What started as a neighborhood dispute has morphed into a City Hall call for an FBI investigation into how a Milwaukee landlord has raised millions of dollars to fuel his real estate empire.

At the center of it is Nicholas Rezny, a brash — at times cocky — 33-year-old with a knack for attracting the attention of law enforcement officials, regulators and lawyers.

Through his American Community ReDevelopment Group LLC and dozens of limited liability companies, Rezny says he has an ownership or management interest in about 225 rental units in the Milwaukee area.

"I’m the biggest person people haven’t heard of under the age of 40,” said Rezny.

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So, who is Rezny?

Raised in Kenosha, Rezny is a mohawk-wearing former stand-up comedian and self-proclaimed "fasting expert" who said in a January deposition that he once was "paid $300 a day to take experimental pharmaceutical drugs." He and his wife, Emma, started a company to promote the gluten free lifestyle in 2014, and though he says the company is not active, Rezny regularly posts shirtless photos of himself on Instagram to show the benefitsof the lifestyle.

On his LinkedIn page, Rezny brags: “We renovate rental units to last while our investors receive monthly checks" and declares he is "(expletive) great at what I do.” He's even compared himself to legendary investor Warren Buffett, saying in a promotional email that "I've beaten Warren Buffett's return every year I have been in business."

The Office of the Milwaukee City Attorney and the state Department of Financial Institutions are suspicious.

In a Dec. 21 letter to the FBI and the U.S. attorney's office, City Attorney Grant Langley wrote that Rezny “may be engaged in criminal conduct regarding interstate securities fraud involving real estate located in the City of Milwaukee."

The letter, which was also signed by Deputy City Attorney Adam Stephens and Assistant City Attorney Heather Hough, went on to say:

"It appears that Mr. Rezny purchases properties in the name of one LLC, takes out a mortgage from a private individual or IRA then sells that property to a different Rezny LLC for a profit to pay off the mortgage. The nature of these transactions seem to be akin to a mortgage ‘Ponzi scheme.' "

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A Jan. 30 letter from Hough to the FBI, securities regulators and federal and state prosecutors urged the agencies to conduct a "careful review" to see if Rezny's operation is breaking laws dealing with securities fraud or Ponzi schemes.

The Milwaukee Journal Sentinel obtained both letters through open records requests.

No criminal investigation has been launched, but U.S. Attorney Gregory Haanstad said that his office and the FBI are reviewing the materials from the city. The state Department of Financial Institutions has been investigating Rezny's activities for about a year and has seized copies of his banking records, according to sources and Rezny himself.

A Ponzi scheme, often referred to as robbing Peter to pay Paul, involves using money from new investors to make payments to older investors.

Companies tied to Rezny have raised at least $4 million from financial backers in several states including Wisconsin, California, Illinois, Indiana and Idaho, Hough wrote in the second letter.

In an interview, Rezny chuckled at the Ponzi allegation, then vehemently denied it: "That's the dumbest thing I've ever heard." He repeatedly said he had not violated securities regulation or done anything illegal in his business operations.

Rezny said he raises money and uses it to buy and fix up run-down properties. He then sells some of the properties to third parties — often an LLC that is controlled by a financial backer of Rezny, with Rezny himself as a minority owner.

He promises his backers a return of up to 20%, guaranteed for three years. Those payments are made even if the property is bringing in little or no rent, Rezny said.

Rezny said he insists that the properties are managed by a separate LLC that he owns. If his management company is fired, he said, the guaranteed payments end.

Off the radar

Rezny was not on City Hall's radar until last fall when he got into a spat with his neighbors on the 2000 block of N. Hi Mount Blvd. A Rezny-created LLC bought the home in 2015. It is assessed at $355,400.

Convinced Rezny was running a business out of his home in violation of zoning codes, neighbors flooded Ald. Michael Murphy's office with complaints about increased street traffic and construction materials they say had been left on the property.

The matter initially went to the Department of Neighborhood Services. Inspectors referred the matter to the city attorney's office when Rezny wouldn't let them into his home.

