For years, title firm Riverside and legislation agency Nussbaum Lowinger have been dogged by rumors of mortgage fraud.
Now, a sweeping lawsuit claims the companies orchestrated a years-long scheme involving dozens of fraudulent actual property transactions, misappropriated escrow funds and hid kickbacks by way of charitable donations.
Lakewood, New Jersey-based Blueberry Funding and Florida-based lender EADMK filed a lawsuit in New York’s Southern District in opposition to Mark Nussbaum, Samuel Lowinger, Riverside and its house owners, Shaul Greenwald, Avery Eisenreich and Yoel Zagelbaum, and two former staff to recoup $87.5 million in lacking funds that have been purported to be held within the now-shuttered legislation agency Nussbaum Lowinger’s escrow accounts. As a substitute, Nussbaum wired cash out of escrow accounts to Riverside, so the title agency might facilitate fraudulent offers, Blueberry and EADMK allege.
The authorized filings painting Riverside and Nussbaum Lowinger because the architects of a sprawling fraud that used shopper escrow accounts and 1031-exchange funds to inflate property values, safe outsized loans and siphon off illicit earnings. Riverside and Nussbaum Lowinger obtained kickbacks on every fraudulent deal and laundered a few of them by way of charitable donations, the grievance alleges.
The brand new filings vastly broaden the scope of the alleged misconduct and supply new particulars about how the transactions have been structured and financed. It additionally raises questions on why prosecutors haven’t pressed fees in opposition to the gamers concerned.
The scheme
In response to the lawsuit, first reported by the Promote, the operation dates again to at the least 2018 and adopted a constant playbook: A purchaser acquires a property beneath contract and rapidly assigns the contract to a associated social gathering at an inflated value. The second sale is totally fraudulent, the lawsuit alleges. However Riverside acts because the title and shutting agent, making the offers look reliable, although no cash exchanges palms, in response to sources aware of the scheme.
The customer might then solicit a bigger mortgage based mostly on the inflated sale value than would have in any other case have been doable. The members would pocket the distinction between the inflated mortgage and the precise gross sales value.
In a single instance cited by the lawsuit, a purchaser acquired a property often known as Park at Crestview in Austin, Texas, for about $40.1 million in 2023. The contract was rapidly assigned to a brand new “purchaser” for $54 million. The inflated valuation resulted within the lender, Lument Actual Property, offering $42 million to Riverside, Nussbaum, and co-conspirators — virtually $2 million greater than the actual value.
In response to the lawsuit, the settlement statements ready by Riverside additionally consisted of unusually giant charges, together with $23,677 to Riverside and a $138,685 “dealer price” to Fortune Capital Group, regardless of Fortune by no means serving as a dealer on the deal, plus $50,000 to Nussbaum Lowinger for authorized charges.
In an effort to fund the flips, Nussbaum Lowinger and Riverside required fixed short-term bridge loans to make the second fraudulent deal seem actual. That is the place Blueberry and EADMK are available. They allege Nussbaum Lowinger used their escrow cash with out their data to offer bridge loans.
“The scheme required a steady provide of recent lender deposits as a way to function, as every new closing trusted the funds from the prior closing,” the lawsuit stated.
Riverside, Greenwald, Eisenreich, Zagelbaum, Nussbaum, and Lowinger didn’t instantly return a request to remark.
1031 Exchanges and charity kickbacks
Nussbaum and Riverside’s founder, Greenwald, allegedly created two extra fraudulent schemes to complement themselves.
Nussbaum and Riverside allegedly used the 1031 trade program — which permits firms to defer capital positive aspects taxes by reinvesting earnings into like-kind properties — to facilitate kickbacks. Underneath tax legislation, the preliminary gross sales proceeds must be held by a 3rd social gathering.
In response to the lawsuit, Nussbaum directed 1031 trade purchasers to Riverside. As a substitute of holding the cash in its escrow account, Riverside lent out the cash at 2 % curiosity per 30 days. Riverside paid Nussbaum 1 % per 30 days in curiosity as a kickback. Nussbaum and Greenwald described the phrases of the deal in a December 2021 textual content trade.
“I neglect our deal on 1031,” Greenwald texted.
Nussbaum responded, “1 level a month I feel.” Greenwald stated that Riverside was “loaning it out at 2 plus.”
Greenwald and Nussbaum allegedly used charitable donations to cowl up their fraud.
Nussbaum himself and Nussbaum Lowinger workers allegedly disbursed a few of the proceeds of the fraudulent flips and 1031 offers by writing checks or wiring funds to charitable organizations at Greenwald or Nussbaum’s course. The donations hid a few of the charges constituted of the flips and 1031 fraud, in response to the lawsuit. Nussbaum and Greenwald’s actual ties to the entire charities are unclear. But it surely’s clear from the lawsuit and messages that Nussbaum and Greenwald gave express directions about which charities the cash ought to go to.
These charities included Pomona Jewish Neighborhood, Ohr Shlomo Chasidic Middle, Chabad of Pomona, Tomche Shabbas of Monsey, Harchava Charitable Fund, Bais Menachem North Miami Seaside, and Rofeh Cholim Most cancers Society (RCCS), to which funds have been directed within the title of “Mark Nussbaum RCCS Hockey,” in response to the lawsuit.
In a single message, Greenwald requested Riverside to ship $5,000 to RCCS, “In honor of Mendy & Chanie Fischer and household for Mark Nussbaum RCCS Hockey.”
A Riverside worker responded, “sure however you should allow them to know [the charity] can’t write something.”
The worker made the request to cover the title of the donor as a result of Greenwald couldn’t subject a written acknowledgement of the donation or it could be seen as a kickback.
The lawsuit doesn’t explicitly say to what extent the charities could have recognized in regards to the fraud.
The association started to unravel in early 2025, when Blueberry and different Nussbaum Lowinger purchasers started asking for his or her escrow a reimbursement. Nussbaum’s enterprise companion Mendel Steiner died by suicide and Nussbaum Lowinger shut down. In the present day, escrow purchasers are looking for more than $400 million from the agency. The Manhattan District Legal professional’s workplace charged Nussbaum with diverting greater than $15 million in escrow funds. Nussbaum pleaded not responsible. Neither Nussbaum nor his companion, Samuel Lowinger, have confronted any fees associated to mortgage fraud.
Riverside was blacklisted from Freddie Mac and Fannie Mae in 2024 for performing because the title agent on a fraudulent flip involving Brooklyn dealmakers Boruch Drillman and Aron Puretz. Riverside has not confronted any prison fees. The corporate began off in title insurance coverage however branched into 1031 trade, LLC formation and price segregation.
The agency’s unofficial motto was “Do no matter it takes.”
Learn extra
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