison and was ordered to pay $4.2 million in restitution to Broadway Federal Bank.
According to court documents, Peggese acted as a “consultant” who targeted Los Angeles-area churches with promises of new mortgages to purchase property or refinanced mortgages from Broadway Federal Bank. Between 2007 and 2009, Peggese met with representatives of churches and obtained financial information required for the loan applications. Others involved in the scheme altered the financial information to make it appear the churches were more financially sound than they actually were, and Peggese caused these false loan applications to be submitted to Broadway Federal Bank.