A former loan officer at a Los Angeles-based community bank that pocketed 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 to 18 months in federal prison. In addition to his sentence, Paul Ryan was ordered to pay $353,925 in restitution to his former employer, Broadway Federal Bank.
Between 2007 and 2010, the bank paid rebates to brokers that brought in loan applications. According to the sentencing memorandum, 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.” Ryan also worked with brokers and provided a template for presenting fraudulent financial information for the churches, thus ensuring approval on the loan applications.
“This bank insider accepted hundreds of thousands of dollars in a scheme that led his employer to suffer millions of dollars in losses,” said United States Attorney Eileen M. Decker. “After investigators began looking into the scheme, Ryan encouraged another bank employee to lie about the fraudulent loan applications, which further complicated but did not deter this investigation.”
Ryan pleaded guilty in 2014 to one count of receiving bribes and rewards as a bank employee. One of the brokers involved in the scheme, Chester Peggese 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.
