In late 2020, from more than 5,000 miles away, a Chilean investor named Jaime Sepulveda purchased a single-family home in Southwest Baltimore.

It was a simple pitch: An American company, ABC Capital, would handle the entire process, acquiring the property, rehabbing it, renting it out and maintaining it. All he had to do was sit back and collect income.

But after just two months, the money stopped coming. Growing suspicious, Sepulveda, a retired member of the Chilean Navy, hopped on a plane to check things out. There was no tenant, though an upstairs bedroom had clothes scattered around. Piled together in the main room were ripped-out cabinets and drawers, a space heater, a microwave and a toilet. The white-and-chocolate-milk-brown color scheme looked from another era.

No renovation had taken place, even though his contract required him pay $48,000 for a complete demolition and renovation, on top of the $37,500 purchase price.

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“Everything was a mess. Nothing was done,” Sepulveda, 53, told The Baltimore Banner.

Sepulveda is one of hundreds of investors from Asia to Latin America to Europe who have acquired property in Baltimore in recent years through the Philadelphia-based ABC Capital, which markets a “hands-off” rental-property model that they promise will generate rental income. They pitch Baltimore as a thriving port city and say their homes are in proximity to world-renowned Johns Hopkins Hospital.

Dozens of investors are complaining that ABC Capital is not delivering, however. The company has faced lawsuits from more than 60 investors in Argentina, Hong Kong, Israel, Italy, Panama and other nations who allege that ABC did not fulfill its promises to renovate and rent properties in Baltimore as well as Philadelphia. Investors accuse the company of running a fraudulent Ponzi-type scheme. Other investors complain on message boards or in group chats, unsure how to seek relief in a country where they do not reside.

Investors from Hong Kong, Mexico, Israel, Chile, Venezuela, Turkey, Argentina, Panama and Italy have all invested in properties through ABC Capital.

One lawsuit filed in federal court in Pennsylvania, which has since been settled, accused ABC Capital of running a racketeering enterprise by using “funds of new investors, including funds specifically earmarked for renovations of those new investors’ properties, to make the guaranteed rental payments to prior investors and/or to buy-back the prior investors’ properties.”

Another lawsuit brought by Argentinian investors who bought three dilapidated Baltimore properties said ABC Capital targets foreigners “due to their lack of familiarity with the residential/rental real estate market in the United States, the language difference, and the fact that [the companies] lacked personnel who could monitor the ABC Capital Defendants’ performance.” The company lost a $1.25 million judgement in Philadelphia in August and has settled at least six other cases there in recent months.

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A excerpt of a contract written in Hebrew from ABC Capital.
A excerpt of a contract written in Hebrew from ABC Capital. (Courtesy photo)

ABC Capital co-founder Jay Walsh denies claims of fraud but acknowledges that some homes were not renovated as promised due to a “myriad of reasons,” and says he no longer purchases homes for investors that need to be fixed up. He also said he has stopped acting as a property manager for clients.

Walsh said he could not comment on litigation but provided pictures of completed renovations and says communities where he places investors are better off.

“For every house that hasn’t been renovated, I can show you three that I did renovate,” he said, “and if I wasn’t in the neighborhood, those properties wouldn’t have been renovated, and they would’ve been slumlord properties.”

Using deed records, lawsuits and property incorporation documents, The Banner identified almost 700 properties since 2016 that were sold to investors working with ABC Capital; Walsh told The Baltimore Sun the number is more like 1,200. They’re not the only ones marketing Baltimore homes to foreign investors: A rival, Miami-based Property Invest USA, which markets mainly to Turkish investors, has been involved with the sale of more than 200 Baltimore homes.

ABC Capital, which is now operating as IPP USA, has spent at least $19.8 million acquiring homes in Baltimore and has sold them for at least $25.4 million. The investors take ownership through LLCs set up by ABC, and typically use mailing addresses at ABC-related offices in Baltimore, Philadelphia or Miami. The only clue that the home is foreign-owned is ABC’s involvement.

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The transactions highlight a burgeoning realm of global real estate in which middlemen entice buyers from faraway lands to buy abandoned homes in some of America’s most distressed neighborhoods.

The Banner visited hundreds of the properties throughout Baltimore and found a wide range of conditions. In some heavily blighted blocks, a home owned by an ABC investor might be in better shape than most others. But many homes remain boarded up years after they were acquired, despite the rental income guarantee to the investor. Others appear from the outside to be secured but sitting empty. Still others are occupied by squatters.

