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California Bank Loan Officer Sentenced for Mortgage Fraud
A former loan officer at Broadway Federal Bank in Los Angeles, California, has been sentenced to 18 months in federal prison for demanding kickbacks as part of a multi-million dollar mortgage fraud scheme.
Paul Ryan, 49, of Torrance, California, was sentenced by United States District Judge S. James Otero to also 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 his time at the bank, from early 2007 until March 2010, the bank paid rebates to brokers who brought loans applications to the bank. However, Ryan demanded 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 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.
“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.”
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.
The investigation into Ryan and Peggese was conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Federal Deposit Insurance Corporation’s Office of Inspector General. The cases were prosecuted by Assistant United States Attorney Jill Feeney of the Major Frauds Section.
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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