An actual property fraudster who offered dilapidated Indianapolis houses to buyers throughout the nation has been sentenced to 41 months in jail, bringing to shut a prolonged authorized course of that has at times frustrated victims.
Herbert “Bert” Whalen, 50, was sentenced Tuesday in federal courtroom in New Jersey after pleading responsible practically three years in the past to 1 rely of conspiracy to commit wire fraud. The sentence, handed down by U.S. District Court docket Decide Madeline Cox Arleo, additionally requires Whalen to pay a $5,000 tremendous and serve three years on supervised launch after finishing his jail sentence.
The decide additionally stated a restitution order should be submitted to the courtroom by April 14. For now, he stays free on bond pending an order from the Bureau of Prisons directing him when and the place to give up.
Whalen ran what prosecutors described as a multi-million greenback Ponzi scheme during which he offered run-down houses to buyers, many dwelling out of Indiana, with a promise to repair them up and hire them out. In lots of circumstances he did not make the repairs after which hid the poor situation of the houses. In some circumstances, he despatched buyers faux leases and some months of hire cash to dupe them into believing he was renting out the houses on their behalf.
Whalen offered lots of the houses with the assistance of his then-business partner Clayton Morris, a former Fox & Friends host with a well-liked YouTube show about actual property investing. Morris has been the topic of a number of civil lawsuits and a grievance from the Indiana Legal professional Normal’s Workplace, however he has not been charged with any crime.
Bert Whalen is accused of defrauding actual property buyers throughout the nation.
“Mr. Whalen continues to just accept duty for his offense and regrets participating on this conspiracy,” Whalen’s lawyer, John Tomkins, stated in an announcement to IndyStar. “We additionally remorse nobody else was held accountable for the losses of the buyers.”
Whalen and Morris had been the main target of an IndyStar investigation in 2019 that recognized dozens of disgruntled buyers, together with one who stated he was by no means instructed {that a} house he bought had burned down previous to closing. Others stated they believed they had been buying freshly renovated “turnkey” properties, solely to study later that the houses had been uninhabitable or occupied by tenants dwelling in deplorable circumstances.
After promoting the houses, Whalen managed a lot of them on behalf of his out-of-state buyers. His renters stated they suffered in houses with sewage-filled basements, vermin infestations, and houses with out warmth. A number of reported accidents from collapsing ceilings.
IndyStar investigation: Part 1: Investors say ex-‘Fox & Friends’ host turned them into unwitting slumlords
IndyStar investigation: Part 2: Renters lived ‘horrible.’ Their landlord lived large. The government helped him do it.
Whalen, in the meantime, lived lavishly. He owned a yacht in Florida and resided in a waterfront house in Geist as soon as owned by former Indiana Gov. Mitch Daniels.
Shortly after IndyStar revealed its investigation, Morris offered his New Jersey house and left the country, shifting his household to Portugal. He and his spouse, former MSNBC anchor Natali Morris, cited their enterprise troubles as a motive for the transfer, however denied that they had been attempting to keep away from duty. They returned to the US final 12 months, after roughly 5 years.
Whereas Morris was overseas, a federal grand jury in New Jersey indicted Whalen in 2019. The Indiana Legal professional Normal’s Workplace additionally filed a grievance in opposition to each males for violating Indiana’s misleading gross sales and residential mortgage acts in actual property offers involving greater than 150 properties in Marion County. That case was paused pending the end result of Whalen’s legal case.
Herbert “Bert” Whalen as soon as lived on this waterfront house at Geist Reservoir. It was beforehand owned by former Gov. Mitch Daniels.
In an announcement, a spokesman for Indiana Legal professional Normal Todd Rokita stated the workplace “will proceed pursuing its claims in opposition to the entire defendants.”
IndyStar reached out to Morris for remark, however didn’t instantly obtain a response.
Whalen’s sentencing represents the primary time both man has confronted any penalties from authorities, although Morris has settled a number of civil lawsuits filed by buyers.
The case has been a source of frustration for a lot of buyers. Whalen pleaded responsible in 2022, however his sentencing was delayed greater than half a dozen occasions, principally with none public clarification.
The case was additional sophisticated when Whalen was accused of constant to defraud buyers whereas awaiting sentencing.
Based on a complaint filed by the Indiana Legal professional Normal’s Workplace final 12 months, Whalen used the identify “Herb Francis” to obscure his id as he solicited buyers by way of a brand new set of restricted legal responsibility firms. In a single case, the grievance says, he satisfied an Oregon-based investor to buy two properties for $154,900 and signal property administration agreements, however then failed to repair up the properties as promised.
Brian Freeman, a California investor, stated he was relieved that Whalen will lastly spend time in jail, however that it took far too lengthy.
“It’s higher than nothing,” stated Freeman, who bought a property and acquired hire checks for about 5 months earlier than a metropolis inspector instructed him the house had been vacant for a very long time and was infested with rats. “The general public is protected for about three years from extra predatory habits.”
He stays confused, nonetheless, about why Whalen’s extra well-known former enterprise companion hasn’t been charged. He stated there is not any method Morris did not know that buyers had been being deceived, given the torrent of complaints.
“They each knew and had been profiting off it,” Freeman stated.
Contact IndyStar reporter Tony Cook dinner at 317-444-6081 or tony.cook@indystar.com. Observe him on X: @IndyStarTony.
This text initially appeared on Indianapolis Star: Man behind multi-million dollar real estate Ponzi scheme sentenced
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