Baltimore Lenders Allege $24 Million Mortgage Fraud Scheme

Two federal lawsuits filed in Maryland allege that a network of Baltimore real estate investors, limited liability companies and appraisers used inflated property values to obtain more than $24 million in loans, then allowed most of the properties identified in the cases to fall into foreclosure.

Ameritrust Mortgage Corp. filed the first case on Sept. 9 against investors Benjamin Eidlisz, Eluzer Gold and Shraga Chaim Lerner. RCN Capital LLC and Commercial Lender LLC filed a second case about a week later. The allegations are civil claims and have not been proven in court.

The lawsuits describe rapid resales backed by disputed appraisals

Ameritrust alleges that the defendants secured 90 loans worth more than $14 million. The second lawsuit alleges another $10 million in losses involving 59 properties bought and defaulted on between 2023 and 2024. The lenders are pursuing claims under the federal Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO.

According to the complaints, shell companies acquired distressed Baltimore homes, many for $40,000 to $60,000, before reselling them to related entities for three or four times the earlier price. Some resales allegedly occurred within days or weeks, without improvements that would support the higher valuations.

The lenders say loan files included inflated appraisals, altered or inaccurate photographs, misleading property descriptions and incomplete prior-sale histories. Several appraisers are named as defendants in the RCN case. Realtor.com News reported that the broader investment operation acquired about 700 properties, while the two pending lawsuits focus on roughly 150. The vast majority of the properties addressed by the suits reportedly entered foreclosure.

One property cited in the litigation, 1829 N. Bond St., sold for $43,000 in March 2023 and then for $310,000 three months later to an LLC associated with Gold. After foreclosure, it was listed for $35,000 in August 2026, according to the lawsuits.

Distressed transactions can muddy a seller’s comparable sales

For Baltimore sellers, the immediate issue is not that every nearby foreclosure will reduce a home’s value. It is that a cluster of unusual transactions can make the local sales record harder to interpret.

A foreclosure, related-party transfer or distressed sale may not be a reliable comparison for an occupied and maintained home. The same is true of a transaction showing an abrupt price increase without documented renovation. Automated estimates and quick comparative market analyses can still absorb those sales, however, producing numbers that are either too low or too high.

Before setting a list price, sellers should review the deed and sale history behind nearby comparable properties rather than relying only on the latest recorded price. Ask whether each sale was arm’s length, whether the property was habitable, how long the prior owner held it and whether public records show permits consistent with a major renovation.

A seller whose home is in better condition than nearby foreclosures should document those differences. A prelisting inspection, contractor invoices, permit records and clear photographs can help an appraiser distinguish a maintained property from a vacant or damaged one. That evidence is more useful than simply arguing that a distressed sale should not count.

Sellers should also resist pricing from the alleged inflated transactions. A high recorded sale does not guarantee that an appraiser will treat it as credible, particularly when the property changed hands rapidly or later returned to the market at a fraction of the price.

Financed offers may receive more scrutiny in affected areas

The lawsuits center partly on debt service coverage ratio loans, which are generally underwritten using a property’s expected rental income rather than the borrower’s personal income. That does not make a DSCR loan improper. It does mean lenders evaluating investor purchases may examine rent projections, appraisals, ownership relationships and recent transfers more carefully after allegations of this scale.

A seller considering an offer from an LLC should verify that the person signing has authority to bind the company. The listing agent or closing professional should also confirm the buyer’s financing contact, deposit terms and major deadlines. A preapproval letter is useful, but it is not the same as final approval.

Long financing contingencies deserve attention when a buyer’s valuation depends on aggressive rent assumptions or a rapid post-closing renovation. Sellers can negotiate clear appraisal, inspection and loan-commitment dates while keeping backup-offer provisions where appropriate. The goal is not to reject investor buyers; it is to identify whether the proposed closing depends on numbers that may not withstand underwriting.

No seller should sign a document containing an inaccurate purchase price, repair credit, occupancy statement or description of completed work. Requests to hide concessions, omit side agreements or represent unfinished work as complete are reasons to pause the transaction and consult an independent real estate attorney.

Owners near the properties should preserve records and challenge bad data

Sellers who previously transferred a property to one of the named entities are not automatically implicated in the litigation. Still, they should retain the contract, settlement statement, communications, inspection materials and proof of any repairs. Those records may matter if a lender, investigator or attorney later asks how the transaction occurred.

Current owners preparing to sell should check their title work early. Old liens, unreleased mortgages, ownership errors and unresolved judgments can delay closing even when the seller had nothing to do with an alleged scheme. Using an independent title professional and reviewing the preliminary title report before accepting a short closing schedule can expose problems while there is still time to address them.

If an appraisal relies heavily on a questionable foreclosure or rapid resale, the seller can provide the lender with better comparable sales and documented property differences through the permitted reconsideration process. The response should be factual: transaction dates, condition, concessions, renovation records and location differences. Unsupported claims that a sale was fraudulent are neither necessary nor helpful.

The lawsuits do not establish that Baltimore values broadly are falling, nor do they determine what an individual home is worth. They do show why sellers in neighborhoods with heavy investor activity need to look behind recorded prices. In a market with old housing stock and sharply different property conditions, the story behind a sale can matter as much as the sale price itself.