Top-producing LO pleads guilty to bank fraud charge

Former top producer Christopher J. Gallo has pleaded guilty to a federal fraud charge for allegedly falsifying loan documents during the recent market heyday. 

Gallo pleaded guilty to a single count of conspiracy to commit bank fraud in a hearing before a New Jersey federal judge Wednesday. By pleading guilty, federal prosecutors have agreed to drop 17 additional counts of bank fraud, false statements to a financial institution and aggravated identity theft, according to his plea agreement. 

HousingWire first reported the guilty plea. 

The conspiracy charge carries a maximum prison sentence of 30 years and a fine that could reach beyond seven figures, although Gallo will not learn his fate until a sentencing hearing scheduled for December in a Newark federal courthouse. His assistant, Mehmet Ali Elmas, has a change of plea hearing scheduled for Aug. 20. 

Gallo also agreed to restitution that will be determined by the sentencing judge. Prosecutors and defendants will file sentencing memorandums ahead of that hearing. 

Wednesday's plea agreement marks the end of an over two-year court fight by Gallo, after he and Elmas were arrested in April 2024. Gallo, who was working at CrossCountry Mortgage at the time of his arrest, was a billion-dollar originator at NJ Lenders Corp. over the previous five years, where prosecutors say he falsified documents. 

An attorney for Gallo didn't return an immediate request for comment Thursday afternoon. 

According to an indictment, Gallo and Elmas misled their employer and others about the intended use of properties as primary residences to secure lower interest rates for rental or investment properties. Feds say the pair falsified property records and borrowers' financial information to facilitate approvals. 

Gallo eclipsed $1 billion in loan volume in 2020, and was frequently on National Mortgage News' own top-producers list between 2016 and 2020. Feds say the pair originated more than $3 billion in loan volume during their 2018-2023 run at NJ Lenders. 

NJ Lenders, at the time of the arrests, said it was fully cooperating with investigators, while CrossCountry terminated him upon his arrest. 

CrossCountry's lingering grievance

As Gallo was fighting the charges, CrossCountry asked the court last year to recoup $2.1 million from the ex-branch manager stemming from a sign-on bonus. While the Cleveland-based retail giant has had success in other clawback cases, it ran into roadblocks against Gallo.

A federal judge in June blocked CrossCountry's request to open arbitration proceedings with Gallo over his bonus but allowed the lender to respond to the court's actions. Gallo had opposed the lender's arbitration request, and his attorney previously criticized CrossCountry's 18-month wait to pursue its clawback claims.