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The leader of a five-person team that originated billions in loans for a New Jersey-based mortgage lender has been charged, along with one of his assistants, with allegedly engaging in a large-scale mortgage fraud scheme.
Christopher J. Gallo, 44, of Old Tappan, New Jersey, and Mehmet A. Elmas, 32, a U.S. citizen who resides in Turkey, “routinely misled mortgage lenders,” prosecutors said — often by claiming that their clients intended to live in homes that they were actually purchasing as investors.
Gallo and Elmas were arrested Wednesday and appeared before U.S. Magistrate Judge André M. Espinosa in Newark federal court. Each was released on a $200,000 unsecured bond, the U.S. Attorney’s Office for the District of New Jersey announced.
Inman was unable to reach either defendant at their current employer. An attorney for Gallo did not immediately respond to a request for comment.
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Gallo and Elmas have each been charged with one count of conspiracy to commit bank fraud, which carries a maximum penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense, whichever is greater.
Their former employer, Little Falls, New Jersey-based NJ Lenders Corp., said in a statement that it is “fully cooperating with law enforcement and the ongoing investigation,” and that Gallo and Elmas’ actions “appear to have been coordinated to benefit them financially while taking advantage of the reputation and trust of the firm.”
Team Gallo
In their criminal complaint, prosecutors said Gallo was a senior loan officer who supervised four loan processors, and Elmas was a loan officer and assistant to Gallo. “Team Gallo” originated more than $1.4 billion in loans from 2018 through October 2023, the complaint said.
In some cases, prosecutors alleged, Gallo and Elmas would submit loan applications stating that borrowers were the primary residents of homes they were financing, when in fact the properties were to be used as rental or investment properties.
“By fraudulently misleading mortgage lenders about the true intended use of the properties, Gallo and Elmas secured and profited from mortgage loans that were approved at lower rates,” prosecutors said.
Gallo and Elmas are also accused of falsifying borrowers’ financial information and property records, including building safety information, to get loans approved.
In one instance cited in the complaint, Gallo and Elmas allegedly obtained an approval for a $353,000 condominium mortgage by falsely stating that the homeowners’ association had the 10 percent capital reserve required for loan approval, the complaint said.
The investigation that led to the charges was conducted by special agents of the FBI under the direction of Special Agent in Charge James E. Dennehy in Newark, and special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak.
Top 10 US mortgage originator
During the period investigated, the industry publication Scotsman Guide ranked Gallo as one of the top 10 mortgage originators in the country for five years running.
In a 2020 profile, Scotsman Guide ranked Gallo 10th among all U.S. mortgage originators in 2019 by dollar volume, with $346 million in loans funded. The publication ranked Gallo first in New Jersey and 4th nationwide in 2020 and 2021, with more than $1 billion in loans originated each year. In 2022 and 2023, Gallo dropped back to 10th in the Scotsman Guide rankings, with refinancings accounting for more than 90 percent of his team’s business.
Licensed in 20 states and Washington, D.C., NJ Lenders Corp. sponsors 139 mortgage loan originators who work out of 18 branches, according to records maintained by the Nationwide Mortgage Licensing System (NMLS).
In 2019, NJ Lenders Corp. agreed to pay a $10,000 penalty to the New York State Department of Financial Services to resolve allegations that it failed to obtain authorizations to use the domain names and websites SilverBayLending.com and MyHomeBanker.com to solicit business in New York.
According to NMLS records, Gallo joined CrossCountry Mortgage in September 2023 as a mortgage loan originator in Rockaway, New Jersey, and became a branch manager at the lender’s Rutherford, New Jersey, office in January. Elmas followed Gallo to CrossCountry Mortgage in October and is listed by NMLS as a mortgage loan originator in the company’s Rockaway office.
In a statement, CrossCountry Mortgage would say only that “Chris Gallo is not employed by CrossCountry Mortgage. We do not comment on legal matters.”
Coincidentally, CrossCountry Mortgage employs another Christopher J. Gallo who is a branch manager in Blue Bell, Pennsylvania. That employee, Christopher Joseph Gallo, has not been accused of any wrongdoing.
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