Towson attorney sentenced for role in Baltimore real estate bank fraud scheme
BALTIMORE (WBFF) — A Towson attorney was sentenced to federal jail on Tuesday for orchestrating a real-estate bank fraud scheme, in accordance with the US Attorney’s Office for Maryland.
Jacob Rappaport, 41, was sentenced to fifteen months in jail for conspiracy to commit bank fraud.
Rappaport, an attorney, represented Alexander Schultz, 31, previously of Pikesville, and Schultz’s firm, Limitless Management, which was concerned in shopping for, promoting, and managing real estate in Maryland.
In January 2020, Coventry Realty LLC, an organization led by Schultz and others, bought Coventry Manor, an condominium complicated in Baltimore, for $5.5 million. In March 2021, Coventry Realty obtained a $6.2 million mortgage from a bank for Coventry Manor, officers reported.
In December 2021, Schultz bought Coventry Manor to a purchaser who agreed to imagine the $6.2 million bank mortgage, fairly than looking for new financing.
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Rappaport, appearing on behalf of Limitless Management, ready two separate contracts for the sale.
The first contract said that the client was buying Coventry Manor from Coventry Realty for $7.8 million. However, Rappaport additionally drafted a aspect settlement that he didn’t open up to the bank, in accordance with the report.
This aspect settlement, signed by Schultz and the client, indicated that the present buy value was roughly $6.9 million. It additionally indicated that Coventry Realty would supply round $847,619.05 in “seller credits” to bridge the distinction between the inflated buy value of $7.8 million and the present value of $6.9 million, the press launch mentioned.
Rappaport ready each the $7.8 million contract of sale and the separate $6.9 million settlement.
Rappaport participated in discussions with Schultz and others to plan the scheme, officers mentioned. When the preliminary attorney representing the client determined to not take part, Rappaport assisted in hiring a unique lawyer who would.
Rappaport and his co-conspirators determined that solely $512,251.12 of the agreed-upon vendor credit ought to be listed on the settlement assertion as vendor concessions to the client.
The co-conspirators agreed to point out a pretend “Reno Credit” of $85,000 on the settlement assertion to decrease the quantity the client needed to pay at closing.
The bank didn’t know that Rappaport had agreed to maintain $335,367.93 in his attorney’s belief account to cover from the bank the true vacation spot of the funds, which was to return to the client.
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On April 14, 2022, Coventry Realty accomplished the sale, which concerned a fraudulent value of $7.8 million, a pretend “Reno Credit” of $85,000, and a $335,367.93 “seller fee” paid to Rappaport’s legislation agency, in accordance with the press launch.
The settlement firm wired a complete of $351,617.93 to Rappaport’s attorney’s belief account. As a results of this transaction, Rappaport acquired a fee of $16,250.
On April 19, Rappaport’s attorney’s belief account transferred $335,367.93 to the client’s firm, which the lender believed was a “seller fee” for Rappaport’s legislation agency.
Furthermore, Rappaport additionally negotiated contracts for Schultz and different co-conspirators concerned in a residential dwelling wholesaling scheme.
Authorities reported that Schultz and associates focused properties for sale under market worth in Baltimore, securing 42 properties.
In September 2021, they bought these properties for $3,675,000 and rapidly bought them for $6,930,000 after inflating the worth. The lender was misled on the true buy value of $112,500 per dwelling.
The settlement indicated a down fee of $1,931,545.96 was made by a 3rd social gathering, masking the present supply of funds.
Schultz and the co-conspirators made $2,921,604.09 from the sale, deposited in Rappaport’s attorney belief account to cover the transaction’s true particulars.
Rappaport later wired about $2 million again to the third social gathering and earned $5,500 from this scheme.
Now, Rappaport faces 15 months in federal jail for conspiracy to commit bank fraud.