Rezny told the Journal Sentinel he often works from his home but said his company conducts business out of an office at 4812 W. Lloyd St.

He said the complaints started when neighbors — whom he labeled racist — saw black associates coming to his house. The area in question is one of the more racially diverse in the city.

Hough, the assistant city attorney, said neither her office nor city building inspectors knew about the size, scope or complexity of Rezny's operation.

"Had the community not alerted us to something going on, there would not have been any investigation,” she said.

Fast-moving business

Sometimes the properties that go through the Rezny organization are quickly flipped.

For example, deeds filed in the Milwaukee County Courthouse show that on Feb. 29, 2016, a Rezny-owned LLC paid $894,000 for an apartment building at 5716 W. Hampton Ave.

Just two weeks later — on March 11, 2016 — the property was sold to APR1 LLC, a company majority owned by Jay and Nancy Patel of Crown Point, Ind., for $1.2 million. Rezny is a minority partner in APR1.

The Patels' lawyer said the couple did not know about the price hike or that they were buying it from a Rezny LLC that had just purchased it. Rezny said they were told that information.

The Rezny LLC purchased the property from an LLC owned by Tim Brophy — once labeled a slumlord by city officials — who has sold dozens of properties to Rezny in recent years. In 2005, Milwaukee police arrested Brophy for being $69,000 in arrears on fines for building code violations. He currently owes the city nearly $90,000 in fines for building code violations dating to 2005.

Rezny said controversy dogs him because of his associations with people like Brophy and Russell Freeman, a felon serving a 17-year sentence for securities fraud.

Rezny acknowledges he learned key portions of the real estate business at the knee of Freeman and considers him a mentor.

Freeman, 46, bilked dozens of investors — many elderly who lost their life savings — out of more than $2.5 million in the late 1990s, Sheboygan County court records show. He is scheduled to be released next year.

Rezny claims a net worth of more than $2 million and a 2014 income of $843,000. Still, the IRS slapped liens totaling $223,167 on Rezny and his wife for unpaid taxes.

Rezny says he has a target on his back because others are jealous of his success.

“I went from being a broke stand-up comic to a millionaire in just over a year,” he said.

A magnet for controversy

In 2009, Rezny quit the University of Wisconsin-Parkside — one of a handful of schools he attended — in order to focus his attention on real estate, according to his deposition testimony.

He soon met Freeman through mutual friends and went to work for Freeman at his Genesis Fulfillment Management LLC, a company Rezny said provided the business model for his own company.

"He knew the numbers of real estate," Rezny said of Freeman.

Rezny said he knew Freeman was on parole when he worked for him, as well as the seriousness of the crimes.

Freeman was released in 2007 but sent back in 2011 for several parole violations, including starting the company, accepting money from clients and selling unregistered securities, according to state Department of Corrections records.

That same year, Rezny opened his American Community ReDevelopment Group by taking over responsibility for some of Freeman's properties. He still has some of those same clients.

Asked how his ACRD operation is different from Freeman's Genesis Fulfillment, Rezny replied: "It's not."

Rezny said he had no ownership interest in Genesis, although a 2012 deed drafted by Rezny lists him as an member — the term used for LLC owners. Rezny said the title was put on the deed by mistake.

Genesis Fulfillment was created several years after Freeman committed the crimes that resulted in his convictions. There have been no allegations that Genesis Fulfillment was involved in any criminal activity though it did have run-ins with regulators.

In 2013, the state Department of Financial Institutions sanctioned Genesis, Rezny and Freeman "for misrepresentation and omissions in the sale of unregistered securities." Freeman and Rezny were banned from selling unregistered securities.

Now department officials are looking into whether Rezny is violating that order.

The securities in question were promissory notes funding real estate purchases that the department said were actually securities and should be registered with the agency.

Rezny said he did not object to the order because of his youth and because he felt pressured by the regulators. During parts of the proceedings, Rezny was represented by two attorneys, including former U.S. Attorney Steven Biskupic.

