A Lutherville title company that helped facilitate sales of homes in distressed Baltimore neighborhoods for ABC Capital is being sued after investors claimed it accepted nearly $1 million for transactions that weren’t completed.
One investor said in a lawsuit filed Thursday they wired $761,700 to Castle Title to acquire 14 homes but did not receive the deeds; a second lawsuit names another investor who claims to have wired $150,000 but doesn’t own the properties. In many of the cases, Castle or other title companies sold the homes to other ABC Capital investors.
“Despite due demand, Defendant Castle Title will not, or cannot account for the wrongful retention or disbursement of Plaintiff’s funds,” wrote attorney Thomas C. Valkenet. “Upon information, Defendant Castle Title froze the … trust account in early April of 2023, but has steadfastly refused to disclose to Plaintiff what balance existed as of that date, and whether transfers out of the WF trust account have continued past that date, or to which customers the remaining funds belong.”
The lawsuits come amid an investigation by the Maryland Insurance Administration into discrepancies raised by a civil lawyer and reported by The Baltimore Banner last week. While ABC Capital faces scores of lawsuits regarding not following through on renovations and renting out homes, the role of the title company added a new wrinkle: title companies are supposed to oversee and complete transactions on behalf of the buyer and seller.
Castle shut down its account with ABC Capital and has said that it is conducting its own review, and at least two national insurance underwriters issued warnings about doing business with ABC Capital and a slew of related people and entities.
Through an attorney, Castle declined to comment on the lawsuits.
The Banner first reported in November that investors around the world have said they were ripped off by Philadelphia-based ABC Capital and another iteration, IPP USA. In buying homes here, the investors were told the company would renovate the properties and maintain them, and they were guaranteed rental income. But scores of investors say rent payments stopped flowing in and that they learned the homes had not been fixed up as promised.
ABC Capital owner Jay Walsh has denied intentionally misleading anyone, pointing to a slew of problems that he encountered. In other cases, he has said the allegations are trumped up and a money grab.
Some of the properties were already vacant and in poor shape, in neighborhoods where homes are flipped around like trading cards and neglected. But others were acquired from longtime homeowners, contributing to further decline.
The new lawsuits, which name Walsh and Castle Title, were filed in the Circuit Court for Baltimore County and allege negligence, breach of fiduciary duty, constructive fraud, and civil conspiracy.
An investor doing business as Atlas Properties, with a mailing address in Miami, said they signed executed settlement statements to acquire 14 homes throughout Baltimore.
Some of the homes were sold to other investors; others remain in the names of their longtime owners. Reached by phone, Andrew Jackson Jr. said he had no intentions of selling his North Fulton Avenue home.
“Ain’t nobody trying to sell my house. I’m not selling,” he told The Banner.
But Valkenet’s client said Castle facilitated a settlement agreement with Jackson’s name on it, and they wired $65,000 to Castle in November to purchase it. It remains in Jackson’s name.
Another home is owned by the Housing Authority of Baltimore City. Though listed in online records as vacant, agency spokeswoman Ingrid Antonio said it is occupied, and the housing authority “intends to keep it in inventory.”
The purported transactions took place between June 2022 and January 2023, the lawsuit said.
The second investor, also doing business through a limited liability company formed in Florida, said they wired $155,500 to Castle Title to acquire four properties, in East, West and South Baltimore.
Three of the properties were sold — but not to the investor. Another remains in the name of the original owner.
The funds, the lawsuit says, are unaccounted for.
The investor wired another $44,500 at Walsh’s direction for renovations that they say were not performed.
The investor was “directed by … Walsh and others directed and controlled by him” to use Castle Title for their purported property acquisitions.
On Oct. 17, 2022, the investor made wire transfers to Castle Title’s Wells Fargo account to acquire three homes: $48,500 for a home in the 700 block of East 23rd Street; $31,500 for a home in the 1900 block of Ramsay Street; and $35,500 for a home in the 4100 block of 8th Street. A month later, $40,000 was wired for a home in the 1800 block of North Fulton Avenue.
“For each property, Defendant Castle Title accepted deposits from Plaintiff for the purpose of funding real estate settlements, including the purchase of title insurance policies,” the lawsuit said.
Despite having a fully executed settlement statement and sending the funds, the investor never received deeds to the properties.
Castle executed a deed for one of the properties — but to a different investor. The Fulton Avenue and East 23rd Street properties were sold to different investors, and through two other title companies.
The East 23rd Street home was sold by its owner to another limited liability corporation four days after the wire transfer.