A Maryland lawyer was sentenced to 15 months in federal prison for using double contracts, back contracts and his own trust account to defraud lenders in a Baltimore apartment sale and 42 same-day sales.
A Towson, Maryland, attorney has been sentenced to 15 months in federal prison in connection with a bank fraud scheme.
Jacob Rapaport was found guilty on June 23 of conspiracy to commit bank fraud. Rappaport represented Alexander Schulz and his firm, Limitless Management, in a variety of real estate transactions, including the purchase and sale of a multifamily property in Baltimore and a wholesale project involving 42 homes in Baltimore.
Participate in the INMAN Intel Index Survey
According to the U.S. Attorney’s Office, Rappaport met with Schultz and participated in the planning of the scheme after Schultz’s former attorney refused to participate.
For the apartment project, Rappaport drafted two contracts for the 2022 sale, one showing the sale price of $7.8 million offered to the bank and the other showing the true price of $6.9 million, negotiated in a confidential agreement.
The HUD-1 contained a false credit of $85,000 for renovations, and $335,000 was hidden in Rappaport’s trust account and wired to the buyer after the transaction was completed.
Rappaport’s share of the participation fee was $16,250.
In the wholesale plan, Mr. Schultz’s group entered into contracts to purchase 42 homes in Baltimore for a total of $3.675 million, or $87,500 each. On the same day, the portfolio of homes was sold to a third-party buyer for $112,500 per property, or $4.725 million, increasing the value to the lender by $165,000 per property, or $6.93 million.
The HUD-1 Settlement Statement for this transaction shows that the final purchaser provided nearly $2 million as a down payment. However, this amount comes from a third party unrelated to the transaction. Mr. Schultz and his co-conspirators then received $2,921,604.09 from the sale proceeds, which were funneled through Rappaport’s trust account to conceal the true source of the down payment.
For his participation, Rappaport received $5,500.
Rappaport is scheduled to surrender to federal authorities on July 7 and begin his prison term. He is the father of five children and a sixth child is on the way. As part of his plea agreement, he forfeited attorney fees collected in connection with the scheme.
Email Christy Murdock
