Detroit Files Historic Nuisance Lawsuit Against Cryptocurrency Real Estate Firm

City Takes Action Against Blighted Properties

In a significant legal move, Detroit officials announced on Wednesday that they have initiated the largest nuisance abatement lawsuit in the city’s history. The lawsuit targets two brothers from Florida, Remy and Jean-Marc Jacobson, who are believed to be connected to a network of cryptocurrency-based real estate companies managing over 400 properties in Detroit plagued by severe blight and nuisance issues.

Properties in Disrepair

Many of the properties involved are rental units located in economically disadvantaged neighborhoods, while others stand vacant and in such disrepair that city officials have classified them as public health hazards. These properties are owned by investors, frequently from overseas, who acquired fractional ownership through cryptocurrency transactions. The lawsuit, filed in Wayne County Circuit Court, identifies 53 properties as “priority one,” indicating they pose an immediate threat to public health and safety.

Allegations Against Real Token and Its Affiliates

The lawsuit names Boca Raton-based Real Token, along with the Jacobson brothers and 165 associated corporate entities, for failing to uphold basic health and safety standards across their extensive portfolio of residential properties. Real Token, operating under the name RealT, has been accused of neglecting its responsibilities, leading to numerous violations.

The RealT platform advertises potential rental returns of 6-16% annually, although it remains unclear if these figures represent guaranteed profits. The company claims to have attracted over 65,000 investors, many of whom are not U.S. residents.

Foreign Investment and Local Impact

Currently, RealT is promoting ten Michigan properties on social media, allowing foreign investors to purchase shares for as little as $50, although these offerings are not available to U.S. citizens.

The Jacobson brothers are identified as co-founders and co-CEOs of RealT, and the company has attributed the poor conditions of its properties to “unscrupulous property management companies.”

Company’s Defense and City’s Response

In a statement, Real Token asserted that the blame for the properties’ conditions lies with third-party management firms that were compensated to oversee the properties and address tenant issues. They claimed these companies misappropriated funds, adversely affecting both Real Token and its tenants.

However, City Councilman James Tate and other officials dismissed this defense, emphasizing that the city had issued multiple correction orders directly to Real Token, which went unaddressed. Tate expressed his outrage after visiting some of the properties, describing severe issues such as leaking roofs and sewage problems.

Legal Demands and Future Actions

The lawsuit seeks various remedies, including the recovery of $500,000 in fines for nuisance and blight violations. Additionally, the city demands that all properties undergo compliance inspections to obtain necessary certifications. If compliance is unattainable, the lawsuit calls for the properties to be repaired to meet city standards.

The city is also pursuing personal accountability for the Jacobson brothers regarding the conditions faced by tenants. Furthermore, the lawsuit requests judicial oversight to ensure that even vacant properties are properly managed and that tenants can place their rent in escrow during repairs.

Real Token’s Commitment to Improvement

In response to the lawsuit, Real Token stated that it has been actively making repairs and has taken steps to improve its property management practices since December 2024. The company claims to have invested in direct management of its properties and implemented checks to prevent future issues.

Real Token emphasized its commitment to addressing blight violations and tenant complaints, asserting that while progress takes time, they are dedicated to fulfilling their original mission.

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Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.