Deputy pleads guilty to federal fraud charges

Spokane County Sheriff’s Deputy Brett J. Peterson pleaded guilty today to three counts of lying to the federal Department of Housing and Urban Development in order to obtain a discounted mortgage for a house on West College Avenue. Peterson, 41 and a 14-year veteran of the department, declined comment but said he resigned from the sheriff’s office this week. Assistant U.S. Attorney Russ Smoot declined comment after the hearing, which did not appear on any court docket and remained sealed until Peterson appeared in court. “The parties have been discussing this matter throughout the summer,” Smoot told U.S. District Court Judge Fred Van Sickle. “While it appears the case is rushed, that is not the case.” According to court testimony, Peterson signed documents twice and also wrote a letter indicating that he lived at the house on West College when he did not. He had purchased the home under the federal Good Neighbor Next Door program, which provides financial assistance to law enforcement officers to buy homes in troubled neighborhoods if they agree to live in the homes for three years. With the plea, Peterson faced up to six years in prison. Smoot indicated in the plea agreement — which was partially read in court — that he would seek the low end of the sentencing range, which is six months in federal prison, defense attorney Rob Cossey said. As part of the plea, Cossey retains the right to ask Van Sickle to sentence Peterson to less time. The lawyer said he will ask Van Sickle to impose only probation. The attorneys agreed that Peterson must repay $32,500 as restitution in the case. “I signed a form indicating I lived at the house on College when in fact I did not,” Peterson said in court. He did so on three separate occasions in 2006 and 2007. Assistant U.S. Attorney Tom Rice read from court records that said the investigation began from an anonymous tip in 2008. Agents working for HUD investigated and turned the case over to federal prosecutors. The home on College Avenue was the second home Peterson purchased under the program. If a deputy or officer finds a home in a qualifying neighborhood, HUD will pay half the mortgage if they live in the home for three years. If they leave before that time, the amount HUD pays is prorated based on the buyer’s time in the house. Peterson bought the College Avenue home in 2004. Records show he also purchased a home in the 900 block of East Nebraska Ave in 1999, Rice said. Rice said the sheriff’s office was not involved in the investigation. “We try not to involve the agency itself,” he said. “We don’t want to put people in the difficult position of compromising an investigation.” Sheriff Ozzie Knezovich said Peterson informed him weeks ago that he was under federal investigation. “When he found out he was going to be charged, he … stated he did not want to see any ill repute brought to the sheriff’s office and resigned,” Knezovich said. “He did the right thing.” Peterson was making a base salary of $65,000, but the sheriff said that amount did not include overtime and other possible pay increases for education. “It’s heartbreaking,” Knezovich said. “This guy was very talented.” Van Sickle allowed Peterson to remain out of jail until his sentencing, which is currently scheduled for 10:30 a.m. on Jan. 5.