Baltimore Business Owner Pleads Guilty to Conspiracy to Commit Wire Fraud in Relation to the Sale of Two Baltimore Properties
Baltimore, Maryland – Philip Abramowitz, age 50, of Pikesville, Maryland, pleaded guilty yesterday to conspiracy to commit wire fraud. As part of his guilty plea, Abramowitz will be ordered to pay $373,684 in restitution.
The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge Shawn A. Rice of the U.S. Department of Housing and Urban Development Office of Inspector General.
According to his guilty plea, from May 2016 to April 2017, Abramowitz and others conspired to defraud two financial institutions by fraudulently obtaining Federal Housing Administration (FHA) loans and property under false pretenses. Specifically, Abramowitz used his company 163 N. Potomac St., LLC., to facilitate the fraudulent sales of his Potomac Street, Baltimore, Maryland properties.
For example, in May 2016, Abramowitz sold one of his Potomac Street properties (Property 1) to a family member (Relative 1) and entered into an agreement with Relative 1 to purchase the property using an FHA-insured loan. The FHA is part of the U.S. Department of Housing and Urban Development (HUD) and provides mortgage insurance on loans made by FHA-approved lenders. To qualify for the FHA-insured loans, the buyer must use the residence as their primary residence, disclose any familial or business relationship between the seller and buyer, and disclose the source of the money the buyer intends to use for the down payment and closing costs.
As stated in his guilty plea, Relative 1 applied for and received a $294,566 FHA-insured loan with a mortgage company (Mortgage Company 1) by falsely representing Abramowitz’s bank account records as his own. Relative 1 and Abramowitz also concealed their familial relation from Mortgage Company 1 by submitting false company filings during the loan application process, having Abramowitz’s property manager (Property Manager 1) pose as the sole seller and manager of 163 N. Potomac St., LLC and arranging Property Manager 1 to sign the FHA-loan contact as the official seller of the property. Abramowitz’s ownership of 163 N, Potomac St., LLC. or involvement in the sale was never disclosed.
To meet the requirements of the loan procurement process, Abramowitz gave Relative 1 $10,500 to pay for the closing costs for Property 1 as Relative 1 did not have the financial means to make the purchase. Based on the fraudulent financial information presented during the loan application process, Mortgage Company 1 loaned Relative 1 $294,566 for the purchase of Property 1. The majority of the loan proceeds were subsequently deposited into Abramowitz’s bank account. Ultimately, Relative 1 never used Property 1 as a primary residence and rented the property to tenants for a year before ceasing mortgage payments and allowing the property to fall into foreclosure.
Further, Abramowitz arranged the sale of his second Potomac Street property (Property 2) in March 2017 to another family member (Relative 2) using an FHA-insured loan. To facilitate the sale of Property 2, Relative 2 applied for an FHA-insured loan with another mortgage company (Mortgage Company 2). Using the same manner to defraud Mortgage Company 1, Abramowitz concealed his familial relation to Relative 2, falsely listed his property manager as the sole seller and owner of Property 2 and submitted multiple fraudulent documents to Mortgage Company 2, including an LLC affidavit of title asserting that no other person or entity had ownership in Property 2.
In a similar manner as the sale of Property 1, Abramowitz violated FHA-loan requirements by providing Relative 2 $8,750 for the closing costs of the sale, misrepresented his own bank account information as Relative 2’s in the FHA-loan procurement process, and received the majority of the loan proceeds to his personal bank account. Relative 2 never used Property 2 as a primary residence or paid monthly mortgage payments to Mortgage Company 2 which caused the property to fall into foreclosure.
Abramowitz faces a maximum of 30 years in prison followed up by 5 years of supervised release for conspiracy to commit wire fraud. U.S. District Judge Richard D. Bennett has scheduled sentencing for August 9, 2022, at 2:30 p.m.
United States Attorney Erek L. Barron commended HUD-OIG for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorney Martin J. Clarke, who is prosecuting the federal case.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.
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