A Towson, Maryland, attorney has been sentenced to 15 months in federal prison in connection with a bank fraud scheme.
Jacob Rappaport was sentenced on June 23 for conspiracy to commit bank fraud. Rappaport represented Alexander Schultz and his company, Limitless Management on a variety of real estate transactions, including the purchase and sale of a Baltimore apartment complex and a wholesaling scheme involving 42 Baltimore homes.
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According to the U.S. Attorney’s Office, Rappaport met with Schultz and participated in planning the scheme after Schultz’s previous attorney refused to participate.
In the apartment scheme, Rappaport drafted two contracts for a 2022 sale, one showing a sale price of $7.8 million, which was given to the bank, and one showing the true price of $6.9 million, which was negotiated in a hidden side agreement.
A fake credit for renovation of $85,000 was included on the HUD-1, and $335,000 was concealed in Rappaport’s trust account and wired back to the buyer after the closing.
Rappaport’s cut for his participation was $16,250.
In the wholesaling scheme, Schultz’s group contracted to buy 42 Baltimore homes at a total cost of $3.675 million, or $87,500 per home. That same day, the portfolio of homes was sold to a third-party buyer for $112,500 per property, or $4.725 million, which was inflated to $165,000 per property, or $6.93 million, for the lender.
The HUD-1 Settlement Statement for the transaction showed that the end buyer provided nearly $2 million as a down payment; however, this amount came from a third party not affiliated with the deal. Subsequently, Schultz and his co-conspirators received $2,921,604.09 from the sale, which was funneled through Rappaport’s trust account to obscure the true source of the down payment.
For his participation, Rappaport received $5,500.
Rappaport is scheduled to surrender himself to federal authorities on July 7 to begin his term of incarceration. He is a father of five, with a sixth child on the way. As part of his plea deal, he forfeited the attorney fees he had collected in connection with the scheme.
