Christopher J. Gallo and Mehmet A. Elmas face serious charges for allegedly manipulating loan documents to fraudulently secure lower mortgage rates.

Two former employees of a New Jersey-based mortgage lending business, Christopher J. Gallo, 44, of Old Tappan, New Jersey, and Mehmet A. Elmas, 32, who resides in Turkey, have been formally charged with conspiracy to commit bank fraud, announced U.S. Attorney Philip R. Sellinger.

The charges relate to a complex mortgage fraud scheme that reportedly ran from 2018 through October 2023. Both men, who previously held significant positions within the lending company, are accused of exploiting their roles to falsify loan documents, and misleading mortgage lenders about property uses to secure preferential interest rates. 

Gallo, a senior loan officer, and Elmas, his assistant and a mortgage loan officer, appeared in Newark federal court before U.S. Magistrate Judge André M. Espinosa and were each released on a $200,000 unsecured bond.

Scheme Details: 

According to court documents, Gallo and Elmas frequently submitted fraudulent loan applications stating the borrowers would be primary residents at the properties, whereas these were intended for rental or investment purposes. 

This misrepresentation allowed them to obtain loans at rates significantly lower than what would have been available for non-primary residences. The fraudulent activities extended to falsifying building safety and financial data of prospective borrowers to facilitate loan approvals. 

Throughout the five years, Gallo alone originated loans totaling over $1.4 billion.

Legal Implications: 

The charge of conspiracy to commit bank fraud carries severe penalties, including a potential maximum of 30 years in prison and a $1 million fine, or double the amount of the gross gain or loss from the offense, emphasizing the serious nature of the allegations.

The arrest was the result of a thorough investigation by the FBI, led by Special Agent in Charge James E. Dennehy in Newark, and the Federal Housing Finance Agency, Office of Inspector General, under Special Agent in Charge Robert Manchak. Assistant U.S. Attorney Shontae D. Gray of the Economic Crimes Unit in Newark is representing the government in this case.

It is important to note that these charges are merely accusations, and the defendants are considered innocent until proven guilty. The case will continue to unfold as it moves through the judicial system.