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A federal jury was scheduled to begin deliberations today on charges that a millionaire banker orchestrated a $580,000 loan fraud against the Bank of New York in the early 1980s.

Peter J. Castiglia of Hamburg, once considered a rising star of the Buffalo banking industry, has been the central figure in a five-week trial before U.S. District Judge John T. Elfvin.

Castiglia resigned from the bank in 1983 after the FBI and Internal Revenue Service began investigating fraud allegations. As the bank's top loan officer in Western New York, he once had the authority to grant loans of up to $1 million without consulting other bank officials.

He and three other businessmen are accused of carrying out a complicated scheme in which the bank loaned $580,000 to a land-development company with Castiglia as the main stockholder.

Three contractors -- Jack Liffiton of Getzville, Anthony H. Santiago of Williamsville and Richard W. Tocha of Clarence -- are charged with assisting Castiglia in the 1981-82 scheme.

In closing arguments before the jury Tuesday, Assistant U.S. Attorney Rodney O. Personius said the four men altered records in a tangled plot to hide the fact that Castiglia was essentially lending his bank's money to himself.

Castiglia authorized the $580,000 loan to Santiago, and Santiago then funneled the money to Geneva Lands, an Amherst condominium conversion venture run by Liffiton and the banker, Personius said.

"The person who directed the disbursement of the funds was Peter Castiglia," Personius said. "The actual and true owner of Geneva Lands was Peter Castiglia."

He charged that Tocha assisted the others in a "coverup" after Castiglia learned that federal agents were looking at bank records for signs of fraud.

Castiglia never had mentioned his participation in the Geneva Lands project in annual disclosure statements required by the bank, Personius said.

Harold Boreanaz, Castiglia's attorney, scoffed at the government accusations. He said Castiglia was widely respected in the local banking industry and once had personal assets of more than $4 million. If Castiglia ever wanted to defraud the bank, he had the knowledge to construct a much better plot that would "beat them for millions," Boreanaz said.

Boreanaz and other defense attorneys said the $580,000 loan arrangement was not a crime. They said it began as a series of handshake agreements among friends but degenerated into a business fiasco after a series of arguments and misunderstandings.

Liffiton claims he and the other three men were indicted because of an FBI vendetta, stemming from the agency's failure to prove allegations that he was involved in murder, drug-dealing and other criminal activities, the businessman told The Buffalo News.

The FBI has denied Liffiton's allegations.

In August a federal jury convicted Liffiton of conspiracy and perjury in an unrelated case for concealing profits from property deals in 1982.

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