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Real Estate Developer Sentenced 3+ Years for Multimillion-Dollar Property Investment Fraud
Defendant created fake leases, misled investors, and diverted funds to sustain a Ponzi-like scheme.
An Indianapolis-based real estate developer and property manager has been sentenced to 41 months in federal prison for orchestrating a multimillion-dollar investment scheme that defrauded investors in Indiana and New Jersey, Acting U.S. Attorney Vikas Khanna announced. Herbert “Bert” Whalen, age 50, who operated Oceanpointe Property Management, pleaded guilty to conspiracy to commit wire fraud and was sentenced by U.S. District Judge Madeline Cox Arleo in Newark federal court.
The Scheme and Promises to Investors
Between August 2016 and July 2018, Whalen enticed individuals to invest in real estate ventures by claiming his firm, Oceanpointe, would repair and rehabilitate properties before renting them out. Investors were assured that once repairs were complete and tenants moved in, they would receive copies of leases and monthly rent payments as a return on their investments. The alleged properties were spread across Indiana and New Jersey.
In reality, many properties remained in disrepair or simply uninhabitable. To hide this from investors, Whalen and a co-conspirator instructed staff to produce fraudulent leases—complete with invented tenant names—giving investors the false impression that rental income was being earned. Meanwhile:
- Whalen and his associates pooled and commingled actual tenant rent payments and selectively paid out “returns” to some investors, thus avoiding suspicion.
- When investors voiced concerns online or threatened to withdraw, Whalen directed an employee to pose as a satisfied investor in internet real estate forums to praise Oceanpointe and undermine valid complaints.
The scheme inflicted millions of dollars in losses. According to court statements, Whalen used portions of investor funds to support his lifestyle, rather than rehabilitate the rental properties or provide legitimate returns. The massive deception ultimately unraveled, prompting an investigation by special agents of the FBI, under the direction of Acting Special Agent in Charge Terence G. Reilly in Newark.
Sentencing
After pleading guilty, Whalen was sentenced to 41 months (over three years) in prison and three years of supervised release by Judge Arleo. Officials emphasize that this outcome reflects the gravity of Whalen’s breach of trust and the significant financial harm inflicted on his victims.
Acting U.S. Attorney Khanna credited the FBI for its thorough investigation, noting that unscrupulous property managers and developers who operate Ponzi-like schemes undermine confidence in real estate markets. The case was prosecuted by Assistant U.S. Attorneys Caroline Silane (Economic Crimes Unit) and Ari B. Fontecchio (Opioid Abuse Prevention and Enforcement Unit).
This sentencing sends a message that real estate fraud will not go unpunished, and it highlights the importance of due diligence for potential investors—especially when promises of rental income and repairs are made without verifiable evidence.