Ekrem Usayler, who worked for ABC Capital before being recruited to work for a rival company, said the foreign buyers don’t know what they’re getting and, in his perception, don’t care “as long as the numbers are right.”

Though the company has marketed a hands-off process for investors, the reality is anything but. Ricardo Scattolini, who recruited many Latin American investors for ABC Capital in Florida, said some customers did not receive promised repairs. He said in many cases, problems arise when tenants leave a home in bad condition or if it goes unrented, which can lead to break-ins and squatters. “I have tried to educate my customers, if your property sits vacant, we have to tackle it,” he said.

Similarly, Walsh said many homes that are currently vacant had tenants who moved out. Because he’s out of the property management business, clients are working with companies other than the one that brought them to the table.

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City housing officials and advocates said they were unaware of the surge in foreign investment in distressed residential neighborhoods. The Housing Department said in a statement that in general it “would prefer to see more homeownership opportunities and quality rental options generated for residents within our communities.”

Baltimore real estate attorney Thomas C. Valkenet, who represents several ABC investors, including Sepulveda, said the company “is a millstone around the neck of all of these communities, and these communities are never fully brought back to life.”

“They create artificial, contrived equity in our poorest neighborhoods, and suck it out,” Valkenet said.

Baltimore has 15,000 vacant houses, or more

Housing and blight are among Baltimore’s biggest challenges. The city estimates that there are 15,000 vacant homes — which many believe to be an undercount — and a recent study found that they cost $200 million in lost tax revenue and other costs. The vacant homes drag down the value of property around them; they can also be a threat to public safety through fires, collapses and crime.

More than one-quarter of the officially counted vacants are owned by limited liability companies, Open Baltimore data shows, underscoring how homes where families once lived now get passed around among companies like trading cards. Many are owned by people living out of state or by businesses no longer in good standing with the state. The owners often can’t be identified due to secrecy afforded by the nature of LLCs.

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Researchers at Drexel University published a study in September looking at property trends in Philadelphia, Jacksonville, Florida, and Richmond, Virginia, and found a sharp rise in the number of homes being acquired by LLCs. They say investor purchases were more prevalent in neighborhoods with low sale prices and high vacancy, elevated mortgage denial rates, and higher shares of residents who are Black or Hispanic, and that in the most distressed neighborhoods, one in five homes sold to investors was by homeowners.

“In many industrial cities, flippers play an important role in revitalizing America’s aging housing stock; landlords are a necessary part of any rental housing market. Yet we are alarmed by the changes we are seeing,” the researchers wrote.

The Banner learned about the foreign investment companies while reviewing absentee property owners in Carrollton Ridge, a West Baltimore neighborhood plagued by extreme blight and more homicides in recent years than any other city neighborhood. Scores of homes are listed as owned by people who are dead, or businesses and organizations that have been defunct for years.

ABC Capital arranged the sale of at least 25 properties in the neighborhood, 9 of which are listed by the city as vacant and another 2 which are empty.

“Not everybody buys in the 1900 block of Ramsay Street,” Walsh said, referring to buying in Carrollton Ridge. “I do, and now others do too.”

The National Association of Realtors says foreign investors spent $59 billion on residential home purchases from April 2021 to March 2022, about 2.6 percent of existing home sales. Twenty-four percent of purchases took place in Florida, followed by 11 percent in California and 8 percent in Texas.

Residential rentals make up a small percentage of those foreign transactions. Most are bought with the intention of it becoming their primary residence, or a vacation home, according to the association.

Walsh’s career includes bankruptcy and lawsuits

Walsh, 44, is a Pennsylvania native who says he started his real estate career at age 19.

Prior to creating ABC Capital, the Drexel University grad and certified public accountant served as chief financial officer for Money Centers of America, a check-cashing and ATM company that also provided financial services for Native American casinos. Walsh was pursuing his interest in real estate on the side, and when Money Centers came into a large amount of money as a result of a deal with a Wisconsin tribe, it decided to lend $1.6 million for Walsh’s real estate ventures in hopes of generating interest income, he said in a 2016 deposition.

An illustrated portrait of Jay Walsh, the co-founder of ABC Capital Investments.
Jay Walsh, the co-founder of ABC Capital. (Adam T. Jones for The Baltimore Banner)

When the real estate market tanked in 2008, Walsh had to file for personal bankruptcy. He was evicted from his apartment for non-payment of rent, he said in the deposition.

