Ronald Lipscomb was in a tight spot in 2009.

Once a major player among Baltimore developers, Lipscomb was accused of bribing a member of City Council. He pleaded guilty to violating campaign finance laws and agreed to testify against his ex-girlfriend, then-Mayor Sheila Dixon, in a separate bribery case. As he racked up millions of dollars in unpaid tax bills and his business filed for bankruptcy, Lipscomb retreated from Baltimore and the spotlight.

Then he had an idea.

According to a lawsuit filed this month in Baltimore Circuit Court, it involved Chinese investors seeking U.S. citizenship, a plot of land near the Johns Hopkins medical campus and a hotel project with wildly inflated construction costs.

That’s how Lipscomb and his business partners wound up in China in 2014 and 2015, the lawsuit said, holding marketing seminars and meeting with potential investors.

Knowing nothing of Lipscomb’s checkered past, the investors say they each paid at least $50,000 for the opportunity to invest in his hotel project. The lawsuit said nearly 100 people then invested $500,000 apiece, or $47 million total.

The hotel was built in 2017, and years passed without public indication that it was in dire financial straits. Then, this summer, a lawsuit revealed the hotel had defaulted on a $21 million bank loan.

Now, with the bank looking to recoup its loan, individual investors say they are at risk of losing their entire stake, and they are accusing Lipscomb and his associates of securities fraud.

Lipscomb did not respond to a request for a comment.

At the center of the lawsuit is the 15-story Residence Inn Baltimore at the Johns Hopkins Medical Campus, at 800 N. Wolfe St. The land was once part of a neighborhood of rowhouses called Middle East, whose residents were predominantly poor and Black.

In the early 2000s, city officials, the Johns Hopkins University and other local stakeholders decided to take control of 88 acres in that area and redevelop it through a nonprofit called the East Baltimore Development Inc., or EBDI. Today, the area is known as Eager Park.

According to Marisela Gomez, an academic who wrote a book about urban renewal in East Baltimore, the EBDI displaced and relocated more than 700 Black families as it demolished homes and cleared the land to create new development parcels. One of those parcels was the future site of Lipscomb’s hotel project.

In 2015, the EBDI sold the land to Lipscomb and a team of developers for $10.

Around that same time, Lipscomb was making presentations to potential Chinese investors, which included an offering memo described in the lawsuit. The offering memo projected the hotel would be profitable within in its first year and make annual interest payments to its investors.

None of that happened, the lawsuit alleged.

The hotel’s first full year of operation was 2018. Each year thereafter, investors say, they got a report that told them the hotel was losing money. At first, the reports blamed the state of the hotel industry, the lawsuit said, then blame shifted to “growing pressure from Johns Hopkins to decrease rates” and attract more visitors.

Later, it was the fault of the COVID-19 pandemic, the lawsuit said, and then a unionization push by the hotel’s employees.

In November 2023, the investors say, they received a document titled “Important Notice Regarding Your Investment.” The document said the hotel wasn’t making enough money and had just defaulted on its bank loan.

The bank was first in line to get repaid, the lawsuit said, and the individual investors were told they would walk away with little to none of their original $500,000 investment.

Of the nearly 100 individual investors, 44 have signed on to the lawsuit. They are suing Lipscomb and other people and businesses connected to the project, including subsidiaries of the general contractor, Colorado-based Hensel Phelps, and the hotel manager, Pyramid Global Hospitality.

The plaintiffs’ attorney, Ramsay Whitworth of Silverman Thompson, said the lawsuit is about holding Lipscomb and his associates accountable and “protecting the American dream.”

The lawsuit claims Lipscomb and his associates “duped” investors by intentionally misleading them about revenue projections and taking advantage of their unfamiliarity with Baltimore’s hotel market.

There was another reason to invest. According to the lawsuit, Lipscomb and his associates lured investors by promising them a pathway to U.S. citizenship.

Through the EB-5 visa program, foreign investors could live in the U.S. permanently if they invest at least $500,000 in an American business that creates at least 10 jobs. (In 2022, the minimum was raised to $800,000).

The program is meant to spur foreign investment in the American economy, but occasionally developers have abused the program and preyed on wealthy foreigners. News in 2016 that the owners of a Vermont ski resort allegedly misspent more than $200 million of foreign investment shocked the state and led to years of litigation and investigations.

In the case of the Baltimore hotel, the investors say, Lipscomb did not fully disclose multiple conflicts of interest on the project that allowed and encouraged his business partners to inflate construction and development costs.

Lipscomb was soliciting investors for a partnership he controlled that would then lend that money to an LLC he also controlled to develop the project, the lawsuit said.

Normally, a lender wants to extend the least amount of credit needed to fund a major construction project and protect its investors from unnecessary risk. But, under this ownership structure, those guardrails were gone, the lawsuit alleged, and Lipscomb and his associates were incentivized to raise, lend and spend far more money than was needed.

Immediately after financing closed, the lawsuit said, Lipscomb and his partners started spending more than $2.8 million to pay “fees” from companies controlled or owned by Lipscomb.

By the time construction on the 194-room hotel finished in 2017, the lawsuit said, the total cost of development was $86.6 million — nearly three times what a comparable hotel should have cost.