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.
One deal the complaint singles out is the Park at Crestview in Austin. Plaintiffs say it first went under contract for about $40 million, then was reassigned at a $54 million valuation. That paper swap, the filings contend, generated nearly $2 million more in financing than the underlying sale price would normally support. Those details, along with other transaction-level examples, appear in recent coverage that reviewed the complaint and related documents; The Real Deal has published several summaries of the filings.
Bankruptcy And Criminal Fallout
The civil suit is landing on top of a fast-unraveling business empire. Nussbaum Lowinger and an affiliated firm sought Chapter 11 protection in April, listing estimated liabilities somewhere between $100 million and $500 million and putting dozens of creditor claims on the federal docket, according to coverage in Bloomberg Law. Official court materials from the Southern District of New York show the cases are being administered there and that the U.S. Trustee’s office has begun outreach to unsecured creditors as the bankruptcy winds through the system.
On a separate track, prosecutors in Manhattan have already accused Mark Nussbaum of diverting escrow funds in earlier criminal filings. Reporting on that matter states he was indicted in 2025 and has pleaded not guilty. Civil creditors now find themselves in a complicated maze: dueling claims in state and federal court, a criminal case that is still pending, and a Chapter 11 estate that could try to claw back transfers. For those attempting to keep score, PincusCo has compiled background reporting and links to underlying court documents.
What’s At Stake For Lenders And Buyers
Beyond the $87.5 million that Blueberry and EADMK want back, the complaint, if it survives into full discovery, could drag more deals into the spotlight and surface internal emails, fee schedules and wire records that track how money moved through title and escrow pipelines. The federal bankruptcy proceeding is already stacked with large unsecured claims and will decide whether specific demands are consolidated, attacked as fraudulent transfers, or resolved through Chapter 11 settlements. Public docket records in the Southern District of New York show multiple related civil actions and removal notices have been filed this spring, according to Justia.
For local lenders and investors, the allegations are a not-so-gentle reminder of the risks that come with short-term bridge loans, complex 1031-exchange maneuvers and heavy reliance on title and settlement agents to safeguard large sums. Plaintiffs say they plan to use discovery to trace deposits, loans and charitable donations that, in their telling, kept the machine humming. The defendants are expected to push back hard on that narrative in court. Either way, the civil fight looks likely to generate months of depositions and motion practice, all while the criminal case moves forward on its own track.