Walsh created ABC Capital in 2011, along with two Israeli-born partners. In the ensuing years, the company boasted that it purchased more than 1,500 homes across Philadelphia and was the top cash buyer of property in that city for years running.

“Our investment is a totally passive investment. You will do absolutely nothing,” he tells investors in a 2014 YouTube video. “I send [my clients] a statement, you get a direct deposit in your account. It’s about as passive of an investment as you can get.”

The company attracted little attention there, outside of a 2018 case brought by the Public Interest Law Center regarding a low-income couple it said were forced to abandon their north Philadelphia home because dangerous living conditions, including the home not being certified as lead-free as required to collect rent. ABC Capital, described as one of Philly’s “largest landlords,” and the anonymous overseas investor were ordered to pay a $22,400 judgment.

Since then, lawsuits from investors have been piling up. One complaint was brought by 33 Hong Kong investors who said they jointly invested $3 million in Philadelphia properties between 2012 and 2019. In return, they claim, they were promised guaranteed rent for three years; a three-year warranty for all maintenance costs; a roof warranty for 15 years, and the option to sell back the properties at the conclusion of a three-year property management term. But they said ABC Capital failed to make rental payments within months, failed to renovate the properties and/or failed to manage maintenance of the properties.

A brochure targeted at Latin American investors.
A brochure targeted at Latin American investors. (Courtesy photo)

Attorney Mu’min F. Islam is representing the Chinese investors and says ABC Capital sent the investors statements claiming rent was collected, but the properties did not have rental licenses and the homes were dilapidated without tenants. “It’s very blatant,” Islam said.

In its response to that suit, ABC’s attorneys said the company “never fraudulently collected renovation costs and management fees with the fraudulent intent to withhold money due to its investors.”

It acknowledged, however, a myriad of problems including a breach of contract by a rent insurance company it had been working with. “There was no plan in advance not to pay rents owed to our investors, and in good faith, ABC Capital Realty had attempted to issue all payments due,” the company wrote in a July 2020 court filing.

ABC also cited “unexpected costs and real estate market forces that occurred after the original contracts were entered into with these investors,” including its inability to insure against non-payment of rent, unexpected renovation costs and delays, and the non-payment of rent by tenants resulting in evictions and further delays in collecting rent.

“This had the domino effect of causing ABC not to pay rent guarantees to some of our investors, or complete renovation projects,” the company’s attorneys wrote. The case is scheduled for trial next month in U.S. District Court in Philadelphia.

ABC Capital expanded into Baltimore in the fall of 2016.

“People should be getting in Baltimore now before it becomes super hot,” Walsh said in a 2017 YouTube video. He said while ABC Capital had invested in some “C” grade neighborhoods in Philadelphia, they would only be targeting property in Baltimore’s “B-plus” areas. Johns Hopkins Hospital is cited as a major selling point, as well as proximity to Washington, D.C.

Walsh insists today that investors know what they’re getting. “I can assure you, people aren’t dumb. Nobody thinks property ... in Carrollton Ridge is a ‘B’ property,” he said. “You can go on Google [Maps] and see it’s not a ‘B’ property.”

A review of 64 transactions from their first year shows 48 are now listed as vacant by the city. One home, at 2230 W. Baltimore St., has been transferred three more times after the initial sale by ABC Capital; another property went to the city’s tax sale, while others have unpaid water bills in the thousands of dollars. Walsh suggested that some of the properties had been rehabbed and rented out, but became vacant over time, “especially during COVID.”

“COVID was a very tough time,” he said.

More than 25 lawsuits covering properties brought in Philadelphia, Baltimore and Miami accuse ABC Capital of shady deals. In a case settled earlier this year in Miami, an Italian-born investor attached extensive correspondence with ABC in which the investor repeatedly inquired about the condition of properties that he was assured were being fixed up and rented out. The investor, who was living in Florida, travelled to Philadelphia and found a man living in one home, sleeping on an air mattress with luggage. Condoms and liquor bottles littered the floor.

ABC Capital claimed the man was their contractor and living in the home to keep it “secure” from squatters, the lawsuit alleged.

A boarded up rowhouse on W. Baltimore St.
The property at 2230 West Baltimore St., owned by ABC Capital. (Ulysses Muñoz/The Baltimore Banner)

“Why ABC is not taking care of my property? They are only capable of collecting their 10 percent every month without doing any maintenance,” the investor wrote in one email attached as an exhibit in the lawsuit.

