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Inspector General alleges Baltimore non-profit requested kickbacks from tax sale purchasers

baltimore city money
Posted at 11:16 AM, Jun 17, 2021
and last updated 2021-06-17 16:22:05-04

BALTIMORE — A Baltimore City Inspector General's report reveals how a non-profit community organization was in cahoots with the city's Department of Housing and Community Development to choose which developers could purchase properties as part of an annual bulk tax sale, in exchange for kickbacks.

According to the report, the Department of Housing and Community Development would withhold some properties that were supposed to be part of the city's yearly public tax sale and instead place them in the bulk tax sale, which are reserved for community development purposes that require private investors to purchase tax liens on a cluster of properties.

As part of their selection process, the non-profit allegedly set up an unauthorized vetting program in which interested developers would have to file an application with them to go over their finances and property rehabilitation experience.

Once chosen, the non-profit would either buy city tax sale certificates on behalf of the developers or recommend to the Department of Housing which developers should be awarded the certificates.

The Inspector General found, the non-profit not only charged developers an application fee but also requested them to pay a percentage of their profit made from the property acquisitions, despite the vetting program never having been approved by the city.

During an interview, the non-profit's Executive Director told the Inspector General that the fees collected were paid back to the Maryland Department of Housing and Community Development in accordance with a grant agreement.

That state agency however denied any such agreement.

Eventually the City Comptroller's Department of Real Estate told the non-profit to end the vetting program, which led to the Department of Housing writing up an unofficial memorandum of understanding that suggested the non-profit would be prioritized when issuing available tax sale certificates.

That plan never went into effect, after the Inspector General last August alerted then Mayor Jack Young's office.

The Director of City Housing and Community Development at the time, is no longer with the agency.

Read the entire report below.