Michael Franks LLC Founders Michael Morawski and Frank Constant Sentenced for $21 Million Apartment Investment Ponzi

Case from 2013 (U.S. Attorney's Office release: May 6, 2013). Published on Scammers.com Oct. 16, 2026; case status is current as of that date.

Michael Morawski and Frank Constant founded Michael Franks LLC, a real estate investment company in Palatine. They were sentenced in late April and early May 2013 to 10 years and 7½ years in federal prison for a scheme that took about $21 million from investors and left 267 of them more than $18 million short. The U.S. Attorney's Office for the Northern District of Illinois announced the sentences [1].

How the scheme worked

According to prosecutors [1]:

1. Two products: From 2006 to 2010, Michael Franks and related companies sold passive stakes in apartment buildings in Illinois, Texas and Alabama. One product funded specific complexes for three to five years at a typical 7% to 9% annual return. The other was real estate "funds" backed by promissory notes paying 8% to 30% a year.
2. Failing properties: Some projects did poorly and couldn't cover operating costs.
3. Hidden shuffling: Without telling investors, the defendants moved money between investments to prop up weak projects and pay earlier investors in Ponzi fashion.
4. Personal use: Investor money also paid employees, commissions to people who raised new money, the defendants' own pay, Constant's company car and country club payments, and loans to Morawski's friends. Morawski pocketed nearly $1 million.

The people sentenced

Both were sentenced by U.S. District Judge Gary Feinerman, ordered to pay $18,211,547 in restitution, and told to report to prison July 15, 2013 [1].

• Michael Morawski, 56, Sleepy Hollow — pleaded guilty in September 2012 to two counts of mail fraud. Sentenced April 30, 2013, to 10 years. The judge said deterrence matters most "when businesses go south."
• Frank Constant, 59, West Dundee — pleaded guilty to one count of wire fraud. Sentenced May 2, 2013, to 90 months. The judge said the sentence should signal that people in positions of trust must tell the truth "in good time and bad."

The FBI investigated.

Red flags

• Fixed high "interest" on real estate funds, here up to 30% a year, regardless of how the properties perform.
• Vague reporting on individual properties while payouts stay steady.
• Large commissions paid to people who bring in new investors.

Protect yourself

1. Ask for audited financials for each property or fund, and check whether the offering is registered or properly exempt with the SEC or your state.
2. Look up the sponsor on the SEC's Investor.gov and in your state securities regulator's records.
3. Report suspected fraud to the SEC at sec.gov/tcr and the FBI at tips.fbi.gov.

Case status (as of Oct. 16, 2026)

Defendant	Court	Status as of Oct. 16, 2026	Source
Michael Morawski, Sleepy Hollow	N.D. Ill. (Judge Feinerman)	Pleaded guilty Sept. 2012 to two counts of mail fraud; sentenced April 30, 2013, to 10 years; $18,211,547 restitution (joint)	[1]
Frank Constant, West Dundee	N.D. Ill. (Judge Feinerman)	Pleaded guilty to one count of wire fraud; sentenced May 2, 2013, to 90 months; $18,211,547 restitution (joint)	[1]

Sources

1. U.S. Attorney's Office, Northern District of Illinois, "Four Defendants Sentenced To Prison Terms Between Five And 10 Years In Three Investment Fraud Schemes," May 6, 2013. https://www.justice.gov/usao-ndil/pr/four-defendants-sentenced-prison-terms-between-five-and-10-years-three-investment-fraud

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