ABC settled another suit brought by a Mexico-based doctor who said he spent $540,000 to purchase six properties in Baltimore and Philadelphia that he found were “in a state of complete disrepair, extensively damaged, and unoccupied.”

Walsh acknowledged that some houses were not renovated, but he downplayed the lawsuits, saying people were “copying and pasting” each other’s claims and that more customers are pleased with their results.

“They are allegations and you can allege anything,” Walsh said in an email. “I do not sell a house with the intent not to rehab. I do not leave vacant houses in the city for which I was paid to construct. Owners have responsibilities to pay for their investments. You can not just say it’s ABC’s fault.”

Overseas investors left in the dark

For as many investors that have sued, others, particularly those overseas, told The Banner that they don’t know what to do.

Augusto Ramirez, a Colombian investor who bought property through ABC Capital, said he had previously invested in property in Orlando, Florida, through another company, and was looking for other opportunities in America. ABC’s pitch sounded good.

“I didn’t know much about Baltimore beyond being a major port and the city of [Olympic swimmer Michael] Phelps, but the laws and American culture made my family and I trust it,” he said in Spanish over email.

From the outset, he says ABC didn’t make payments, and didn’t fix the property. He said Florida broker Ricardo Scattolini, who many of the investors said was their conduit to ABC, offered help “if I bought more properties,” he said.

One investor who lives in Mexico and did not want to be identified, citing privacy concerns, said he and others turned to America for investment after policy changes from a leadership change in his country in 2018 created insecurity. He, too, got involved through Scattolini after a friend who had purchased 11 properties recommended ABC.

“They offer you a risk free investment so they advance one year rent payments,” he said via email. “In this 12 months, you did not bother them because you are already covered and paid. ... After the 12 months, problems start and they start big.” He said he is now working with a property manager to fix the two properties he purchased in Baltimore and get things in order, in hopes of salvaging the investment.

An East Baltimore home owned by an ABC Capital investor. The owners say they visited the property and found squatters living inside.
An East Baltimore home owned by an ABC Capital investor. The owners say they visited the property and found squatters living inside. (Justin Fenton/The Baltimore Banner)

Marsia D. Urdaneta says her brother lives in Venezuela and owns a construction company that performs road projects. He sought to invest in real estate, first buying property in Florida, before learning of ABC’s sales pitch and acquiring a home in Baltimore and another in Philadelphia in early 2020.

Records show he paid about $50,000 for a home in East Baltimore’s Broadway East neighborhood, and Urdaneta said he spent another $45,000 for renovations. Urdaneta, who lives in Virginia, said ABC never paid the rent, as promised for one year under the contract. When she visited the home, she discovered that no renovations had been performed. Squatters had taken over.

“They are doing whatever they want with people’s money,” she said. Walsh said he was unable to secure a rental license for the property during COVID, and said the owners have “refused to pay for legal fees or services to remove squatters.”

Valkenet, the attorney representing some frustrated property owners, says Walsh is operating as a broker but without a broker’s license. Islam, representing Hong Kong investors, asserts that a securities fraud is being committed.

Walsh said in a 2020 deposition that he’s not acting as a broker if he is buying properties and then selling them. But Valkenet points to other deals in which ABC does not acquire and flip property, but connects the buyer with the seller. In those cases, Walsh says, he’s not a broker because he has “equitable interest” in the properties, meaning he has a contract giving him control of the property.

The attorney generals’ offices in Maryland and Pennsylvania both declined to say whether they had received complaints about ABC or had investigated the company.

Sometimes, when investors express frustration, records show ABC offers to arrange another deal, to another investor. Sepulveda, the Chilean investor, said he turned their offer down because he did not want someone else to be stuck with the property.

“The guy in Bolivia says, ‘I’m glad I’m out of that deal,’ but now the guy in Japan is in it,” said Valkenet, his attorney.

Tenants are also left in the lurch

The domino effect goes beyond investors to tenants. Multiple tenants told The Banner that ABC Capital acted as their property managers but fumbled billing and would not make repairs, forcing them to pay out of their own pockets.

Tenant Bria Jennings sued ABC Capital and the Florida LLC listed as the owner, saying in court documents that after entering into a $1,100-a-month rental agreement for her Northwest Baltimore home in August 2019, she noticed a ceiling leak causing black mold. A maintenance worker allegedly spray painted it white. Eventually, the living room ceiling collapsed, revealing mushrooms and extensive black mold, and damaging furniture, clothing and her children’s bicycles, the complaint said. The case was filed in July, and ABC has asked for more time to respond.

