North Carolina-based Red Oak Capital Holdings gave its first loan to D.C. slumlord Ali “Sam” Razjooyan in 2020. The $2.8 million loan allowed him to purchase the 15-unit building at 4400 Hunt Pl. NE and convert the “market-rate apartments to affordable housing,” according to Red Oak’s website.

Over the next four years, Red Oak went on to approve six more loans for Razjooyan, totaling more than $40 million. An investment solicitation from the firm refers to him as “a repeat borrower with a solid track record.”

“Here’s a borrower who takes the term, ‘Don’t mess with what’s working,’ to heart,” Red Oak proclaimed in an investor solicitation for the 12-unit property at 4725 Minnesota Ave. NE, purchased in December 2022.

“A specialist in the region’s subsidized housing market,” the ad said, referring to Razjooyan, while boasting that he would lease all 12 units to tenants with housing vouchers.

As Red Oak repeatedly approved loans for Razjooyan and held him up as a poster boy of its success, back in D.C., he was neglecting properties, stiffing creditors, and abandoning low-income tenants in unlivable conditions. 

A whistleblower lawsuit against Red Oak, which was filed in February 2023, provides a window into the opaque underwriting standards of some private lenders whose risky lending practices enabled Razjooyan—referred to as a “deadbeat landlord” by his own attorney—to reap millions in loans and fees while subjecting low-income D.C. tenants to horrific living conditions.

(Red Oak is a family of commercial real estate finance and investment companies with locations in North Carolina, Michigan, California, and Connecticut.)

In the lawsuit, the whistleblower specifically names Razjooyan as a uniquely problematic applicant, raises concerns that Razjooyan had forged documents in application for a loan, and identifies other ways in which Red Oak failed to vet Razjooyan and other potential borrowers and prevent fraud.

In early 2021, the whistleblower discovered “serious problems with Red Oak’s internal controls, the quality of the loans that it was originating, and the representations that it was making to investors,” according to the lawsuit.

The company’s underwriting procedures “lacked rigor or were routinely ignored.” Red Oak’s use of “outdated or compromised appraisals, inflated projections, or falsified documents” were concerning for the whistleblower. Some rent rolls, which document the number of tenants at a given building and how much they paid in rent, were falsified “with assistance from Red Oak employees,” the lawsuit alleges.

The whistleblower claims in their suit that borrowers could easily bypass the company’s software that is intended to verify the accuracy of potential borrowers’ banking information despite Red Oak’s promises otherwise to investors. When the whistleblower attempted to verify information, they claim that they “ran into significant pushback from … superiors,” and were then fired in retaliation.

In one instance, Red Oak CEO Gary Bechtel chastised the whistleblower for their attempts to verify a borrower’s liquidity, writing in an email referenced in the lawsuit, “we can’t let it impede our ability to actually process a loan.”

“Anyone can alter documents on their side and send it over to Red Oak or any institution. … I am playing my role … to prevent fraud,” the whistleblower responded in an email reviewed by City Paper and attached to Bechtel’s deposition. “When it comes to a borrower’s personal financial statement, anyone can put anything on there, they can overvalue their assets, net worth, etc., and sign the document.”

But Bechtel disagreed, telling the whistleblower, “It seems as if we are questioning EVERY document that borrowers are providing us and this is creating bottlenecks on getting transactions processed. We get paid for speed and creativity; we’re not a bank. Unless there is a reason that we believe the borrower has provided fraudulent documents, we should be revieing [sic] them at face value and incorporating into our work product.”

The whistleblower raised concerns about potential fraud from several borrowers who failed to verify banking information through Red Oak’s platform, according to the complaint. But only Razjooyan is identified by name in the lawsuit as an example of a potential fraudster.

Razjooyan, who appeared to have “significant liquidity issues,” set off warning bells in July 2021 when he submitted potentially forged documents for what would be his fifth loan with Red Oak, according to the whistleblower lawsuit.

Since 2020, Red Oak has made nine loans in the District totaling more than $60 million—eight of which went to Razjooyan or his associates, according to filings with the D.C. Recorder of Deeds. The loans from Red Oak were some of the biggest Razjooyan has received and they allowed him and his associates to accumulate almost 300 units.

