An Overlea man whose property-flipping activities grossed more than $4 million over a three-year period pleaded guilty to mail fraud in federal court yesterday.
Walter Duersch, who flipped scores of houses in the mid- and late 1990s, admitted that his scheme to buy Baltimore properties and sell them at inflated values may have cost lenders as much as $1.5 million.
Duersch, 47, agreed to a statement of facts that said he sold houses for prices "substantially in excess of the actual value ... at times being as much as two to three times the true value."
He usually paid $5,000 to $20,000 for the properties and performed cosmetic repairs before selling them. With the aid of mortgage brokers, appraisers and settlement attorneys, he used falsified and fraudulent documents to obtain loans for buyers with modest incomes and, often, poor credit, according to the statement of facts.
Two men convicted last year for their flipping activities, appraiser G. Samson Ugorji and settlement attorney Robert Ness, were named as Duersch accomplices.
The statement of facts said federal tax returns show that two corporations through which Duersch did the flipping had gross receipts of $4.2 million in 1996-1998. The returns showed taxable income was about $73,000 in both 1996 and 1997. For 1998, the corporations claimed losses.
U.S. District Judge J. Frederick Motz will sentence Duersch on July 18. In a plea deal, prosecutors agreed that they would not seek prison time for Duersch because of his health. Motz is not bound by the agreement.
Duersch has a rare form of cancer, Joseph L. Evans, the assistant U.S. attorney who prosecuted him, said after the hearing. "The government had him examined by an oncologist, who indicated that he is extremely ill."
As part of his plea deal, Duersch agreed to "cease the buying and selling of real property as a commercial activity" and to make available to his probation officer "all financial, commercial, business and tax records." He agreed that the probation officer could share them with federal agents and prosecutors.
Evans described Duersch as "one of the early pioneers of flipping in Baltimore."
An occasional partner and collaborator was Robert L. Beeman of Wilmington, Del., who flipped more than 100 houses. Beeman pleaded guilty last year to fraud and was sentenced to three years in federal prison.
Duersch and Beeman were partners in the early 1990s in a janitorial franchise business. After they were sued for fraud, unfair competition and civil violations of the federal anti-racketeering statute in 1995, they quickly settled and moved into real estate speculation, sometimes working together but usually operating independently.
Evans told Motz that Duersch has refused to disclose the name of the real estate company where he now works to a pretrial release officer out of fear that it would lead to his firing. "I'm a little concerned at not disclosing it," Motz said.
Duersch's attorney, Gerald C. Ruter, said the problem would be "worked out."
The Maryland Real Estate Commission Web site shows Duersch is a licensed real estate agent with Mr. Lister Realty Inc. in Pikesville.