Suspected $100 million real estate fraud discovered in Baltimore
The group has reportedly purchased more than 700 homes – largely in predominantly black neighborhoods – at inflated prices, financed by debt service coverage ratio (DSCR) loans.
Investors are accused of taking out $100 million in DSCR loans from dozens of private lenders, using expected rental income as collateral.
Case Specifications
According to the reportmany transactions were recorded at prices well above the previous sales value or public estimate of each property.
In one case, the group allegedly bought a mansion for $100,000 that had sold for just $13,000 five years earlier, securing a $220,000 loan for the deal.
Most of the excess money would have flowed to an LLC controlled by Eidlisz — without any evidence that the promised renovations ever happened.
Of the hundreds of properties linked to the group, The Banner found that more than 70% had no renovation permits since 2019, despite claims of significant improvements.
Now more than half of the portfolio has reportedly been seized, raising fears for neighborhood stability, declining property values and displaced tenants.
Foreclosures in the Baltimore metro area rose 26% in the third quarter compared to the previous period and rose 11% year over year, according to figures from the U.S. Department of State. ATOM.
State and industry response
Maryland Secretary of Housing and Community Development Jake Day said his office is monitoring affected properties and working with local partners to limit damage.
“At this time, it does not appear that this activity is representative of the overall home purchasing and renovation market in Baltimore,” Day said Realtor.com in a statement. “This predatory plan will not deter us from our 15-year vision to eliminate vacancy in Baltimore.”
Day said his department is working with the Baltimore mayor’s office and community development groups to monitor market changes and identify redevelopment opportunities for vacant properties.
Pete Mills, senior vice president at the Association of Mortgage Bankerssaid it is important to clarify that this was real estate fraud, not mortgage fraud.
“From what we understand of what happened in Baltimore, it was a sophisticated scheme involving appraisers and title company actors who deliberately circumvented the protocols and documentation that lenders rely on to protect themselves from making loans for fraudulent real estate transactions,” Mills told Realtor.com. “The lenders of these loans are victims of the fraud, as are the tenants of the properties now in foreclosure and in disrepair.”
Fallout and federal response
One lender — RCN Capital – said it was one of those who had been deceived.
“A group of bad actors active in the real estate investment space recently orchestrated a highly sophisticated scheme that led to devastating consequences in the Baltimore area,” the company said. “These individuals have deliberately studied the processes and guidelines of reputable lenders, including RCN Capital, to exploit vulnerabilities in the system.”
The The U.S. Attorney’s Office in Maryland did not comment, citing the federal government shutdown — while the The Baltimore City State Attorney’s Office did not respond to questions. Attempts to reach Gold and Eidlisz, or their legal representatives, were unsuccessful, according to Realtor.com.