Rezny argues the promissory notes used by Genesis — and that his current operation uses to finance some real estate purchases — are not securities at all. Rather, he says, they are loans and do not have to be registered with the state.

Well known in the courthouse

Rezny has been involved in at least nine lawsuits since 2013.

In the cases, investors allege a variety of wrongdoing including fraud, misrepresentation and misusing their money. Meanwhile, Rezny suesthe investors for defamation, breach of contract and failure to pay money owed.

"Anybody I owe money to can and should sue me," Rezny said in an interview. "Let's have the courts decide who owes who what."

The most recent lawsuit against Rezny was filed March 29 by David Calzaretta, a Chicago-area business owner and musician. His lawsuit, filed in U.S. District Court in Illinois, accuses Rezny of securities fraud and misrepresentation for failing to disclose problems in his operation and his true financial situation.

In the lawsuit, Calzaretta said he wired Rezny $150,000 in December to enter into a real estate deal that would pay him a guaranteed return of 15%. Calzaretta quickly demanded his money back, after being told by "Rezny's banker" about lawsuits dogging Rezny and other issues, the lawsuit says.

Rezny "wired back the portion he hadn't spent in three hours," said Matthew Saffar, Calzaretta's lawyer. That amounted to about $100,000.

The lawsuit alleges that Rezny "created a pyramid scheme where he would collect money under the premise of investing in properties and other securities and then use the money pay off previous investors based upon guarantees."

In an interview, Rezny denied the allegations and called the lawsuit "worthless." Renzy blamed disgruntled former associates for complaining about him to U.S. Bank.

Rezny also blamed Calzaretta for his recent ouster from the Entrepreneurs Organization, an international group designed to bring business owners together.

Rezny, who pitched his deals to Calzaretta during the group's meetings in the Chicago area, was recently removed because "there were some issues around a fraudulent business," a spokeswoman for the group said in an email.

A friendly, funny guy

Several of Rezny's current financial backers said they were attracted to his business because of the guaranteed payments and his outgoing personality.

"He was funny and I believed him," said Joan Rixe, 50, of Racine, adding: "He talks like me."

That is, she explained, Rezny swears a lot.

Rixe said she has invested about $125,000 with Rezny over the past eight or nine years and had earnings of about $133,000.

"It's been an excellent investment, he's an excellent guy," said Wayne Anderson of Hayden, Idaho, who, like Rixe, has been investing with Rezny since he was with Freeman's Genesis firm.

Hayden, too, said he had received the promised payments.

Rixe, who considers Rezny a friend, said the controversy around Rezny "kind of concerns me," but added: "He's been upfront with me." However, she and several other investors said Rezny did not tell them that he was banned from selling unregistered securities in Wisconsin.

The situation was different for Nancy Patel, and her physician husband, Jay Patel, the Indiana couple who purchased the Hampton Ave. building and sued Rezny last year. Their lawsuit alleges he defrauded them out of more than $1 million in four deals, including failure to pay back promissory notes, which the Patels contend were securities and Rezny argues were loans.

The Patels and Reznys were friends before they were foes, having met in 2011 through mutual friends.

Jay Patel raced Porsches and Rezny peppered him with questions about racing and came to his events.

"I remember him sliding across the floors with our kids on his back," Nancy Patel said in an interview.

Now, she said, she feels "that we were marks."

Told of Nancy Patel's comment, Rezny responded: "I'm so pumped to fricken' keep suing people for defamation."

According to the Patels' lawsuit, their LLC purchased the building at 5716 W. Hampton Ave. for $1.2 million last year, and it was managed by Rezny's company until the Patels fired that company last September.

"The building is in deplorable and unsafe condition," according to an October memo from Lisa Rollins of My Dwelling Inc., a property management company hired by the Patel's to replace the Rezny company.

The Patels had the building boarded up.

The vacant building was the target of an April arson. Police said they arrested a 16-year-old male, but the district attorney's office declined to prosecute.

