Mortgage Fraud: Two Ex-Employees Charged

Originally Syndicated on April 16, 2024 @ 1:45 am

Christopher J. Gallo, 44, from Old Tappan, New Jersey, and Mehmet A. Elmas, 32, a U.S. citizen residing in Turkey, have been charged in a complaint with conspiracy to commit bank fraud related to their involvement in a significant mortgage fraud operation.

Court documents and statements reveal that Gallo and Elmas were formerly employed by a licensed residential mortgage lending company based in New Jersey. Gallo served as a senior loan officer, while Elmas worked as a mortgage loan officer and assistant to Gallo. From 2018 to October 2023, the pair collaborated to create a fraudulent scheme that involved falsifying loan origination documents submitted to mortgage lenders in New Jersey and beyond, including their former employer, to illegally secure mortgage loans. They consistently mislead lenders regarding the intended use of properties in order to acquire lower mortgage interest rates. Frequently, they submitted loan applications falsely indicating that the listed borrowers would be living as primary residents in certain properties, when, in reality, those properties were meant for rental or investment purposes.

By providing false representations about the actual use of the properties, Gallo and Elmas managed to obtain and profit from mortgage loans that were approved at reduced interest rates. Their conspiracy also involved the falsification of property records, such as building safety and financial details of potential borrowers, all to aid in gaining mortgage loan approval. During the specified period from 2018 to October 2023, Gallo originated loans exceeding $1.4 billion.

The defendants appeared in court today before U.S. Magistrate Judge André M. Espinosa in Newark federal court and were each released on a $200,000 unsecured bond.

U.S. Attorney Philip R. Sellinger announced the charges. The conspiracy to commit bank fraud could lead to a maximum sentence of 30 years in prison and a fine up to $1 million, or double the gross gain or loss incurred, whichever is greater.

U.S. Attorney Sellinger acknowledged the diligent work of FBI special agents, overseen by Special Agent in Charge James E. Dennehy in Newark, along with special agents from the Federal Housing Finance Agency, Office of Inspector General, managed by Special Agent in Charge Robert Manchak, for their efforts in the investigation that led to the arrests.

The case is being prosecuted by Assistant U.S. Attorney Shontae D. Gray from the Economic Crimes Unit in Newark. It’s important to note that the charges and allegations in the complaint are just that—allegations—and the defendants are presumed innocent unless proven guilty in a court of law.