After Merchants Bank extended loans to a group of troubled investors, new details are emerging about the extent of its losses, particularly those tied to Moshe Silber, an investor who is now serving a 30-month prison sentence. Silber and his associates were involved in a scheme where they allegedly used a stolen identity to secure an inflated $74 million loan for a Cincinnati apartment complex.
The Carmel, Indiana-based regional bank had previously disclosed $46.1 million in write-downs after some borrowers became subjects of mortgage fraud investigations. Recent court filings have shown that Merchants Bank’s exposure to Silber is significant, with the bank claiming it is owed over $61 million on loans backed by multifamily properties in Flint, Michigan; Danville, Virginia; and Pittsburgh, Pennsylvania.
According to court documents, entities linked to Silber abandoned these properties in 2024. Merchants Bank covered operating shortfalls and appointed receivers to put the properties up for sale. The sales process has revealed that the bank will likely incur substantial losses. For example, Merchants has a binding letter of intent to sell the 365-unit Midway Townhomes in Flint for $1.5 million. The property previously had a $21.6 million loan from Merchants in 2023, indicating a steep decline in value.
Other properties connected to Silber are also being sold below their loan amounts. Woodside Village in Danville, which recently received 17 building code violations, is under contract for $10 million, while Merchants had provided $10.5 million in loans for it.
Due to bankruptcy proceedings, final sale prices could be even lower. Merchants alleges that a buyer could use debtor-in-possession (DIP) financing and a stalking horse bid to acquire the properties at an even greater discount. The DIP financing will be provided by an affiliate of entrepreneur Daryl Hagler, who would have credit-bid rights—meaning the lender could buy the properties using its existing debt rather than cash.
Merchants Bank has stated that at least some of Silber’s loans were securitized as part of larger private securitizations—a process through which the bank offloads risk to outside investors and can issue more loans. However, if fraud occurs, banks typically must assume those loans back onto their balance sheets.
These court filings are part of broader bankruptcy cases involving Silber’s former companies CBRM and Crown Capital. After Silber pleaded guilty to conspiracy to commit wire fraud affecting a financial institution, fiduciary Elizabeth LaPuma was appointed to oversee his portfolio and placed dozens of related companies into bankruptcy earlier this month.
An attorney for CBRM claimed that Silber may have extracted hundreds of millions from his portfolio before the bankruptcy filing. At the time of filing, many properties were reportedly in poor condition.
Merchants Bank is listed as the senior lender on seven out of nineteen properties included in the most recent bankruptcy filings and has challenged aspects of the bankruptcy process.
A spokesperson for Merchants declined to comment.
