This story appeared in Bank Digest.
Chester Peggese of Los Angeles, Calif., has been sentenced to serve one year and one day in federal prison for recruiting churches into a $4.2 million mortgage scheme that defrauded TARP-recipient Broadway Federal Bank, SIGTARP has reported. Peggese has also been ordered to pay $4.2 million to Broadway Federal Bank and $38,609 to the Internal Revenue Service. Peggese pleaded guilty in 2015 to one count of bank fraud and one count of subscribing to a false tax return.
SIGTARP's release stated that according to the plea agreement, 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.
Other individuals involved in the scheme then altered the financial information to make it appear the churches were more financially sound than they were, and Peggese caused these false loan applications to be submitted to Broadway Federal Bank. Based on the false information concerning the financial status of the churches, Broadway Federal Bank issued loans to the churches.
According to SIGTARP, Peggese has also admitted he failed to report more than $159,000 in business income on his tax returns for the years 2007 through 2009.