Indianapolis developer and property manager Bert Whalen has been arrested and indicted on charges he participated in a Ponzi scheme involving rental homes that defrauded investors out of millions of dollars.
Federal prosecutors on Friday announced that a federal grand jury this week indicted Whalen, 45, on one count of conspiracy to commit wire fraud and three counts of wire fraud.
Whalen was arrested Thursday and is scheduled to appear before U.S. Magistrate Judge Tim Baker Friday afternoon in Indianapolis.
The Indianapolis Star and the New York Times last spring reported that Whalen was a partner with former “Fox and Friends Weekend” host Clayton Morris in a venture that sold run-down homes in Indianapolis as investment properties but didn’t make good on promises to renovate the homes.
Together they sold at least 700 homes in Indianapolis that Whalen’s companies went on to manage, according to The Star, whose reporting found atrocious living conditions in some of the residences.
An attorney for Whalen could not immediately be located. He previously has denied any wrongdoing.
Public records don’t show an indictment against Morris, though The New York Times this fall said he is the subject of an investigation by the FBI and state officials in Indiana and New Jersey, where Morris lived before leaving the country this summer.
According to prosecutors, between August 2016 and July 2018, Whalen, the owner of Indianapolis-based Oceanpointe Property Management, obtained money from real estate investors by misrepresenting and concealing the poor condition of properties managed by Oceanpointe and by creating fake leases for unoccupied Oceanpointe properties.
Employees from Oceanpointe promised investors that, after repairs and renovations were completed and tenants rented the properties, investors would receive copies of the leases and begin to receive rent payments as their return on investment, the U.S. Attorney’s Office in New Jersey said in a press release.
In reality, many Oceanpointe properties were not repaired and were not ready for occupancy. To conceal this fact from investors, Whalen and a co-conspirator directed Oceanpointe employees to draft fake leases, creating the impression that properties were rented when they were actually vacant, according to the release. Prosecutors did not identify the co-conspirator.
When investors attempted to view the properties they had purchased, Whalen directed Oceanpointe employees to cover the windows to create the false impression work was being completed, the release said.
According to prosecutors, Whalen and his co-conspirator commingled tenant rent payments and selected which investors would be paid from the pool of funds in order to silence investors who voiced concerns and evade detection of the fraud.
The press release said that misrepresentations by Whalen and his co-conspirator led to millions of dollars in losses for investors, which they used to prop up their lifestyles.
According to The Star, Morris lived in a $1.4 million New Jersey home, and Whalen lives in a waterfront home in Geist and keeps a 51-foot yacht in Florida.
Each of the four counts against Whalen carry a maximum penalty of 20 years in prison.