Indiana man pleads guilty in real estate rental fraud case

NEWARK, N.J. (AP) - An Indiana man pleaded guilty Tuesday to running a real estate fraud scheme that persuaded investors to buy rental properties then lied to them about the condition of the properties and whether they were even being rented.

Herbert Whalen pleaded guilty by videoconference before a federal judge in New Jersey to one count of conspiracy to commit wire fraud. He had also been charged in a 2019 indictment with separate counts of wire fraud.

According to prosecutors, the 47-year-old Indianapolis resident scammed investors out of millions of dollars from 2016 to 2018 by disguising the poor condition of the rental properties and, with a co-conspirator at his company, Oceanpointe, drafting fake leases to make it look as though the properties were being rented.

Investors who expressed concerns about the properties were paid in part to silence them, according to the U.S. attorney's office. In one instance, an Oceanpointe employee posed as an investor and wrote on an online real estate message board that the company had addressed their concerns.

The indictment described victims from South Orange, New Jersey and Plainview, New York who bought properties in Indianapolis.

Whalen is scheduled to be sentenced on July 14. The conspiracy count carries a maximum potential penalty of 20 years in prison. A message seeking comment was left with his attorney Tuesday.