Two Former Mortgage Lenders Indicted in $3 Billion NJ Mortgage Fraud Scheme

Defendants Allegedly Secured Loans Using False Information to Obtain Lower Interest Rates

NEWARK, N.J. – Two former employees of a New Jersey-based residential mortgage lending firm were arraigned today on charges tied to an extensive mortgage fraud scheme, U.S. Attorney Philip R. Sellinger announced. Christopher J. Gallo, 44, of Old Tappan, New Jersey, and Mehmet Ali Elmas, 32, a U.S. citizen previously residing in Turkey, each pleaded not guilty in federal court before U.S. District Judge Brian R. Martinotti.

According to court documents, Gallo, a former senior loan officer, and Elmas, his assistant and a mortgage loan officer, allegedly conspired from 2018 to 2023 to falsify loan documents to obtain mortgage loans fraudulently. The scheme involved misrepresenting the intended use of properties to secure lower interest rates. In numerous cases, the defendants reportedly submitted applications falsely claiming that borrowers would use the properties as primary residences, despite knowing the properties were intended for rental or investment purposes. This misrepresentation allowed them to secure loans at lower interest rates than would otherwise apply.

The indictment also details how the defendants allegedly falsified records related to building safety and borrower financial information to ensure loan approval. Over five years, Gallo originated more than $3 billion in loans, a significant portion of which are suspected to have involved falsified information.

Gallo and Elmas each face multiple charges: one count of conspiracy to commit bank fraud, eight counts of bank fraud, eight counts of making false statements to a financial institution, and one count of aggravated identity theft. The charges of conspiracy to commit bank fraud, bank fraud, and false statements each carry up to 30 years in prison and a $1 million fine or twice the financial impact of the offense. The aggravated identity theft charge includes an additional mandatory two-year prison term.

The indictment’s charges remain accusations, and both defendants are presumed innocent unless proven guilty.