Baltimore County business owner sentenced to prison for fraudulently obtaining federally insured loans

BALTIMORE, MD – A Baltimore County business owner has been sentenced to federal prison for fraudulently obtaining federal loans to sell two Baltimore properties he owned.

U.S. District Judge Richard D. Bennett sentenced Philip Abramowitz, 50, of Pikesville, to one year in federal prison and one year of house arrest, followed by three years of supervised release, on conspiracy to wire fraud for fraudulently obtaining federally insured home loans. Judge Bennett also ordered Abramowitz to pay $373,684 in restitution and forfeit $493,037.

The verdict was delivered by United States Attorney for the District of Maryland Erek L. Barron and Acting Special Counsel Jerome A. Winkle of the Office of the Inspector General of the US Department of Housing and Urban Development.

“Abramowitz has openly lied to federal authorities and abused a federal loan program designed to alleviate the financial stress of buying a home. Our office will continue to prosecute those who abuse federal programs,” Baron said.

“Abramowitz’s conduct is unacceptable and undermines the goals of the FHA loan program,” Winkle said. “HUD OIG is committed to working with our partners at the U.S. Attorney’s Office to hold individuals like Mr. Abramowitz accountable and recover funds fraudulently obtained from HUD programs.”

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. The FHA is part of the United States Department of Housing and Urban Development (HUD) and provides mortgage insurance for 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 family or business ties between the seller and the buyer, and disclose the source of the money used by the buyer for down payment and closing want cost.

Philip Abramowitz admitted that he used his firm, 163 N. Potomac St., LLC, to facilitate the sale of his Potomac Street properties with FHA-insured loans. For example, in May 2016, Abramowitz sold one of his properties on Potomac Street (Lot 1) to his brother Calvin Abramowitz and entered into an agreement with Calvin Abramowitz to purchase the property using an FHA-insured loan.

According to court documents, Calvin Abramowitz applied for and received a $294,566 FHA-insured loan from a mortgage company (Mortgage Company 1) by misrepresenting Philip Abramowitz’s bank accounts as his own. Calvin and Philip Abramowitz have also: concealed their family relationship from Mortgage Company 1 by submitting false company records during the loan application process; had the property manager of Philip Abramowitz (property manager 1) pose as the sole seller and manager of 163 N. Potomac St., LLC; and had Property Manager 1 sign the FHA loan agreement as the official seller of the property. Philip Abramowitz’s ownership of 163 N, Potomac St., LLC or his involvement in the sale was never disclosed.

To meet the requirements of the loan origination process, Philip Abramowitz gave Calvin Abramowitz $10,500 to pay for Property 1 closing costs because Calvin did not have the funds to purchase. Based on the fraudulent financial information provided during the loan application process, Mortgage Company 1 loaned Calvin Abramowitz $294,566 to purchase Property 1. The majority of the loan proceeds were subsequently deposited into Philip Abramowitz’s bank account. Ultimately, Calvin Abramowitz never used Property 1 as his primary residence and leased the property to tenants for a year before stopping mortgage payments and allowing foreclosure on the property.

As detailed in his plea agreement, Philip Abramowitz arranged the sale of his second property on Potomac Street (Property 2) in March 2017 to another family member (Relative 1) using an FHA-insured loan. To facilitate the sale of Property 2, Relative 1 applied for an FHA-insured loan from another mortgage company (Mortgage Company 2). In the same manner to defraud Mortgage Company 1, Philip Abramowitz concealed his family relationship with Relative 1, falsely listed his property manager as the sole seller and owner of Property 2, and submitted several fraudulent documents to Mortgage Company 2, including an affidavit the LLC’s assertion that no other person or entity owned property 2.

As with the sale of Lot 1, Philip Abramowitz violated FHA loan requirements by: providing Relative 1 with $8,750 for the closing costs of the sale; misrepresenting his own bank account information as Relative 1 in the FHA loan origination process; and have most of the loan proceeds deposited into his personal bank account. Relative 1 never used Property 2 as a primary residence or made monthly mortgage payments to Mortgage Company 2, resulting in the property being foreclosed on.

Calvin Abramowitz, 48, of Lakewood, New Jersey, previously pleaded guilty to bank fraud related to his role in the system and faces a maximum sentence of 30 years in federal prison. Judge Bennett has scheduled the sentencing of Calvin Abramowitz for December 6, 2022 at 2:30 p.m

Photo by Sora Shimazaki from Pexels

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