Walsh said ABC Capital got out of property management in Baltimore more than a year ago, but when informed that tenants said they were either still being billed or just recently were notified of a switch, he acknowledged there are still 10 properties he is trying to transition to other companies.

Roxanne Powell, 45, said ABC Capital had been her property manager since she moved into a home in West Baltimore’s Rosemont neighborhood in 2019, and she received notice earlier this month that it was switching to another company. She said, “When it rains, it rains in the house.

“They never come and fix anything,” she said of ABC Capital. “I got receipts for everything.”

Brittanie Jones lives in Carrollton Ridge with six kids. Until recently, ABC Capital was her landlord and she said they did not make repairs.
Brittanie Jones lives in Carrollton Ridge with six children. Until recently, ABC Capital was her landlord and she said they did not make repairs. (Justin Fenton/The Baltimore Banner)

Brittanie Jones, who lives in Carrollton Ridge, said ABC ignored her requests for help regarding maintenance. In several spots, including a wall near the front door and a first-floor ceiling, the home is falling apart. She has six children, including two with special needs, and said moving and having to come up with a security deposit isn’t an option. She showed screenshots of billing by ABC Capital from earlier this year, and she was told someone new was taking over the property over the summer.

Shakiara Edmonds, 29, who has been renting in the Northwest Community Action neighborhood, said she stopped paying after ABC refused to make or pay for repairs and an attorney told her the home did not have a proper rental license, which city records confirm. Walsh said he had difficulty with BGE, and then the city during COVID.

Edmonds, meanwhile, received an eviction notice recently, from a new property manager brought on by the LLC owner.

Proposed solutions would require government action

Annie Milli, the executive director of Live Baltimore, a nonprofit whose mission is to recruit and retain Baltimore City residents, said she’s concerned that one-off rehabs or investments will not address the broader neighborhoods issues, and in fact might make it difficult to address those broader issues.

“Yes, we want investment in our neighborhoods; yes, we need additional housing ... but how we do that deserves a lot of attention,” she said.

Eric Stephenson, a member of the city’s Planning Commission and a resident of Sandtown-Winchester in West Baltimore, said an influx of foreign capital investment in the housing stock in the worst condition could be a “very positive thing, if it’s managed correctly.”

“We [would] welcome that investment wherever it comes from,” Stephenson said.

The Drexel researchers who studied investor purchases in Philadelphia, Jacksonville and Richmond made a variety of recommendations for state and local governments to better regulate the market.

Among them:

ABC Capital’s web site appears to be dormant, but Walsh is running a new venture, IPP USA, which stands for “Income Producing Properties,” and he continues to market homes in Philadelphia and Baltimore, as well as St. Louis. The company was forfeited in Maryland in late 2021 for failing to file paperwork for 2020, but remains active and in good standing in Pennsylvania.

Meanwhile, Sepulveda, the Chilean investor, has relocated to the Washington, D.C., suburbs and is financing, two years later, the renovation of his property in Southwest Baltimore while his lawsuit against ABC is pending.

Views of the neighborhood on North Abington Ave in Baltimore, Friday, October 21, 2022.
Views of the neighborhood on North Abington Avenue in Baltimore. (Jessica Gallagher/The Baltimore Banner)

The block consists of 46 homes, some of them vacant, and others that have been rehabbed. Only eight are owned by someone listing it as their primary residence, with the other 38 owned by a mix of mostly-out-of-town individuals and LLCs.

Sepulveda says earlier this year, he thought he might carry out ABC’s vision of recruiting foreign investors, but in a proper way. But the more time he has spent assessing the conditions and challenges in Baltimore’s rental market, he’s not so sure of that anymore.

Banner reporters Sophie Kasakove and Clara Longo de Freitas and data reporters Ryan Little and Nick Thieme contributed to this report.

Illustrations by Adam T. Jones for The Baltimore Banner

This story has been updated to correct the name of the Public Interest Law Center. The Banner regrets the error.

Justin Fenton is an investigative reporter for the Baltimore Banner. He previously spent 17 years at the Baltimore Sun, covering the criminal justice system. His book, "We Own This City: A True Story of Crime, Cops and Corruption," was released by Random House in 2021 and became an HBO miniseries.

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