Many of the properties Razjooyan purchased with Red Oak’s help followed a similar pattern. Razjooyan would receive the loan, refinance it, and then end up in default for failure to repay. Most of those properties end up in foreclosure or bankruptcy. Razjooyan has been accused in legal filings and bankruptcy court hearings of providing fraudulent documents and of “gross mismanagement.” One bankruptcy judge accused Razjooyan of attempting to use the bankruptcy system to further “his real estate schemes” and found that he perjured himself while under oath.

Two properties purchased with Red Oak loans—Minnesota Commons and Bennington Apartments—are the subject of lawsuits from tenants and the D.C. Office of the Attorney General. Both apartment buildings are the subject of recent court orders to halt illegal construction or improve housing conditions.

Red Oak has claimed it rejected Razjooyan’s loan application that allegedly contained forged documents. But according to the whistleblower, the company “suggested that they would do business with him in the future once he ‘earned’ back their trust.”

“There was an incident in one of Mr. Razjooyan’s loans where he had committed fraud, right? And it was brought to our attention,” Bechtel said in a transcript of a 2025 sworn deposition obtained by City Paper. 

Red Oak went on to approve three more loans for Razjooyan totaling more than $20 million over the next two years.

‘Saturated in Sewage’

Red Oak’s earliest loans to Razjooyan were for the properties at 4400 Hunt Pl. NE, 4303-4313 Wheeler Rd. SE, and 4559 Benning Rd. SE. (The partially redacted loan agreements were filed with the SEC.) 

The $9.6 million acquisition and renovation loan for the 42-unit Wheeler Road complex included about $1.7 million for renovations. The plan was to install new electrical and plumbing systems, in-unit washer/dryers, HVAC, flooring, and cabinets for existing apartments. A press release from Red Oak also said the developer planned to add seven new units, and the property would be “stabilized” using the D.C. Housing Authority’s voucher program.

“We are excited about the potential of this property,” Bechtel said in the press release.

Permits and contracts filed after Razjooyan purchased the building show costs of $350,000 for interior renovations. (The documents were curiously filed under the former owner’s name: Vivienne Awasum, who tells City Paper she knows nothing about the documents or who filed them.)

“We have worked with sponsors focused on creating and preserving affordable housing because we recognize these projects can help provide stability and opportunity for residents in those communities,” Red Oak Chief Legal Officer Robert Kaplan Jr. tells City Paper about his company’s investments in the District.  

But trauma and squalor, rather than stability, define tenants’ experiences at the decrepit Wheeler Road complex.

Shaniqua, who asked that her last name be withheld because she’s ashamed to live in the complex, tells City Paper that she had high hopes when she moved into a newly renovated, three-bedroom unit with her children in 2022.

But Shaniqua quickly found out that requests for necessary repairs were often ignored in the now-squalid complex. “This place is the worst of the worst,” she says.

One unit was “saturated in sewage” and was shut down by the Department of Buildings earlier this year. The tenants were at risk of electric shock from water in the walls, according to the notice of infraction. Leaks from the ceiling were so bad in Shaniqua’s apartment that it felt like it was raining, she says. 

Shaniqua’s neighbor, Jaquanna Porter, had mice everywhere in her apartment—another common complaint from tenants in Razjooyan’s properties. Porter found mice in the stove, in the sinks, in the closets, even in the ceilings, according to an inspection report by the Children’s Law Center that was filed in a 2023 lawsuit against Razjooyan’s LLC. The complaint alleges that the unit had mold, leaks, defective appliances, and severe mice and insect infestations. At one point, mice “ate through [a] fire detector,” and it was disconnected, the report says. And Porter’s young son was afraid to sleep in his own bed after he found a mouse there.

A DOB inspection report found 20 violations in Porter’s apartment, including issues with the doors, the stairs, the refrigerator, the shower, the floors, the windows, and the smoke detectors (or lack thereof).

Many of the tenants at the Wheeler Road complex have fled, and many of the empty apartments are now occupied by squatters, according to the few tenants who remain. “The squatters take better care of the property than Sam,” Shaniqua says—a sentiment reiterated by other tenants. 

