Turns out a real estate guru peddling the ‘deal of a lifetime’ was really a fraud, prosecutors say

By Lukas I. Alpert

Matthew Onofrio claimed to have cracked the commercial real estate code, but is accused of driving away inexperienced investors and banks.

If someone promises you the “deal of a lifetime,” it’s probably not a good investment.

That’s what financial guru Matthew Onofrio, who sold a program that claimed to crack the commercial real estate code, promised inexperienced investors to strike it rich. But prosecutors say it was all a scam aimed at lining Onofrio’s pockets.

The 31-year-old native of Eau Claire, Wis., has appeared on podcasts and at conferences with a compelling story. He said he walked away from a promising career as a nurse anesthetist when he discovered a real estate strategy known as triple net investing, through which he amassed a portfolio worth more than $150 million in just three years.

But between 2020 and August of this year, federal prosecutors in Minnesota say, Onofrio ripped off numerous banks to the tune of $35 million by engaging investors in a complex web of quick real estate sales, fraudulent mortgage applications and doctored appraisals.

In a statement, Onofrio’s attorney, Marsh Halberg, said none of his client’s investors were financially harmed by their investments.

“The defense is aware of very few, if any, transactions where the investors suffered actual losses at the time. We believe most of the transactions with Mr. Onofrio continue to maintain a positive cash flow and/or an increase in value of the property purchased,” Halberg wrote in an email.

A civil suit filed this year involving a radiologist from Puerto Rico named Matthew Hermann, who wanted to get involved in real estate investments with his wife, detailed how Onofrio operated.

The suit said the two met at a networking conference in Colorado in 2020 and hit it off while discussing real estate opportunities. Hermann said he hopes to build a real estate portfolio that will provide him with enough income to stop working.

Hermann said in court documents that Onofrio offered to bring him into “the deal of a lifetime,” involving a commercial property that was for sale in Minneapolis for $6.3 million. All Hermann had to do was come up with $1.5 million for the down payment.

“Onofrio told Hermann that he would not achieve his goal of quitting his job by buying duplexes. Onofrio told him that ‘this gas will set you on fire where you have to go.'” He told Hermann that it’s all about mindset,'” the court documents state.

When Hermann said he didn’t have that kind of money available, Onofrio offered to lend it to him so he could secure a bank loan for the purchase and Hermann agreed, court filings state. What Onofrio didn’t say is that he had already reached an agreement with the owners to buy the building for $4.75 million, not $6.3 million, and that he would pocket the difference, the suit alleged .

Hermann was then stuck making nearly $6,000 a month in loan payments to Onofrio in addition to his bank loan.

“Onofrio pushed Hermann – a real estate novice – into this purchase with grand promises of the deal of a lifetime. However, the reality was that Onofrio was the one guaranteed to make money on the deal, not Hermann,” read the newspapers.

Hermann later tried to sell the property, saying he found a buyer willing to pay $6.3 million for it, but the deal fell through due to litigation surrounding Onofrio’s loan.

Hermann’s attorney did not respond to a message seeking comment.

Federal prosecutors described a similar pattern, with Onofrio allegedly putting his own money into investors’ accounts to make their finances look better to lenders, and also fabricating appraisal documents to inflate the value of properties.

In one transaction in 2021, a commercial property in Minneapolis was sold three times in just five months, passing through more than one business entity controlled by Onofrio. By the end of the series of deals, the price had risen by nearly $4 million, the business publication Finance & Commerce reported.

Onofrio is charged with three counts of bank fraud and prosecutors say they are seeking the forfeiture of $35 million seized during the investigation.

-Luke I. Alpert


(END) Dow Jones Newswires

12-03-22 1431ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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