A real estate speculator who tried to cash in on the building boom around the D.C. Convention Center was accused last week of defrauding at least 37 investors in a $500,000 scheme.
The Securities and Exchange Commission said Joseph H. Tashof of Bethesda has consented to an injunction against any further real estate securities sales without admitting or denying the allegations in the complaint.
According to that complaint, Tashof sold unregistered securities in the form of promissory notes or profit-sharing arrangements called "nominee agreements" on property he had purchased near the center. The investors were to receive a certain percentage of the profits when the land was sold. He pledged to manage the real estate and repay the investors' principal and a high rate of return if the property was not sold by a certain date. Investors were also told they would have a secured interest in the properties when in fact they did not.
These activities occurred between September 1980 and August 1982. In a December 1979 interview, Tashof told The Washington Post of how he hoped to cash in on the boom. He had already made a $100,000 profit on an 11,000-square-foot tract of land at 10th Street and Massachusetts Avenue NW that he bought the previous year at $55 a square foot and sold for $65. Then he purchased a 16,350-square-foot tract near the convention center and advertised it at $80 per square foot.
"If I don't sell it for $80 this month, I'll probably sell it for $100 two or three months later," he told a reporter. "It's like sitting on gold. When the first 50,000 people start going into the center, prices will be $250 to $300 for a square foot of land."
Court documents say Tashof paid $1,050,000 for two other Massachusetts Avenue properties, $950,000 of which was financed by the sellers or investors. He allegedly told investors profits from the sale would be $1.3 million. He persuaded at least 37 investors to put up at least $500,000, the complaint stated. However, he was unable to sell the properties for over a year.
In February 1980, Tashof encumbered the properties with two purchase money deeds of trust totaling $900,000. In December 1981, he obtained a short-term bank loan of $350,000 by placing another deed of trust on the properties at a high interest rate. Part of the money was used to repay an investor. By February 1982, he was unable to pay interest on the deeds so their rates were raised to 24 percent and 17 percent. He defaulted on the loans in July while continuing to solicit investors without disclosing the default.
Richard S. Kraut, a D.C. attorney representing Tashof, said Tashof "never intended to defraud anyone" and that his inability to repay investors "resulted from record high interest rates and the effects of the recession on the Washington-area real estate market.
"He always intended to get the money back to the people who advanced him funds," Kraut said of Tashof, "he always intended to resell the property . . . ."