Christopher Gallagher, mortgage broker, Philadelphia, Pennsylvania, pled guilty to three counts of wire fraud and two counts of failure to file income tax returns in connection with a mortgage fraud scheme involving properties valued at more than $1.5 million.

Gallagher worked in close contact with Patrick Balf, who worked as a real estate agent at The Real Estate Center, located in the same building as Mortgage Access Center, a mortgage brokerage managed and supervised by Gallagher. Gallagher employed Donald Stone to handle various clerical duties at the Mortgage Access Center, as instructed by Gallagher. Balf and Stone have already been convicted and sentenced to prison.

Gallagher intentionally targeted houses in a limited area of downtown Allentown, Pennsylvania for potential buyers which were referred by Patrick Balf. These buyers were subprime borrowers and the majority were Hispanic.

Gallagher, together with Balf and Stone, falsified loan documents submitted to mortgage lending companies to make it appear that the buyers met underwriting criteria. 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.

Gallagher referred to the process of falsifying these documents as creative financing. 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.

Gallagher was originally indicted on June 1, 2006.

Properties identified in the indictment include:

526 W. Liberty, Street, Allentown, Pennsylvania

746 E. 4th Street, Bethlehem, Pennsylvania

631 ½ N. 9th Street, Allentown, Pennsylvania

Sentencing is scheduled for June 6, 2007. Gallagher faces a maximum possible sentence of 62 years imprisonment, 3 years supervised release and an $800,000 fine. Restitution may also be ordered.