An East Baltimore hotel that cost $87 million to build, relied on huge amounts of foreign capital, received taxpayer funds, and had the backing of prominent city and state officials has landed on the auction block with a thud this summer.

The sale price? Just $10 million, court records show.

Now, a group of Chinese investors stands to lose its entire $47 million investment. Those investors, who previously accused the development team of defrauding them, are claiming in a new court filing that the June auction was effectively rigged in favor of a Virginia-based private equity firm.

That firm, Excel Group, is the new owner, and a spokesperson declined to comment.

Tension had been building for years, but financial troubles at the Residence Inn Baltimore at Johns Hopkins Medical Campus did not become public until last year. That’s when a lender foreclosed on the extended-stay hotel, which largely serves medical patients and their families.

Ron Lipscomb, a businessman with a checkered past, led the hotel’s development, court and property records show.

The 15-story hotel opened in 2017 and has struggled ever since. According to the Chinese investors, Lipscomb’s ownership group blamed an ever-changing set of factors: Johns Hopkins University, COVID-19 and a unionization push by the staff.

In 2023, the investors say they got a notice that the hotel defaulted on a bank loan — and that their entire investment was at risk. First National Bank of Pennsylvania foreclosed on the hotel last year, claiming it was still owed $18.4 million of a $21 million loan.

Then, last December, the Chinese investors filed a lawsuit in Baltimore City Circuit Court, alleging that Lipscomb and his associates had bamboozled them. The lawsuit claimed the developers artificially inflated the hotel’s construction costs so they could siphon millions of dollars for their own benefit.

Court records show Lipscomb has not filed a response to the lawsuit, and the case is still progressing through initial steps. Lipscomb did not respond to a request for comment

However, the Chinese investors are in a precarious position.

Business records included in the foreclosure suit show they were the hotel’s subordinate lender. In the case of a default, the senior lender — First National Bank of Pennsylvania and its $18.4 million stake — would get paid back first.

Still, the Chinese investors had reason to believe they might get some money from a foreclosure sale. In 2023, a third-party appraiser valued the hotel at $32.7 million.

First National Bank of Pennsylvania sold the loan this March to Baltimore Blue Jay 1 LLC, a company organized a month prior in Delaware.

During the foreclosure process, the judge appointed a receiver, a third-party firm that would oversee the hotel’s operations while the legal process unfolded. In June, the judge ordered that a new receiver would take over, court records show.

The Chinese investors said this transition should have temporarily halted any public auction of the hotel.

Instead, the auction took place June 25.

The investors claim the auction was improperly rushed, allowing a firm controlled by Excel Group — and linked to Baltimore Blue Jay 1 — to buy the hotel at an “unconscionably low price.”

In a filing last week, the Chinese investors asked the judge to overturn the results of the auction.

Navin Advani, a New Jersey-based attorney who signed property records on behalf of Baltimore Blue Jay 1, declined to comment.

Lipscomb and his business partners in 2015 were able to buy the land the Residence Inn sits on for just $10. Part of East Baltimore Development Inc., or EBDI, the hotel project is one of many ventures in that part of the city that have Lipscomb‘s fingerprints.

Founded in 2003, EBDI is a joint venture between Johns Hopkins, the city and the state, and is meant to oversee the redevelopment of 88 acres of land near the Johns Hopkins medical campus. Those efforts, which have varied in their success, required the displacement of 700 families for demolition work. Much of the acquired land still remains vacant.

What has been rebuilt is now known as Eager Park, where the 194-room Residence Inn is located.

Although the land for the hotel was acquired for $10 — the EBDI sometimes sells land at below-market value as a means to spur development — construction costs were massive. The Chinese investors claim in their lawsuit that a hotel of that size should have cost around $24 million, about a third of what the developers spent.

The Chinese nationals made their contributions as part of a visa program meant to offer a pathway to American residency for wealthy foreigners who invest in businesses in the country. In marketing the project to them, the investors claimed Lipscomb never disclosed his controversial past.

A long-time developer, Lipscomb was at the nexus of a series of wide-ranging corruption cases involving city officials in Baltimore in the mid- to late-2000s. Facing allegations of bribery, he eventually pleaded guilty to a lesser charge of campaign finance violation in 2009 and largely disappeared from public view.

His relationship with former Mayor Sheila Dixon — the pair dated and he regularly gave her gifts as she voted on whether to give tax benefits to his developments — ultimately led to her own corruption case and eventual resignation.

Lipscomb has repeatedly declined interview requests and, when reached at his home earlier this year, told reporters “I don’t care what you write.”