Towson real estate attorney pleads guilty in bank fraud scheme

Key takeaways:

Towson attorney Jacob Rappaport pleaded guilty to felony conspiracy charge of bank fraud.

Rappaport reportedly conspired with investor Alexander Schultz to inflate real estate prices in Baltimore deals.

The allegations involve falsifying purchase prices to obtain favorable loan terms for properties.

Rappaport agreed to a 15-month prison recommendation and to repay $16,250.

A Towson attorney pleaded guilty Wednesday to a felony conspiracy charge after federal prosecutors accused him of fraudulently inflating prices in real estate deals to secure more favorable terms.

As part of the plea deal, Department of Justice lawyers agreed with Jacob Rappaport's defense counsel to only recommend a 15-month prison term at his sentencing in June. Rappaport, a former partner at Towson-based Levin Gann PA, faced a maximum of 30 years of incarceration for the single charge of conspiracy to commit bank fraud. Prosecutors did not object to him remaining out of federal custody pending his sentencing.

Rappaport, 41, appeared calm in court as he answered a routine set of questions from U.S. District Judge Matthew J. Maddox about entering a plea deal. Asked how many times he discussed the agreement with his attorney, Andrew C. White of Silverman, Thompson, Slutkin and White, he responded "a lot."

"A dozen to two dozen," he said. Neither Rappaport nor White would comment after the hearing.

Prosecutors charged Rappaport in March in a criminal information that alleged he conspired with real estate investor Alexander Schultz and an unnamed business partner to defraud lenders by providing them documents that contained inflated purchase prices, while outlining the actual sale costs in side deals with buyers that were otherwise not disclosed.

Rappaport represented the two investors and their real estate firm, Limitless Management. Months before the charge was filed in U.S. District Court for Maryland, Rappaport signed a plea agreement stipulating that he, Schultz and "Person #1" worked together on the illicit deals to sell the Coventry Manor apartment complex in Southwest Baltimore as well as a portfolio of 42 residential homes in the city.

In December 2021, Limitless Management sold Coventry Manor complex for about $6.9 million but gave a contract stating that the price was $7.8 million to a bank that had issued the firm a loan for the apartment, according to the plea agreement. When an attorney representing the buyer said he wouldn't participate in the scheme, Rappaport assisted the buyer in finding a new attorney, the document says.

Schultz and his business partner also bought the 42 Baltimore homes for $3.6 million and, on the same day, sold them at an inflated price to provide the buyer with 100% financing from a mortgage lender, according to the plea agreement.

The difference in both sales was eventually paid back to the buyers in wire transfers from Rappaport's attorney trust account, falsely described in memo lines and official documents as "seller credits," legal fees and renovation credits. Prosecutors say Rappaport made $16,250 off of the deals, which he agreed to pay back as part of his plea deal.

Schultz, who pleaded guilty in 2024 to conspiracy to commit bank fraud but still has not been sentenced, agreed to pay back nearly $665,000 in proceeds from the conspiracy.

Rappaport worked for Levin Gann for 14 years, becoming a partner in 2019. He was fired by the firm immediately after the charges were filed last month.

He still holds a law license, according to the Maryland Judiciary, and the state’s Attorney Grievance Commission had not filed any disciplinary action against him as of Wednesday afternoon. Attorneys are required to notify the state's bar counsel if they are convicted of a “serious crime,” such as a felony, and bar counsel can file a petition for disciplinary action without the commission's approval. Such cases typically take several days to be filed.

This story has been updated.