Indiana property developer and property manager admits Ponzi scheme defrauded investors of millions of dollars | USAO-NJ
NEWARK, NJ — An Indiana real estate developer and manager today admitted his role in a scheme to defraud real estate investors, U.S. Attorney Philip R. Sellinger said.
Herbert Whalen, aka “Bert Whalen,” 47, of Indianapolis, Indiana, pleaded guilty by videoconference before U.S. District Judge Madeline Cox Arleo to count 1, charging him with conspiracy to commit fraud electronic
“The defendant fed on the innocent victims’ desire to improve their own financial situation through what they believed to be wise investments,” US Attorney Sellinger said. “Working with our FBI partners, we were able to uncover his illegal activity and ensure that he will now be brought to justice for his crimes. Fighting investment fraud remains one of our highest priorities, and this belief sends a clear message that such conduct will be punished.
“Investment fraud schemes come in many forms and as long as there are people they trust looking for what seems like a good way to protect and grow their money, these scammers will keep knocking. “said Special Agent in Charge George M. Crouch Jr. “The FBI is constantly on the lookout for thieves who portray their schemes as golden opportunities to leverage your wealth when in fact they are only building their own using your hard-earned money. The best protection is still prevention: do your homework and check several websites like the FBI, SEC, and FINRA, to confirm legitimacy; don’t believe the hype – if it sounds too good to be true, it probably is; and view any seemingly great opportunity through the lens of skepticism.Finally, if you suspect fraud, report it to tips.fbi.gov.
According to documents filed in this case and statements made in court:
From August 2016 to July 2018, Whalen, who operated Oceanpointe Property Management in Indianapolis, engaged in a scheme to obtain money from real estate investors by misrepresenting and covering up the poor condition of properties managed by Oceanpointe and by creating false leases for unoccupied Oceanpointe properties. Investors were promised that once repairs and rehabilitations were completed and tenants had rented the properties, investors would receive copies of leases and begin receiving rent payments as a return on investment. In reality, many Oceanpointe properties were not repaired and rehabilitated and were not ready for occupancy. To conceal this fact from victimized investors, Whalen and a conspirator ordered Oceanpointe employees to write fake leases, tricking investors into believing that Oceanpointe properties were rented, when in fact the properties remained vacant. Whalen instructed Oceanpointe employees to place false tenant names on leases to be sent to Oceanpointe investors.
When investors attempted to view the properties they had purchased, Whalen ordered Oceanpointe employees to cover the windows to conceal the poor condition of the properties and the fact that the properties remained vacant. Whalen and others shuffled rent payments from tenants and selected which investors would be paid from the pool of funds in order to silence investors who raised concerns and evade fraud detection. In order to prevent investors from leaving Oceanpointe and exposing the fraudulent conduct, Whalen ordered an Oceanpointe employee to create a false identity and falsely claim, on an online real estate message board, that the employee of Oceanpointe was an investor in Oceanpointe and another company, and that Oceanpointe had addressed all concerns regarding the investment property. These and other misrepresentations resulted in millions of dollars in losses for investors, which Whalen used, among other things, to finance his lifestyle.
The charge of conspiracy to commit wire fraud carries a maximum sentence of 20 years in prison and a fine of up to $250,000, which is double the gross loss or gain caused by the offence. Judgment is scheduled for July 14, 2022.
US Attorney Sellinger credited FBI Special Agents, under Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation that led to today’s guilty plea.
The government is represented by Assistant US Attorneys Carolyn Silane of the Economic Crimes Unit and Ari B. Fontecchio of the Special Prosecutions Division in Newark.