Shaniqua’s unit currently does not have heat, and she says she relies on space heaters to keep warm. The electricity only works in half of her apartment, she says, and sometimes she is without heat, water, and electricity at the same time.

Shaniqua says she rarely saw Razjooyan or property manager Theresa Fowler on the premises. “I remember Theresa came to the building once and she was Gucci’d down,” Shaniqua says, referring to Fowler’s designer outfit. “I feel bad for my kids. How do I explain how embarrassing it is?”

Porter, who moved out of the building this month after DOB deemed the unit uninhabitable, says that she and her kids would constantly get sick. “I can’t live like this with my kids,” she says.

The complex is set to be sold to developer Craig London for $7 million as part of Razjooyan’s 117-unit portfolio of “recently renovated assets,” along with 4400 Hunt Pl. NE, according to a purchase contract filed in bankruptcy court this month. The Wheeler Road and Hunt Place properties, purchased with approximately $12.4 million in Red Oak loans, are now valued at a fraction of their original purchase price.

At a July 2024 bankruptcy hearing, lawyers with the D.C. attorney general’s office accused Razjooyan of grossly mismanaging the properties, “resulting in extreme risk to the assets and an untenable situation for the tenants that continue to live in the properties.” 

Tenants weren’t the only ones getting screwed by Razjooyan. Even as he continued racking up loans, he neglected to pay for critical operating expenses.

Lawsuits from DC Water reveal more than $630,000 in unpaid water bills for five Razjooyan properties acquired with Red Oak financing.

At Razjooyan’s 36-unit Bennington Road Apartments in Southeast—purchased with a $6.75 million bridge loan from Red Oak in spring 2021—he racked up a whopping $412,734 water bill.

Benning Road Apartments tenant Diane Settles filed a lawsuit last month alleging that she has no heat or gas. Settles says she has gone without those utilities for most of the three years that she has lived at the complex.

Like Shaniqua, Settles says the property management company was rarely responsive. “The only time I remember seeing Theresa [Fowler] is when my voucher ran out,” she says. 

A new consent order issued in a lawsuit brought by the attorney general requires the deposit of repair funds directly into the court registry. Razjooyan is subject to a $1,000-per-day fine if he fails to do so.

Crucial expenses such as insurance have gone unpaid by Razjooyan, too, according to U.S. Bankruptcy Judge Elizabeth Gunn, who found that Razjooyan presented insurance certificates that “exhibit extreme evidence of fraud.”

Razjooyan was “absolutely lacking credibility,” the judge determined in the July 2024 hearing.

“Bankruptcy is intended for the honest but unfortunate debtor who was willing to, as I’ve said before, air their dirty laundry and answer all the questions,” Judge Gunn admonished Razjooyan during a hearing last summer. “And that was almost the farthest thing from what happened during [Razjooyan’s] testimony.”

‘Doctored’ Loan Application

In a 2025 deposition, lawyers asked Bechtel, the Red Oak CEO, about the company’s verification process and Razjooyan’s alleged fraud.

Bechtel said that Razjooyan (to whom he referred as “Sam the man” in the deposition) “doctored” one of his deals, according to the deposition transcript. In that instance, Red Oak “killed the deal,” he added.

“We’re basing our credit decisions primarily on the real estate, and the secondary decision is based on the borrower, the borrower’s experience, and the borrower’s financial capacity,” Bechtel testified.

“The bridge lending space … is a much different pace, much different structure, much more entrepreneurial, fast-paced business than working for a Wells Fargo or a Citibank or Bank of America,” Bechtel said. “This business is a velocity business. This business doesn’t cut corners, but we do get paid for speed.”

Lawyers also asked Bechtel about Red Oak’s internal platform for evaluating loan applicants.

Former Red Oak Capital CEO Chip Cummings, who signed Razjooyan’s first loan with the company, hyped up Red Oak’s “fully integrated fintech platform” and its ability to “rapidly perform credit and collateral scoring,” in an August 2020 press release. (In December, Cummings was sentenced to 66 months in federal prison and ordered to pay about $5.8 million in restitution for “executing a scheme to defraud investor clients at Red Oak Capital.”)

The ROCX platform could “streamline the manual and time-consuming parts of the transaction analysis and underwriting process,” a 2020 offering circular claims. 