Rezny said building fell into disrepair because the Patels waited a month after firing him to have My Dwelling take over. Rezny said they should have been satisfied with the monthly payments he provided despite the numerous vacancies.

"They're getting a check from me every month ... guaranteed for three years — and then they fire me," Rezny said.

Michael Huitink, the Patels' lawyer, said the way Rezny admits to moving money around is an indication of a Ponzi scheme.

"What we've alleged in the complaint we believe constitutes a Ponzi scheme by any acceptable definition," Huitink said. "We believe money from other investments is used to return money to investors."

The Patels allege they once gave Rezny $50,000 in earnest money for a deal that fell through because of tax issues with the Patels and because U.S. Bank raised red flags to them about Rezny.

Rezny said he does not move the money around in inappropriate ways.

But in a January deposition, Rezny testified he used the $50,000 from the Patels to cover "a judgment — or not a judgment, I had a settlement I had to pay .... for a bar that my friends and I were going to open." That plan, to open the Irish Genie tavern on E. North Ave., fell apart and ended up in court.

In February, Rezny countersued the Patels alleging breach of contract, misrepresentation and defamation. The lawsuit claims the Patels — or people working for them — erroneously told U.S. Bank and a local short-term lender that Rezny was "committing fraud."

In another case, a Chicago salesman said he considered Rezny a friend until their business deal fell apart. Jonathan Bliss, 33, said that he and some friends purchased at least two dozen properties from Rezny's operation.

Bliss said the relationship fell apart in 2015 when Rezny demanded funds that Bliss felt he did not owe. Bliss said he immediately fired Rezny as his property manager.

That's when Bliss says he first saw many of the properties his group owned.

"Half of our properties were vacant and in disarray," Bliss said, "He was paying us rent for over a year on a property that was not occupied ... the ceilings were falling in, the paint was peeling."

A house at 1122 W. Grant St. in Milwaukee had a raze order, no heat and no electricity, Bliss said. He and his partners have since hired a new management company.

Rezny said Bliss and his partners bought the property at a discount and it was their responsibility to come up with the $50,000 needed to repair it. Bliss knew about the condition of the properties and about the raze order from the city, Rezny said.

"Two years after, I'm still picking up the pieces," said Bliss. "I'm trying to stay out of bankruptcy and foreclosure."

Rezny filed a lawsuit last month that charges Bliss owes him $150,000.

Rezny's regular court appearances caused Milwaukee County Circuit Court Judge David Hansher to reject his 2015 request to legally change his first name from Nicholas to Nick — the sort of request the judge said he grants "in 99% of the cases."

Hansher said the proposed name change would make it more difficult for people to find Rezny's litigation record on the state's online system for checking court records. Today, Rezny says the judge's decision was "just."

Not my fault

During about four hours of interviews, Rezny frequently blamed others for his controversies, saying the vast majority of his financial backers are happy with him and said his properties are in excellent shape.

A January review of 109 properties showed more than 20 properties linked to Rezny had been cited for code violations, most of which were not serious, city attorney records show.

Hough, the assistant city attorney, said Rezny LLCs tend to repair properties when cited for code violations.

In a case where there had been no citations issued for bad wiring, the Fire Department said a March fire at a property in the 2300 block of N. Holton St. owned by a Rezny LLC was caused by faulty wiring.

Rezny has not been charged with any crime and is not under any criminal investigation.

Still, some, such as state Rep. Evan Goyke, (D-Milwaukee), are distancing themselves from him.

Last week, Goyke donated $2,250 from his campaign account to the state Common School Fund.The amount represented contributions Goyke had received from the Reznys since 2014.

"I don’t know what's going to happen to Mr. Rezny or to his business," said Goyke, who said Rezny last year misused the politician's name in a promotional email. "It's unclear what legal steps are in his future."

Rezny, however, continues to display his usual confidence.

In a December promotional email, he declared 2017 as "THE RISE OF REZNY."

Cary Spivak can be reached at cspivak@jrn.com and twitter.com/cspivak.