A federal complaint filed in Manhattan this week paints a sprawling picture of an alleged multi-year real estate hustle that turned supposedly boring escrow deposits and tax-deferred 1031 exchange funds into ammunition for inflated sale prices and outsized loans. At the center of the web, the suit says, were title firm Riverside Abstract and the now-shuttered law office of Nussbaum Lowinger, which allegedly served as the backbone for dozens of contested deals.
Lakewood, N.J. lender Blueberry Funding and Florida-based EADMK brought the case in U.S. District Court in Manhattan, telling the court they are out roughly $87.5 million that should have been sitting in Nussbaum Lowinger escrow accounts. Their complaint names Riverside Abstract, Nussbaum Lowinger and several executives, and accuses them of a pattern of sham flips, oversized lender draws and missing client deposits, according to The Real Deal.
According to contemporaneous reporting and excerpts from the complaint, the alleged playbook was simple enough to rinse and repeat. A buyer would put a property under contract, then quickly assign that contract to a related entity at a much higher price, creating paper value that supported a bigger loan. Plaintiffs say escrowed money and 1031 exchange proceeds were quietly redeployed as short-term bridge loans to make those second, inflated closings look legitimate, and that some proceeds were run through charitable checks to disguise kickbacks, per reporting by The Promote…