INDIANAPOLIS, Ind. — Former Fox & Friends host-turned-real estate promoter Clayton Morris has been sued in federal court in Indianapolis for what one attorney calls a Ponzi scheme of property investment.
Morris and his local associate Bert Whalen of Ocean Pointe Property Management are alleged to have misrepresented the conditions and rentals of distressed properties to at least 35 out-of-state buyers who were first enticed to invest in Indianapolis real estate by the ex-TV personality’s web-based seminars.
“I have not found one instance and in talking with my clients or other potential clients and speaking with other real estate investors that they actually received what they were promised,” said attorney Jynell Berkshire, who estimates the cost to buyers could reach into the hundreds of millions of dollars. “In every deal that I’ve been able to investigate in deals involving my clients, there is misrepresentation in every single aspect of it.”
As first reported by our news gathering partners at the Indianapolis Star, the lawsuits accuse Morris of trading on his celebrity status to steer potential buyers to Whalen who, the buyers claim, misrepresented the true conditions of the properties, their planned rehabilitations or repairs and the existence of revenue generating tenants.
“Clayton is very nice, likable, comes across as a very family wholesome guy who has made rags-to-riches in real estate,” said Berkshire. “They believed him and they believed he had a turnkey system that, ‘I can make passive income in real estate while I sleep.’
“You have Clayton Morris out there advocating and promoting that, ‘You don’t need to come to Indianapolis. We have this solid team. I’ve vetted our team.’”
Veteran property manager, agent and investor Bert Whalen was Morris’ Indy connection.
“Morris was supposed to send buyers to Ocean Pointe,” said Whalen’s attorney John Tompkins. “The properties were supposed to be purchased from Ocean Pointe. Ocean Pointe showed up at all of the closings. Morris did not show up at the closings and Morris was to receive a commission on each property that he got a buyer for.”
Tompkins said Morris Invest misrepresented itself to the buyers, “that Morris was actually the seller, that Morris owned Ocean Pointe and he also was not making full disclosure to the prospective buyers of the nature of the properties that they were purchasing and the risks involved in this type of investment.”
In the lawsuits, buyers claim they bought vacant lots that were never developed as promised, that the properties did not match the descriptions and that one house was severely damaged in a fire four days before the sale to an unsuspecting California investor.
“They totally believed that they’d been scammed from Clayton Morris and Morris Invest and this is nothing more than a Ponzi scheme,” said Berkshire. “There was just this funnel that was being fed and there was more and more money that Clayton was having to go out and attract new investors to bring those new investors in to then pay for rent of these properties or rehab of these properties that were never made.”
Whalen’s attorney disagreed.
“Ponzi scheme is the most inaccurate description of Mr. Whalen and Ocean Pointe’s business that I can possibly imagine,” said Tompkins. “Properties were being rehabilitated. Buyers who were given correct information…were told that some properties were in a rehab condition, wouldn’t have rents coming in until the rehabs were finished.”
Morris’ attorney told the Indianapolis Star that Whalen was to blame and, “The Morris family and Morris Invest have lost hundreds of thousands of dollars. Clayton and Morris Invest deny all allegations of wrongdoing.”
“If they chose to trust somebody they saw on TV, that’s somewhat understandable,” said Tompkins. “All of the misunderstandings are based on misrepresentations by the sales people that worked for Morris or Morris himself.”
Berkshire said Indianapolis has a reputation as a location friendly to out-of-state real estate investors with a large inventory of available properties in various states of condition.
Tompkins said out-of-state buyers should always hire an independent realtor or inspector to view the property before purchase.
When FOX59 inquired as to whether the Indiana Attorney General was investigating any of the allegations raised in the lawsuits or any buyer complaints, a spokesperson responded, “We do not have any publicly disclosable information regarding Oceanpointe and/or Morris Invest.”