Deputy pleads guilty to fraud

Spokane County Sheriff’s Deputy Brett J. Peterson pleaded guilty Thursday to defrauding a federal program that provides discounted mortgages to law enforcement officers.

Peterson, 41, who’s a 14-year veteran of the department, declined comment other than to say he resigned from the Sheriff’s Office this week.

Assistant U.S. Attorney Russell Smoot also declined comment after the hearing, which did not appear on any court docket and remained sealed from public notice 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 Avenue when he did not. He pleaded guilty to three felony counts of lying to the U.S. Department of Housing and Urban Development.

Peterson bought the home under the federal Good Neighbor Next Door program, which provides financial assistance to law enforcement officers, firefighters and teachers who buy homes in troubled neighborhoods and agree to live in them for three years.

Peterson faced up to six years in prison with the plea. 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 the judge 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 Peterson purchased under the Good Neighbor 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 move out of the home earlier, HUD prorates the value of the discount.

Peterson bought the College Avenue home in 2004. Records show he also purchased a home on East Nebraska Avenue in 1999, Rice said.

Rice said the Sheriff’s Office was not involved in the 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.