The Moonhouse and the Pale Blue Dot. Illustration from photo, Astronautcenter Cologne.
Promised Affordable Housing, Delivered Mortgage Payments: Maryland Man Pays $562K for ‘Social Program’ Fraud
Maryland Attorney General Anthony G. Brown has announced a $562,000 settlement with a Davidsonville man and two of his companies over allegations they defrauded investors through an unregistered securities scheme tied to a purported affordable housing project in Baltimore.
The settlement involves Otis H. Jackson and his companies, Social Solutions LLC and SITO Capital LLC. The state’s Securities Division alleged Jackson raised money from investors between 2019 and 2024 through promissory notes tied to what he described as a “Social and Economic Development Program” focused on affordable housing development in Baltimore’s Park Heights neighborhood.
According to a consent order, which Jackson neither admitted nor denied, investors were told their funds would be used for real estate development and related business activities. Promotional materials cited claimed partnerships with nonprofit organizations, private lenders and local government entities.
Authorities said Jackson issued promissory notes that guaranteed repayment of principal along with high returns. However, regulators allege the investments were not used as described.
“Marylanders deserve to invest with confidence, free from fraud and deception,” said Attorney General Brown. “My Office will continue to pursue unregistered securities schemes and ensure that those harmed receive the restitution they are owed.
Instead, according to the state, investor funds were deposited into accounts controlled by Jackson’s companies and were used for personal expenses, including mortgage payments, travel, dining and transfers to personal accounts.
Officials said some investors were repaid using funds from new investors, but most did not receive returns or recover their principal investment.
The consent order also states that Jackson did not disclose key risks to investors, including the possibility of losing their money, and did not accurately describe the financial condition of properties involved in the project. In some cases, properties were reportedly subject to significant tax and mortgage debt, and at least one was sold at auction due to unpaid taxes.
Under the settlement, Jackson and his companies are barred from operating in the securities or investment advisory industry in Maryland. They are also required to pay $562,000, which will be distributed as restitution to 17 affected investors.
Took $1.4M in Deposits, Left Homes in Ruins: Denver Contractor Sentenced to 10 Years for Remodeling Fraud
A Denver contractor has been sentenced to 10 years in prison for orchestrating a home remodeling fraud scheme that prosecutors say defrauded homeowners of more than $1.4 million over several years.
A Denver District Court judge handed down the sentence Monday to Avi Schwalb after a jury in February convicted him on 47 felony counts, including theft, money laundering and violations of the state’s organized crime law.
Prosecutors said the scheme operated from July 2021 through December 2024 through Schwalb Builders and Avi’s Remodeling and Contracting, two affiliated companies that provided general contracting services in the Denver area. Authorities alleged the businesses routinely solicited home renovation projects, collected substantial upfront deposits and then failed to complete the contracted work.
“Coloradans spend precious time and money to buy and remodel their homes. Homeowners place a lot of trust in contractors to complete the work they agreed to do on their home. In this case, the scope and impact of the defendant’s criminal acts was significant and devastating to many homeowners. The court imposed a serious sentence for his serious crimes, and I am glad we were able to bring justice for the victim homeowners,” said Attorney General Weiser.
In many instances, according to investigators, projects were abandoned after demolition had begun or after incomplete or defective work had been performed. Some homes were left significantly damaged or uninhabitable, and customers were not refunded for unfinished or substandard work.
A financial review of business and personal bank records tied to the companies found that more than $1.1 million in customer payments was not used for the intended projects or returned to homeowners who requested refunds, according to prosecutors.
The case was part of a broader investigation that led to a statewide grand jury indictment in December 2024 charging Schwalb and several associates in connection with the alleged scheme. Authorities accused the group of engaging in a pattern of deceptive practices to obtain and misuse customer funds.
Under Colorado law, contractors are required to hold customer payments in trust for the specific project for which they are collected. Misuse of those funds can form the basis for criminal theft charges.
The Colorado Attorney General’s Special Prosecutions Unit handled both the investigation and prosecution of the case. Officials said additional defendants named in the broader indictment are awaiting trial in Denver District Court.
Schwalb’s sentencing follows what prosecutors described as a large-scale scheme that affected numerous homeowners across the Denver area.
Charged for Insurance They Didn’t Need, Denied Housing Over Unproven Charges: Colorado Landlord Pays $75K Settlement
Colorado Attorney General Phil Weiser has reached a settlement with Baron Property Services, LLC following an investigation into the company’s billing and tenant screening practices.
The state found that some tenants were charged for the company’s renters insurance program even after providing proof of their own coverage, effectively resulting in duplicate payments. According to the attorney general’s office, tenants were allowed to obtain insurance through a third-party provider to meet lease requirements, but deficiencies in the company’s property management system and communications led to continued charges for the company’s policy. Officials said those communications did not clearly explain how tenants could avoid being enrolled in the company’s insurance program.
“Double charging tenants who obtained their own renters insurance coverage is unacceptable. With many renters in Colorado struggling to make ends meet, we will continue to take action when landlords’ unfair or deceptive conduct hits renters’ pocketbooks. Landlords who use software systems to automate property management tasks remain responsible for ensuring their policies and actions comply with Colorado law,” said Weiser. “Moreover, an allegation of criminal conduct is not a conviction and should not be treated as such. I encourage all landlords in Colorado to check their policies and practice to ensure they comply with the law.”
The investigation concluded that these practices violated the Colorado Consumer Protection Act, which prohibits deceptive or unfair business conduct.
Separately, the state found that Baron’s tenant screening policies violated the Rental Application Fairness Act. According to investigators, the company considered pending or unresolved criminal charges as if they were convictions when evaluating rental applications, which is not allowed under state law. The law restricts how landlords can use criminal history in housing decisions and is intended to prevent applicants from being denied housing based on unproven allegations.
Under the settlement, Baron will pay approximately $7,300 in restitution to 368 tenants who were improperly charged for insurance. The company will also pay $67,635 to the state.
In addition to the financial penalties, the company agreed to change its policies and practices. These include clearly informing tenants about renters insurance requirements, ensuring that tenants who provide valid third-party coverage are not charged for additional insurance, and revising application procedures to comply with state rules governing the use of criminal background information.
State officials said landlords remain responsible for ensuring that automated systems used in property management comply with the law. They added that the settlement is part of broader efforts to address practices that can impose unnecessary costs on renters or limit access to housing.
The attorney general’s office encouraged property owners and managers across Colorado to review their policies to ensure compliance with consumer protection and housing laws.
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