The only criminal case against a real estate investor accused of running an international Ponzi-style investment scheme that affected thousands of homes in Baltimore and Philadelphia will be heard this week in Baltimore District Court.
Jay Walsh, who ran ABC Capital until its bankruptcy, watched as a former client testified that he had purchased a home in West Baltimore with the promise that $20,500 of his investment would go toward renovating the property.
“Did the defendant perform the services agreed to in the contract?” asked Assistant State Attorney Samantha Danzinger.
“No,” replied investor Fernando Iacomacci, an engineer who works in Colombia and Venezuela.
The case began late Monday after technical delays related to Spanish interpreting services and will resume on Thursday afternoon.
ABC Capital sold more than 1,000 homes in blighted Baltimore neighborhoods to far-flung investors with the promise of rehabbing them and generating guaranteed income. Dozens of civil lawsuits accused Walsh of failing to make promised repairs, leaving his investors – many of them out of state – begging for help and neighborhoods falling into even greater disrepair.
The case was brought in March by the Maryland Home Improvement Commission, a consumer protection agency of the Maryland Department of Labor. Iacomacci also has a lawsuit pending against Walsh and Castle Title, the now-defunct title company that brokered the transaction and which is currently under investigation by the Maryland Insurance Department.
In a brief opening statement, Walsh’s lawyer Kevin Carr described the proceedings as “A civil case involving an ongoing legal dispute between two companies that is being insidiously placed in a criminal context in order to get to my client.”
Prosecutor Danzinger said Walsh entered into an agreement claiming he was licensed as a contractor when he was not. The indictment says Walsh did not hold a valid Maryland home improvement license before working as a contractor and entered the construction business as a salesman without holding a construction license as a salesman.
The charges include grand theft and three misdemeanors.
The defense’s questions seemed to lay the groundwork for the idea that Walsh was not directly involved in the transaction with Iacomacci. In fact, since many of his clients were based overseas and non-English speaking, Walsh used a network of others to recruit and communicate with them. The investment was portrayed as “no intervention” because Walsh handled every step.
Iacomacci said he negotiated with Florida real estate agent Alejandro Tabosky, but he knew Tabosky was an agent for Walsh. Walsh’s signature appeared on contract documents as the authorized person of ABC Capital, prosecutors noted.
When Carr tried to contradict Iacomacci’s testimony about what Tabosky had told him on the hearsay grounds, District Judge Kent Boles Jr. asked if he was sure. With Iacomacci’s comment about Tabosky’s involvement, “you could get whatever you want,” Boles, who will decide the verdict, told him.
ABC filed for Chapter 7 bankruptcy in December 2022 amid mounting lawsuits and complaints.
The Pennsylvania Attorney General’s Office said Walsh was guilty of unfair or deceptive trade practices, but in April it reached a plea agreement with Walsh that allowed him to avoid paying fines or admitting wrongdoing.
He and the company were barred from operating a property management company in Pennsylvania for 25 years, but he is permitted to operate rental properties there. Use of outside property management companies. ABC also agreed to a suspended fine of $350,000 – meaning it will not have to pay it as long as it complies with the agreement.
