Ex-ABC Capital Chief Fined for Breaching Scam Settlement

Pennsylvania’s attorney general hit the former head of failed real estate firm ABC Capital with a hefty penalty after the firm’s implosion and its churn through Philadelphia’s lowest-income neighborhoods.

Former ABC Capital head Jason “Jay” Walsh, whose company pitched itself as a turnkey rental platform for overseas buyers, was hit with a $350,000 penalty after violating a settlement that barred him from managing properties in the state, the Philadelphia Inquirer reported.

A Common Pleas Court judge found Walsh continued communicating with tenants, running rentals he owned and giving misleading information to the attorney general’s office, all off-limits under the agreement, which labeled ABC’s tactics “deceptive and unfair.”

The civil settlement, brokered under former Pennsylvania Attorney General Michelle Henry, banned Walsh and his wife from landlord duties for 15 to 25 years unless they used a third-party manager.

But Walsh kept leasing and managing two properties near ABC’s onetime Northern Liberties base, according to court filings. He claimed an outside firm ran them, but the owner of that firm said otherwise and tenants told investigators the couple was still collecting rent.

ABC was once a prolific wholesaler of distressed housing, brokering more than 1,900 sales and more than $82 million in deals across roughly 600 limited liability companies during the 2010s, the Inquirer previously reported. Investors from Asia, Europe and South America were promised renovated, cash-flowing homes and eye-popping returns that rarely materialized.

Instead they often got unfinished rehabs, vacant units and mounting bills. Tenants were stuck in crumbling properties with little recourse, a dual failure that fueled lawsuits and tenant union complaints describing ABC’s model as a “scam” or even a “Ponzi scheme.”

The firm eventually decamped to Baltimore as Philadelphia’s rising prices blunted its pitch to bargain-hunters abroad.

But troubles followed Walsh south; last year, he was convicted of operating as an unlicensed contractor in Maryland and ordered to pay restitution, the only criminal sanction he has faced.

— Holden Walter-Warner