Paul Ryan Sentenced in $4.2M Church Loan Kickback Scheme

Paul Ryan, 49, of Torrance, is headed to federal prison for 18 months after pleading guilty to accepting more than $350,000 in kickbacks as part of a multi-million-dollar mortgage fraud scheme that gutted Broadway Federal Bank. The former loan officer abused his position to fast-track fraudulent loan applications from churches, demanding brokers hand over rebate payments meant for the bank. The scam led to losses exceeding $4.2 million, with Ryan directly profiting from the collapse of due diligence.

Sentenced today by U.S. District Judge S. James Otero, Ryan was also ordered to pay $353,925 in restitution. From early 2007 until March 2010, Ryan manipulated the bank’s loan process by providing brokers with a template to falsify church financials, ensuring approval of doomed loans. These applications, built on lies about the churches’ income and stability, were greenlit solely because Ryan was lining his pockets.

One key broker, Chester Peggese, 59, of Los Angeles, already served time—12 months and one day—and was slapped with $4.2 million in restitution after admitting his role. Peggese targeted predominantly African-American churches, promising access to new or refinanced mortgages through Broadway Federal. Instead, he fed the bank falsified documents, knowing full well they misrepresented the borrowers’ financial health.

Ryan didn’t just take bribes—he actively sabotaged accountability. When investigators closed in, he pressured another bank employee to lie about the fraudulent applications, attempting to bury the truth. His actions didn’t stop the probe, but they added obstruction to a long list of betrayals. “This bank insider accepted hundreds of thousands of dollars in a scheme that led his employer to suffer millions,” said U.S. Attorney Eileen M. Decker.

Broadway Federal Bank, a recipient of $15 million in federal TARP bailout funds, has yet to repay the government and absorbed more than $5 million in total losses from the scheme. Christy Goldsmith Romero, Special Inspector General for TARP, emphasized the betrayal: “Ryan abused his position of trust… demanded more than $350,000 in bribes… and tried to cover up his crimes.”

The case was investigated by the FBI, IRS Criminal Investigation, SIGTARP, and the FDIC Office of Inspector General. Assistant U.S. Attorney Jill Feeney of the Major Frauds Section prosecuted. The message is clear: even in the shadows of loan offices and church pews, corruption will be dragged into the light.

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