A real estate fraudster who sold dilapidated Indianapolis homes to investors across the country has been sentenced to 41 months in prison, bringing to close a lengthy legal process that has at times frustrated victims.
Herbert “Bert” Whalen, 50, was sentenced Tuesday in federal court in New Jersey after pleading guilty nearly three years ago to one count of conspiracy to commit wire fraud. The sentence, handed down by U.S. District Court Judge Madeline Cox Arleo, also requires Whalen to pay a $5,000 fine and serve three years on supervised release after completing his prison sentence.
The judge also said a restitution order must be submitted to the court by April 14. For now, he remains free on bond pending an order from the Bureau of Prisons directing him when and where to surrender.
Whalen ran what prosecutors described as a multi-million dollar Ponzi scheme in which he sold run-down homes to investors, many living out of Indiana, with a promise to fix them up and rent them out. In many cases he failed to make the repairs and then hid the poor condition of the homes. In some cases, he sent investors fake leases and a few months of rent money to dupe them into believing he was renting out the homes on their behalf.
Whalen sold many of the homes with the help of his then-business partner Clayton Morris, a former Fox & Friends host with a popular YouTube show about real estate investing. Morris has been the subject of multiple civil lawsuits and a complaint from the Indiana Attorney General’s Office, but he has not been charged with any crime.
Bert Whalen is accused of defrauding real estate investors across the country.
“Mr. Whalen continues to accept responsibility for his offense and regrets taking part in this conspiracy,” Whalen’s attorney, John Tomkins, said in a statement to IndyStar. “We also regret no one else was held accountable for the losses of the investors.”
Whalen and Morris were the focus of an IndyStar investigation in 2019 that identified dozens of disgruntled investors, including one who said he was never told that a home he purchased had burned down prior to closing. Others said they believed they were purchasing freshly renovated “turnkey” properties, only to learn later that the homes were uninhabitable or occupied by tenants living in deplorable conditions.
After selling the homes, Whalen managed many of them on behalf of his out-of-state investors. His renters said they suffered in homes with sewage-filled basements, vermin infestations, and homes without heat. Several reported injuries 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, meanwhile, lived lavishly. He owned a yacht in Florida and resided in a waterfront home in Geist once owned by former Indiana Gov. Mitch Daniels.
Shortly after IndyStar published its investigation, Morris sold his New Jersey home and left the country, moving his family to Portugal. He and his wife, former MSNBC anchor Natali Morris, cited their business troubles as a reason for the move, but denied that they were trying to avoid responsibility. They returned to the United States last year, after roughly five years.
While Morris was abroad, a federal grand jury in New Jersey indicted Whalen in 2019. The Indiana Attorney General’s Office also filed a complaint against both men for violating Indiana’s deceptive sales and home loan acts in real estate deals involving more than 150 properties in Marion County. That case was paused pending the outcome of Whalen’s criminal case.
Herbert “Bert” Whalen once lived in this waterfront home at Geist Reservoir. It was previously owned by former Gov. Mitch Daniels.
In a statement, a spokesman for Indiana Attorney General Todd Rokita said the office “will continue pursuing its claims against all of the defendants.”
IndyStar reached out to Morris for comment, but did not immediately receive a response.
Whalen’s sentencing represents the first time either man has faced any penalties from authorities, though Morris has settled multiple civil lawsuits filed by investors.
The case has been a source of frustration for many investors. Whalen pleaded guilty in 2022, but his sentencing was delayed more than half a dozen times, mostly without any public explanation.
The case was further complicated when Whalen was accused of continuing to defraud investors while awaiting sentencing.
According to a complaint filed by the Indiana Attorney General’s Office last year, Whalen used the name “Herb Francis” to obscure his identity as he solicited investors through a new set of limited liability companies. In one case, the complaint says, he convinced an Oregon-based investor to purchase two properties for $154,900 and sign property management agreements, but then failed to fix up the properties as promised.
Brian Freeman, a California investor, said he was relieved that Whalen will finally spend time in prison, but that it took far too long.
“It’s better than nothing,” said Freeman, who purchased a property and received rent checks for about five months before a city inspector told him the home had been vacant for a long time and was infested with rats. “The public is protected for about three years from more predatory behavior.”
He remains confused, however, about why Whalen’s more famous former business partner hasn’t been charged. He said there’s no way Morris didn’t know that investors were being deceived, given the torrent of complaints.
“They both knew and were profiting off it,” Freeman said.
Contact IndyStar reporter Tony Cook at 317-444-6081 or tony.cook@indystar.com. Follow him on X: @IndyStarTony.
This article originally appeared on Indianapolis Star: Man behind multi-million dollar real estate Ponzi scheme sentenced
