The owner of ABC Capital, the company accused of ripping off scores of foreign investors who bought distressed Baltimore properties, says he’s been dealt a critical blow after being blacklisted by a major insurance underwriter.
The move comes as Lutherville-based Castle Title — one of the Maryland title companies Jay Walsh worked with to process hundreds of transactions — is facing questions of its own from investors angry over deals that were never consummated, allegedly forged documents and other irregularities. In some cases, investors were given deeds to properties they didn’t buy.
Confronted with the questions, Castle reported its concerns to underwriter First American Title Insurance Co., which then warned title companies late last month against working with Walsh and nearly 30 affiliated companies and individuals.
“This is the biggest underwriter out there, so this has basically put me out of business,” Walsh told The Baltimore Banner, saying he was getting out of property sales and instead focusing on consulting and accounting. “I’m done.”
Another major title insurance company, Old Republic Title, followed suit on Friday.
This isn’t the first time Walsh has suggested his company had hit the end of the line — he filed for bankruptcy in November, causing lawsuits in Pennsylvania to be halted, but continued to do business using other company names.
The Baltimore Banner reported in November that, in a growing number of lawsuits, investors in foreign countries and states across the United States say they paid ABC Capital to acquire homes for them in downtrodden areas of Baltimore and Philadelphia through a hands-off process. ABC promised to renovate and maintain the homes and pay guaranteed rent to the investors — but did not follow through in numerous cases. Some of those lawsuits charge that the company and a spinoff, IPP USA, have been running a Ponzi scheme.
Walsh has denied intentionally misleading anyone. In many cases, he said, the investors themselves were to blame, and some were just trying to get money out of him.
So far, no regulatory action has been taken against ABC Capital or IPP, which have sold well over 1,000 properties in distressed Baltimore neighborhoods. Lawsuits against ABC Capital have continued to pile up, and the company filed for Chapter 7 bankruptcy protection in December. As of Wednesday, it’s being fined $500 daily for not complying with the bankruptcy proceedings.
Baltimore attorney Thomas C. Valkenet said he’s been deluged by disgruntled investors and discovered a slew of instances in which property was not received or a buyer signed documents for one home and got another. Others claim transactions were conducted in their names without their knowledge. And Valkenet said he has uncovered documents with forged signatures.
“I’m not the attorney general,” Valkenet said. “I’m here to get money for my clients. And the straightest route is when you find a wrong” covered by title insurance.
A title company supervises and ensures that real estate transactions are carried out properly, including recording of documents, disbursement of funds and payments covering city and state taxes and other fees.
Walsh said he couldn’t account for the discrepancies. “That’s what you have title companies for.” He did not respond to followup questions.
Castle’s president and general counsel, David Kramer, referred questions to attorneys, who said the company is undertaking a complicated internal investigation into the transactions in question.
“At this point in what we’re doing, we’re not in a position to make any comment on facts or allegations,” attorney Steven N. Leitess said.
One month after The Banner first reported on ABC Capital’s growing number of lawsuits and dissatisfied investors, ABC Capital filed for Chapter 7 bankruptcy protection in Pennsylvania, saying it owed $4 million in judgments. The trustee overseeing that process says ABC has ignored repeated requests to file paperwork, prompting the daily fines this week. While the bankruptcy forestalled lawsuits in Pennsylvania, the company has continued to strike settlements in lawsuits filed in Baltimore, including $240,000 to an Israeli couple.
Until now, complaints against ABC and IPP largely have revolved around their alleged failure to follow through on renovations, maintenance and rental payments.
‘It sounded too good’
However, investors from Argentina, Brazil, Chile, Italy and Peru, as well as Miami and Texas, are calling Valkenet with a new set of complaints about the title companies and title insurance.
Luis Martinez, a railroad engineer from El Paso, Texas, contacted Valkenet saying he completed paperwork and wired money for a property in East Baltimore that was never transferred to him. In fact, the current owner says she did not sell it and has never had any intention to.
Leitess, one of Castle’s attorneys, confirmed that Castle notified underwriter First American Title Insurance Co. about its concerns. First American on April 20 sent an alert warning against closing transactions involving nearly 30 companies and individuals associated with ABC.
“Transactions involving these persons and entities typically involve Baltimore City property and foreign investors,” the alert reads. “If you are asked to insure title in any of the following transactions, contact First American and obtain written approval from First American underwriting counsel prior to committing to insure such transaction.”
Martinez said he sought to buy row homes in Baltimore as investment properties after noticing an ad for one of Walsh’s companies, Wall Street Wealth Management, on Instagram.
Martinez had received money from an injury settlement and set it aside for retirement. But he also wanted cash flowing in, and he decided to work with ABC, which promised to identify, acquire and renovate properties — and guarantee rent for a period of time.
