‘Starstruck,’ then stuck
Investors left in lurch after former TV host’s real estate sales pitch
Clayton Morris, the affable former co-host of TV’s “Fox & Friends,” portrays himself on his popular podcasts and YouTube videos as a real estate investment expert who is in the business of helping others achieve financial freedom.
His company, Morris Invest, has been involved in hundreds of property transactions in Indianapolis.
In his wake is a trail of disgruntled investors, tenants living in deplorable conditions and dilapidated Indianapolis homes that could plague the city for years.
While Morris lives in a $1.45 million luxury home in New Jersey, some investors who thought they were buying turnkey rentals are saddled with boarded up hovels, empty lots, stacks of health and nuisance violations from the city and lost savings.
Morris is the target of at least five lawsuits filed in Indiana by out-of-state investors who claim he defrauded them in transactions involving dozens of properties. The mostly novice investors say Morris sold them rental properties with a promise to rehab and rent them. All they had to do was sit back and wait for their monthly rent checks.
But for many buyers, the purchases turned into nightmares. Some say their houses were never rehabbed or rented. Others say they received rental checks for months only to learn later that the house was vacant or uninhabitable.
Morris declined an interview. His attorney, David Hensel, provided an email statement to the Indianapolis Star blaming Morris’ Indianapolis business partner, Oceanpointe, for the problems. In court filings and responses to online complaints, Morris contends he merely referred investors to Oceanpointe and several related entities.
“Clayton Morris and Morris Invest identify with the many investors who lost money through home-renovation, property-management, and other failures by Oceanpointe and its various corporate entities and employees,” Hensel said in the emailed statement. “Clayton Morris and his family purchased properties and were similarly damaged by Oceanpointe’s misconduct. The Morris family and Morris Invest have lost hundreds of thousands of dollars. Clayton and Morris Invest deny all allegations of wrongdoing.”
Oceanpointe is operated by Bert Whalen, a longtime fixture in Indianapolis’ real estate market who has worked since the mid-1990s as an agent, property manager and investor. Whalen had his real estate license revoked more than a year ago.
Whalen declined to comment for this story, but his attorney, John Tompkins, said Whalen did nothing wrong.
Many buyers say they believed they were buying the homes from Morris. His celebrity and online sales videos persuaded them to invest, and his company directed them to the properties in Indianapolis. In at least one case, he even told an investor he owned Oceanpointe, according to an email made public in court records.
Their properties didn’t resemble anything like the ones Morris touted in videos featuring extensively rehabbed houses with quality tenants and a strong investment return, investors said in lawsuits and interviews with the Star.
One buyer paid $52,500 only to learn months later the house had been destroyed by fire a few days before he bought it. He had no idea until he got a demolition order from the city. Another investor purchased what he was told was a newly renovated duplex but learned later it was a run-down triplex where tenants were living without electricity or water.
The horrendous living conditions at a third property caused the premature birth and death of a child, according to one lawsuit.
An Indianapolis Star investigation found Morris has been involved in the sales of hundreds of homes.
By several accounts, those investors may have spent more than $30 million on nearly 1,000 homes and vacant lots in some of the city’s most blighted neighborhoods.
Fueled by star power
Morris, 42, began buying and selling investment properties while co-hosting “Fox & Friends Weekend,” a news and entertainment program where he built a reputation as a personable and sincere family man who wasn’t afraid to laugh at himself.
He stepped down in September 2017 after 10 years on the show, telling viewers he looked forward to sharing his real estate expertise with others.
“I’m going to spend time with family and focus on projects that I’m passionate about: helping people build wealth and passive income and helping empower people,” Morris said.
A Fox News spokeswoman said the cable news network had “absolutely no knowledge” of the fraud accusations against Morris.
Morris parlayed his following into a popular online real estate investment presence. He gave advice and pitched his company’s services on a blog, podcast and YouTube channel, where he has more than 100,000 subscribers. He pitched a simple system: Schedule a consultation with his team, pick a property in one of the company’s hot rental markets and let his team do the rest.
Investors who say they were scammed told the Star they trusted Morris largely because of his public profile.
Jeff Leach, 54, of Gaithersburg, Maryland, purchased his first property through Morris while he was still a “Fox & Friends” co-host.
Leach said he felt he knew Morris from watching him on TV every weekend. He remembers bragging to his son after speaking to Morris personally on the phone.
“I said, ‘Hey, you see that guy on TV? I talked to him last night!’ ” said Leach, who is not part of any lawsuit.
Cole Peterson, 35, of Wyoming, is one of 14 investors who filed a federal lawsuit against Morris over allegations of fraud. He was considering purchasing a second property through Morris in 2018 but grew concerned after rent checks from his first property stopped unexpectedly.
That’s when Morris surprised Peterson with a personal phone call.
