June 9, 2006 - United States Attorney Patrick L. Meehan, F.B.I. Acting Special Agent-In-Charge Brian W. Lynch, and I.R.S. Special Agent-In-Charge Peter Alvarado today announced the filing of an indictment* charging CHRISTOPHER GALLAGHER with three counts of wire fraud and two counts of failing to file tax returns. These charges arise from a mortgage fraud scheme involving properties valued at more than $1.5 million.
“Many people lost their homes because of this scheme and many more are struggling to keep up with expensive mortgages they just can’t afford,” said Meehan. “Schemes like this often trigger an increase in foreclosures which can destabilize and eventually implode a community.”
Defendant CHRISTOPHER GALLAGHER was the manager and supervisor of a mortgage brokerage company located on 7th Street in downtown Allentown, Pennsylvania. Defendant GALLAGHER worked in close contact with Patrick Balf, who earlier has pled guilty to federal fraud charges. Balf worked as a real estate agent at The Real Estate Center. Defendant GALLAGHER employed Donald Stone, who also pled earlier to federal fraud charges. Stone it is charged handled various clerical duties at the Mortgage Access Center, as instructed by defendant GALLAGHER. The indictment alleges that defendant GALLAGHER intentionally targeted houses in a limited area of downtown Allentown, for potential buyers which were referred by Patrick Balf. These buyers were “subprime” borrowers. “Subprime” borrowers are individuals with damaged credit who are unable to obtain financing from banks and other finance companies at the lowest market rates, leaving them with few options in the mortgage lending market. The majority of the buyers involved in the scheme were Hispanic.
Defendant CHRISTOPHER GALLAGHER, together with Balf and Stone, falsified loan documents submitted to mortgage lending companies to make it appear that the buyers met underwriting criteria set by those companies. For example, the defendant falsified documents listing the employment history of buyers, verifying the income of buyers, and detailing the amount and origin of cash used to purchase the houses.
The result of the scheme was that the defendant made it appear that otherwise unqualified buyers were qualified for mortgage financing. The scheme lasted from 1998 through 2003 and involved several hundred transactions.
“They called it ‘creative financing’ but we call it fraud,” Meehan said. “These cases are about protecting our neighborhoods. If we can help to keep people in their homes, we can nurture the kind of cohesive neighborhoods that are the bedrock of safe, secure communities.”
If convicted, defendant CHRISTOPHER GALLAGHER faces a maximum possible sentence of 62 years imprisonment, 3 years supervised release, a $800,000 fine, and a $350 special assessment. Restitution may also be ordered against the defendant.
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DEFENDANT |
ADDRESS |
AGE [Date of Birth] |
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Christopher Gallagher |
Aldan, PA |
age 34 years old |
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The case has been assigned to Assistant United States Attorneys Seth Weber and Michael S. Blume.
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UNITED
STATES ATTORNEY'S OFFICE EASTERN DISTRICT, PENNSYLVANIA Suite 1250, 615 Chestnut Street Philadelphia, PA 19106 |
Contact: RICH MANIERI Media Contact 215.861.8525 |
*An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Benjamin Franklin Photo by B. Krist for the Greater Philadelphia Tourism Marketing Corporation