“It sounded too good, and I still did it,” Martinez lamented.
He said he entered into agreements and wired a total of $220,000 to purchase three properties: one on Pall Mall Road in Park Heights, one on North Bethel Street in the Oliver neighborhood of East Baltimore and another nearby on Kennedy Avenue just north of Green Mount Cemetery.
The Pall Mall purchase went through, and he is listed as the owner. The transaction was overseen by another title company that Walsh worked with, Masters Title & Escrow.
But the other two transactions did not go according to plan, and Martinez said he found out only much later after repeatedly inquiring why rental payments had stopped flowing.
Martinez has copies of fully drawn-up paperwork, including detailed settlement statements and affidavits, appraisals and property management agreements, though, crucially, his copies — even for the Pall Mall property — are unsigned.
Among them is a settlement affidavit on Castle Title letterhead for the purchase of the Kennedy Avenue row home, listing hlm and a woman named Amalia Taylor as the parties. Martinez has bank statements, which The Banner reviewed, showing he wired more than $110,000 for the transaction.
Taylor bought the home in 2008 and continues to be its listed owner. In an interview with The Baltimore Banner, she said she never agreed to sell the home. She said she gets unsolicited calls all the time seeking to buy her properties.
“I never entertain them,” Taylor said. “I just hang up and block them.”
Yet for more than a year Martinez received payments and spreadsheets from IPP documenting purported rental income from all three properties.
Although Martinez can’t claim ownership of the property, Valkenet sought to account for the funds that were sent. Valkenet said he’s known and worked with Castle’s owner, Kramer, for two decades and reached out.
‘That ain’t our account’
“I sent a copy of a bank statement, showing the line item for the wire transfer. It shows a completed wire to the company,” Valkenet said. “The response came back: That ain’t our account.”
Valkenet was surprised and suspected a new deception. Perhaps someone affiliated with ABC had created a fake account and bypassed Castle by wiring the money directly into a personal account, he thought.
But later Castle’s attorney confirmed the bank account was in fact its own, Valkenet said.
Castle has not accounted for the $10,000 it received for the Kennedy Avenue closing, nor has ABC accounted for the $100,000 it received, according to Valkenet.
Meanwhile, the Bethel property was sold to a different ABC investor in May 2022, and sits boarded up in disrepair. It’s among the scores of properties that ABC and IPP have shuffled among investors, with properties sold to an investor and resold in some cases multiple times to other clients. Attorneys say this is how Walsh attempts to placate frustrated investors.
“It’s three-card monte, with rowhouses,” Valkenet said, referring to the card game trick used by hustlers.
As Valkenet dug into claims, he found more red flags. He said a client wired $27,000 to Castle to purchase a home on Ashton Street in Carrollton Ridge. That, too, has not been accounted for, according to Valkenet.
Patricia Driver and her husband have owned the property since 2007, and they have no interest in selling. So they were concerned to receive in the mail, from Castle Title, paperwork with their name on it that had been drawn up for a sale to an ABC-affiliated investor.
“It was alarming,” Driver said. “It’s unusual in my experience to have somebody affiliated with a legitimate title company fill out closing paperwork and mail it to you without you having any interest whatsoever or any knowledge of it.”
They pressed Castle on how such a thing could happen — it was explained as a simple mistake. “That resolved it; that was the end of it,” she said.
Another investor incorporated as Baxter Homes told Valkenet a property was sold to it without its knowledge in August, sold away from it to the ABC spinoff IPP in February and sold by IPP to a new owner. Forms from the latter sale show a $91,750 disbursement was to be made to Baxter, which has received no funds.
A signature for Castle’s president, Kramer, is on each document.
Because Baxter never invested any money, it is not missing anything owed — but it raises questions about where the money went and how deals were processed without investors’ knowledge.
As part of their business model, ABC and IPP offered a hands-off process and created limited liability corporations for their clients. Walsh’s employees and other partners listed themselves as the resident agent and signed deeds and the transfer of notes as the “authorized person” for their investors.
An array of Walsh entities and other companies would get commissions and fees in the deals. One transaction shows $6,000 being paid to a defunct company owned by Walsh, MD First Construction Co. LLC.
Valkenet says his clients need to be made whole — either by Walsh, the title companies or their insurers.
This month, an ABC Capital employee offered “IOUs” on properties to investors. “IOUs have the same value as property as collateral and [are] sometimes even more convenient than a property,” the employee wrote.
But Walsh said he won’t be selling any more houses. He now gives real estate advice on social media accounts as the “Real Estate Doctor.”
“All good things come to an end,” he said.