Two Dundee Township men have been sentenced to prison for cheating 267 victims out of $21 million in a real estate investment scheme. They also were ordered to pay $18 million in restitution.
According to authorities, Michael Morawski, of Sleepy Hollow, and Frank Constant, of West Dundee, fraudulently raised $21 million in their real estate investment company, Michael Franks LLC, over a period of about four years. The men offered investors a choice of two investments. The first was a three-to-five-year-long investment in specific apartment complexes that Morawski and Constant said would render returns of between seven and nine percent annually. The second was an investment in real estate-based “funds” that the men said were backed by promissory notes and offered an annual interest payment of eight to 30 percent.
When some of the company’s projects began to perform poorly, Morawski and Constant transferred funds from other investments to hide the losses. They also used the transferred funds for their own purposes and to pay “returns” to early investors, without disclosing where the money came from. Authorities said Morawski also took nearly $1 million for himself.
Morawski has been sentenced to serve 10 years in prison for his role in the investment fraud scheme. Constant has been sentenced to seven-and-a-half years. Their scheme was one of three such Chicago-area Ponzi schemes to be brought to a close over the past two weeks. For additional details or to learn about the other two Chicago-area Ponzi schemes, click here.