Prolific Philly Landlord Leaves Trail Of Blight, Lawsuits And Ponzi Scheme Accusations

Through a series of shell companies and a churning group of investors, one single-family rental company has reportedly cast a long shadow over the housing market in West and North Philadelphia.

ABC Capital Investments, which spent over $82M snapping up over 1,500 single-family residential properties in Philadelphia, has racked up a mountain of code violations, tax issues and accusations of investor foul play, the Philadelphia Inquirer reports. 

More than 600 LLCs associated with ABC Capital bought properties in the city, the vast majority concentrated in two portions of the city with high concentrations of low-income communities of color. Nearly 500 of them are still under the control of those LLCs, the Inquirer reports, and those properties have a combined 500 open building code violations and more than $200K in property tax delinquencies.

One of ABC's most common strategies had been to buy up a property and sell it to an out-of-town investor as a passive investment, with a promise to carry out property management and maintenance services, the Inquirer reports. In some instances, investors paid ABC's management arm for needed repairs or construction work only to later find the work hadn't been done.

Some properties sat vacant without the work needed to be fit for occupancy, while others were rented to tenants despite being littered with code violations for water intrusion, mold infestation and other issues, the Inquirer reports.

For investors who found themselves underwater on vacant properties, the only exit that allowed them to recoup some capital seemed to be using ABC to find another investor to buy that property, amounting to what multiple lawsuits allege is a Ponzi scheme.

ABC has since shuttered its property management operation. But many tenants are still struggling to identify their landlord or property management company, while a few others have been hit with eviction filings after a change in ownership or management.

ABC and two affiliated entities filed for bankruptcy in November as a trial date for a racketeering and fraud lawsuit was about to go to trial, the Inquirer reports.

Though ABC may be an especially prolific and allegedly negligent landlord, it is far from the only investor-landlord that owns single-family rental properties in the city through anonymous LLCs that shield them from accountability to both tenants and city agencies such as the Department of Licenses & Inspections.

Despite Philadelphia City Council having passed a law three years ago to increase the transparency of rental property ownership, little progress has been made in the city bureaucracy to address companies like ABC Capital directly, rather than treating each LLC as an individual bad actor.

A city spokesperson said that a public-facing database of owners with rental licenses is scheduled to go online late next year, the Inquirer reports. Even then, the database will only include owners of occupied properties that received a rental license in August 2021 or later.