WASHINGTON – A federal district judge said this week that a Washington man who appeared to be involved in a real estate “flipping scheme” in Baltimore cannot pursue fraud charges against others involved in his transactions.
U.S. District Judge Andre M. Davis said in his Thursday ruling that Ralph D. Carter lost no money through the transactions, and he wrote that “there was no actionable fraud perpetrated against” Carter.
Davis said that whether Carter was aware of it or not, he was part of a “flipping scheme,” in which a buyer purchases a property and then sells it at an inflated price to a second buyer, without disclosing his or her real interest in the property.
Attorneys in the case did not return phone calls seeking comment Friday.
The case began in 2001 when Carter responded to newspaper ads promising real estate deals with “no money down” and “cash back at settlement.” Subsequently, he bought 12 residential investment properties in Baltimore City in 2001, four of them from Millennium Properties Inc.
Court documents show that he paid a total of $219,000 for the Millennium properties, which were only appraised at $69,901.
William W. Dent co-owned both Millennium and All Financial Services Inc., the mortgage brokerage that arranged the financing of the disputed transactions. Carter said the companies issued false appraisals of the properties and misrepresented the market value and physical condition of the homes.
He also accused Robert F. Dashiell, then the majority owner of Monumental City Title Co. LLC, which conducted the settlements on the disputed properties, of similar misrepresentations.
Carter sought damages for overpaying for the properties and having to repair them, as well as punitive damages.
But Davis noted that Carter was able to refinance the properties shortly after buying them, and that he experienced a “positive cash flow” from the rental income.
The court also found that Carter paid “considerably less” than what he claimed was stated on settlement statements, since he put no money down and left with funds. Carter was unable to produce the official documentation of the transactions, known as the HUD-1, the court said.
Carter’s claim that he relied on Dent’s representation of the properties in deciding whether or not to buy them “utterly fails,” Davis wrote. The judge pointed to Carter’s own deposition testimony in which he said he went into the agreement on his own accord after learning the cost of the properties, sometimes just days before the sale.
The court said Carter could not demonstrate that Dashiell was involved in the disputed transactions beyond preparing certain opinion letters concerning ground rents, and noted that Carter never even spoke to Dashiell.
The court also said that Carter and his counsel “plainly tried to fit this case” within the framework of another “flipping scheme” case that handed down by the Maryland Court of Special Appeals in February 2004 — “a mere three weeks” before Carter filed.
Davis not only granted summary judgment to Dent, his companies and Dashiell, but also to the defendants in the case who had defaulted.
-30- CNS 04-08-05