Bechtel said differently in his deposition. “We’ve never used ROCX for anything other than tracking deals. It has no place in, you know, underwriting, quote/unquote, transactions,” he said in his sworn testimony. 

“You can’t write an algorithm for commercial real estate lending. Doesn’t work,” Bechtel added. 

Under oath, Bechtel testified that Red Oak did not give Razjooyan any more loans after declining his “doctored” July 2021 application. But government records show that Red Oak was back in the Razjooyan lending business within a year. 

Back in Business 

Red Oak provided three more loans to Razjooyan in 2022 and 2023. Razjooyan later defaulted on all of them, according to Red Oak’s filings with the U.S. Securities and Exchange Commission.

In August 2022, Razjooyan refinanced a loan for 5320 8th St. NW with an $8.5 million bridge loan from Red Oak, according to the company’s website. 

Razjooyan purchased the distressed property in July 2021 while it was in receivership. The original contract to purchase the building was assigned to Razjooyan’s LLC for a $630,000 flip fee paid to a company controlled by Razjooyan associate Farid Jalali. (A flip fee is paid to a person or entity who holds a contract to buy a property and then sells that contract to another entity.)

Razjooyan began making unsafe and unpermitted repairs almost immediately after signing a renovation plan with the D.C. attorney general’s office, according to a 2023 legal filing. By June 2023, the loan was in default, according to Red Oak’s filings with the SEC.

According to Richard Balles, Razjooyan sold the LLC that owns the building to Balles, who paid off the Red Oak loan. Razjooyan has partnered with Balles on some real estate deals and in other cases has transferred control of his buildings to Balles, according to lawsuit and filings with the Recorder of Deeds. 

Red Oak’s next loan to Razjooyan, in December 2022, was for the 12-unit building at 4725 Minnesota Ave. NE. The property, which was refinanced by Acra Lending in summer 2023, is scheduled to be sold in a foreclosure auction next month.

Red Oak’s seventh loan to Razjooyan—for $8.9 million—enabled him to acquire the 44-unit complex at 112 Wilmington Pl. SE. 

After the Wilmington property was refinanced in summer 2023, the new lender would receive only one partial payment on a $10.1 million loan, according to a lawsuit against the LLC controlled by Balles and Razjooyan. The lawsuit sought to remove the property from Razjooyan and Balles’ control and give it to a court-appointed receiver.

On the receiver’s first visit last summer, they found “evidence of an open-air drug market.” The lender also discovered fraudulent leases and fake doors installed in front of cinder block walls—an apparent attempt to give the appearance that the building had more units than it did. 

As with Razjooyan’s earlier properties, operating expenses at Wilmington Place SE were unpaid. “The Borrowers never paid any property expenses since purchasing the property,” according to a receiver’s report for the property. “This included back real estate taxes, water and sewer changes [sic], gas and electric utilities, and trash.” 

Despite regularly defaulting on utility bills, Razjooyan may have profited from the significant loan proceeds earmarked for renovations and property management.

Legacy Construction, “a recognized regional development leader,” according to Red Oak’s glowing investor solicitation, would conduct renovations at 4725 Minnesota Ave. NE. Razjooyan’s brother, Ray Eimon Razjooyan, was the beneficial owner of Legacy Construction, according to CorpOnline, an online database of corporate registration data. But the company’s LLC status was already revoked by the time Red Oak was singing its praises—in September 2022, according to a spokesperson for the D.C. Department of Licensing and Consumer Protection. Razjooyan has been listed as a subcontractor on other Legacy Construction projects. 

Kanga Property Management would be responsible for the property’s day-to-day operations, according to the investor solicitation posted to Red Oak’s website, which is no longer available. A Kanga Property Management representative tells City Paper that the company operates exclusively in Florida and has never managed a property in D.C.

Lender lawsuits for other Razjooyan properties suggest that he is extracting up to 7 percent of total rental income through property management fees to his company Masterpiece Property Management, or “MPM,” at times using “false or fraudulent” management agreements.

The ‘Razjooyan Default’

The 83-unit complex called Minnesota Commons is the latest foreclosure and bankruptcy casualty tied to Razjooyan.

