Mike Morawski: Multi-Family Real Estate Investment Expert

We were honored to host Mike Morawski, a real estate investment veteran of more than 30 years and the chief investment officer of Resilience Equity, as our February 2024 White Collar Support Group Tuesday Night Speaker Series presenter. Mike built an apartment company valued north of $100 million, lost all of it, served a federal sentence, and is back in the same business today. You can watch the full recording above.

Most comeback stories skip the part our members actually need. Mike does not. He names his five mistakes in order, says out loud what the plan looked like on the day he approved it, and explains how he got cleared to raise capital again after a federal fraud conviction. If you are two years out from sentencing and not sleeping, or home now and wondering whether your industry is shut to you forever, this is an hour with a man who has stood on both sides of that question.

How moving money between his own companies became wire fraud

Three of his five mistakes were made before the market ever moved. He grew too fast, he was overleveraged, and he was undercapitalized as an owner. Then 2008 arrived. He owned 38 companies, twelve of them should have gone to foreclosure, and he knew it, and a handful of investors would have taken the loss.

What he did instead is the reason this talk is worth the hour, because nothing in it felt like a crime on the day it happened.

I crafted a plan that was totally legal to, um, move money from my profitable companies to my non-profitable companies to keep them afloat.

He had ridden out corrections before, 17 or 18 months and 10 or 12 percent off the market. This one ran seven or eight years with a 45 percent correction. The money was going back when values recovered, and he was going to be the man who saved everything. What he never did was tell his investors he had moved it, and that non-disclosure is what the government charged as wire fraud and mail fraud. If your own case turns on which account money sat in and when, our session on forensic accountants in white collar criminal defense covers how that gets reconstructed, and Tom Hardin walks the same short distance from an ordinary decision to a federal charge.

Depression, divorce, and what he built in prison

He reported to Duluth, Minnesota in July 2013, more than a decade before two prison consultants sat with our group and explained what can actually be changed once someone is inside. Three weeks in, his wife told him she was going to divorce him. Mike strips the glamour out of what he lost. He never flew private, had no boat, no fancy house, no fancy car. He was a neighborhood baseball coach who was home most nights for dinner, and then he was in a 12 by 12 room with three men he did not know or like, 35 pounds heavier than the man who used to run marathons, and by his own account wanting to die.

Six weeks in, he walked into the prison gym. Window shopping, as he puts it, not looking for a workout. A man he did not know came over and said one thing to him.

They can take your business, they can take your money, they can destroy your family. But what they can’t take is who you are and what you’re made of.

Mike calls that a defining moment, and says we all get them and the only real choice is whether to go with it or let it pass. What followed filled the rest of the sentence. A degree in theology, two books, two courses, six years teaching real estate investing, property management and ethics to other men inside, and a paper co-authored with a University of Minnesota professor that is taught at the college level today, which is Louis L. Reed’s case in miniature, that the people this system processed are the ones best equipped to rebuild it. Anyone who has served a stretch like that will hear echoes of it in Building A New Life After Prison.

Can you legally raise capital again after a federal fraud case?

He came home in 2020, into a country that was shutting down, and spent his first ten months on home confinement. The plan was coaching and training, nothing more. What pulled him back was mundane. To teach people how to evaluate apartment buildings he had to start underwriting again, so he underwrote, rebuilt broker relationships around the country, and found a property worth doing, which fits Erin Frey’s most robust finding, that people forgive faster than any of us expect.

The turn came from his securities attorney, who said she thought she could get him approved by the SEC to legally raise capital again as an issuer of securities. He did not believe she could do it, and they never spoke about it again. Three months later she held something up to the camera on a Zoom call. What that clearance took, and what he runs differently now that two of his five mistakes were failures of his own attention, is where the talk lands. Members wondering whether their old industry is shut for good should also sit with Ron Bauer and our session on the collateral consequences of a white collar conviction.

About Mike Morawski

Mike Morawski is a real estate investment veteran of more than 30 years who has controlled over $405 million in real estate transactions. He is an entrepreneur, an author, a real estate trainer, a public speaker, a personal coach, and the chief investment officer of Resilience Equity, a multifamily hedge fund. He has coached hundreds of real estate investors. Before the apartment business he built a general contracting company in the northwest suburbs of Chicago to $5 million in annual revenue, then entered real estate as a sales agent and built a team producing more than $20 million a year. He was our February 2024 Tuesday Night Speaker Series presenter.