“I was like, whoa!” Peterson said. “I was almost starstruck because I was like, oh my gosh, I’ve heard this voice so many times but never directed to me.”
Morris assured Peterson that his questions about the missing rent payment would be addressed. It was enough, Peterson said, to persuade him to shell out $48,500 more for a second property. He later discovered it resembled a “crack house” more than the nicely renovated properties Morris featured in his videos.
In a video, Morris walks along a treelined street of neat homes, touting how his company helped hundreds of clients purchase “affordable rental properties with incredibly high returns.”
The promotional video, posted in September 2016 on YouTube, offers potential investors a way to avoid three big obstacles to real estate investing.
“My company, Morris Invest, takes care of all three of those headaches – finding, renovating, managing – for you, so you don’t have to worry about a thing,” Morris says. “All you need to do is collect your monthly rent checks.”
He emphasizes the best rental properties may not be “in your backyard.” He recommends markets in the Midwest, where low real estate prices can lead to bigger returns.
The lure of ‘hot’ properties
Morris even had a plan for how novice investors could finance their purchases: Borrow from a retirement account. “If you’ve been told you should under no circumstances touch your 401k, you’ve been lied to,” Morris said in a blog post July 11. “That’s what makes my blood boil: innocent people being taken advantage of.”
Once investors contacted Morris Invest, they were provided with opportunities to purchase “hot” properties, but they had to act quickly, according to lawsuits and emails provided to the Star. Deals were cash-only.
“You’re probably saying, where’s the catch, right?” Morris says in the 2016 video. “Well honestly, there is no catch.”
The properties Morris marketed in Indianapolis belonged to several limited liability companies tied to Whalen. The companies include Oceanpointe Investments and Indy Jax Properties.
Whalen partnered with Morris about five years ago. Morris needed homes to sell. Whalen had a lot. But it was an odd match. Morris’ squeaky-clean, familyman persona stood in stark contrast to Whalen’s checkered history.
Whalen, 44, was hit with a $744,000 judgment in 2011 over the sale of three homes to an investor. The court ruled Whalen had committed fraud in the deal.
The following year, Whalen filed for bankruptcy, which allowed him to escape millions of dollars in debt.
He was soon buying up cheap houses and selling them through Morris. In many cases, he managed the properties after the sales, taking 10% off the top of any rent.
When asked if he owned Oceanpointe, Morris said he did in a June 2017 email included in court documents.
“Yes sir we have many LLC’s that we use to hold acquisitions before rehab,” Morris wrote. “And that is just one of them we own.”
Jynell Berkshire, an attorney in Indianapolis for investors, said, “Every single one of my clients believed 100% that they were dealing directly with Clayton Morris and that they were purchasing the properties from Clayton.”
Landlord or slumlord?
In lawsuits and interviews with the Star, some investors say they received rent checks that they suspect were part of a Ponzi scheme. Despite receiving monthly checks and copies of leases, they discovered their homes had been vacant for months.
Some investors found they unwittingly became slumlords.
Mike Orbinpost, an investor living in South Korea, purchased a home through Morris in December 2016 and paid $19,400 for rehab work that Morris’ company told him would be complete in six to eight weeks. Oceanpointe would serve as the property manager.
Raniesia Gentillion and her family began renting the house in June.
After moving in, they twice provided Oceanpointe with a list of maintenance problems. Many were never addressed, Gentillion said.
In October, as her frustration grew, Gentillion called the Marion County Health Department. An inspector found 23 violations, including a broken furnace, plumbing and water leaks and crumbling ceilings.
The problems persisted, Gentillion said. When there was no heat, the family sometimes stayed in a hotel. When they ran out of money, they slept in their van on the street with the engine running to stay warm, she said.
The heat was restored in January, but the stress had a profound effect on her daughter, Gentillion said.
The teenager had become pregnant in October. In February, Gentillion’s daughter gave premature birth to a girl. “Exactly an hour after she was born, her little heartbeat stopped,” Gentillion said.
In a legal claim, the family blames the death on the conditions they endured in the home. The case is pending.
According to emails, Orbinpost knew nothing of the problems until a county health inspector told him his tenants had been without heat. Orbinpost emailed Morris to find out what was happening.
Morris tried to reassure him. “Mike we’ve had a lot of ‘no heat’ calls for maintenance because it suddenly went from 80 degrees to 30 degrees and then back up again,” Morris replied. “A lot of tenants hadn’t cycled their furnaces on so for a lot of them they simply need the pilot light relight (sic).”
When Orbinpost obtained a full copy of the health department violations, which stretched over three pages, he asked Morris how a $19,400 renovation job could leave so many problems unaddressed. Morris referred him to Whalen, who wrote, “Sorry Mike these people are fast to put this crap on us and slow to take it off.”