Back in April 2024, Red Oak projected optimism about its $15.5 million bridge loan to 4069–4089 Minnesota Ave. NE LLC, which is controlled by Razjooyan’s associates Jesper Nylen and Oscar Portillo. (Nylen has since resigned, according to a bankruptcy filing.)

The high price tag was justified by a March 2024 appraisal containing a shocking $4 million flip fee, which was paid to Razjooyan associate Jalali.

But this time, the loan agreement included an unusual provision called the “Razjooyan default.” The clause said that if Razjooyan was involved in the operation or management of Minnesota Commons, Red Oak would consider it an “immediate event of default” on the loan.

But Minnesota Commons would follow a familiar path of illegal construction, distressing conditions, and loan defaults.

The property “so resembles an abandoned property that DOB designated three of the buildings as ‘Blighted Propert[ies],’ meaning that they are unsafe, unsanitary, or otherwise threaten the health, safety, or welfare of the community,” according to a recent OAG filing in bankruptcy court. 

Razjooyan and Portillo began conducting illegal construction soon after the LLC purchased the building, according to the attorney general. In October 2024, Razjooyan and Portillo agreed to halt illegal construction and improve housing conditions at Minnesota Commons. 

Despite the ongoing lawsuit from the attorney general, Red Oak celebrated its borrower, an LLC made up of Razjooyan’s associates Nylen and Portillo. “Given the sponsor’s significant track record in redeveloping aging properties into affordable apartments, we’re confident in their ability to once again deliver a high-quality product that meets the demands of the local market,” Ken Wood, a regional manager at Red Oak, told Yield Pro a month after Razjooyan agreed in court to stop illegal construction.

“Our loan will enable the sponsor to execute their vision and transform this asset into a thriving community for families,” Bechtel, the Red Oak CEO, added.

But behind closed doors, Red Oak accused the LLC of failing to secure permits and maintain the property in “good and safe” condition, according to a default notice issued just one day before the Yield Pro article was published.

According to the relatively sparse management agreement for the property, which was filed in the bankruptcy case, Minnesota Commons is managed by JBR Companies and Joseph Johnson, the advisory neighborhood commissioner of 8B05. JBR Companies has managed or acted as an agent for some of Razjooyan and Balles’ properties, according to notices to tenants, the District’s SCOUT database, and public records obtained by City Paper via the Freedom of Information Act. Yet, there is no record on the District’s Professional Licensing website of Johnson having a property manager license, as required by law. Johnson did not respond to emailed questions.

Balles, who is named as a co-debtor in a bankruptcy filing for Minnesota Commons, claims he does not know Johnson or JBR Companies. Yet the company is listed on the business license for Balles’ building at 5320 8th St. NW. In addition to his interests in Minnesota Commons, City Paper has traced the ownership of Capital Venture Trust, a company that recorded 55 liens on Razjooyan’s properties last spring, according to the Recorder of Deeds, to Balles and Sol Kaspi, both of whom have been involved with Razjooyan in other properties in D.C. Balles claims they placed the legal claims on the properties, which include the Wheeler Road SE, Benning Road SE, and Wilmington Place SE complexes, “as security” for their investments.

As the whistleblower’s lawsuit against Red Oak proceeds, Razjooyan’s wave of defaults and questionable maneuvers to retain control of the properties continues through transfers to his associates and bankruptcy proceedings.

In the June 2024 bankruptcy hearing, a lawyer for the D.C. attorney general told the judge, “we do think that there is a broader scheme going on here to try to move the ownership of these properties around in order to make it more difficult for there to be enforcement with regard to the myriad code violations and all kinds of other issues going on.”

In Maryland, another Razjooyan-affiliated bankrupt property was recently sold at a foreclosure auction (pending court approval). According to the auction house, the winning bid of $4.6 million came from Razjooyan’s associate Jalali.

For tenants, life in Razjooyan’s properties remains precarious. They are regularly subjected to utility shutoffs, fires, and shootings.

“Your home is supposed to be your peace, but instead you’re causing chaos,” Shaniqua says of  Razjooyan. “Why would you want us to suffer like this? Do you think what you’ve done to the families here is right spiritually? Do you ever think that you’ll reap what you sow?”