My cousin is a midlevel manager for one of the larger institutional players and consults large big companies - he lost a beer to me in a bet as he did not believe it could be done!

So, you are spot on when you had the idea to pay them a consulting fee.  

If so, then it is what it is and is long done.If by some mechanism you were able to take the funds without that being classified and reported as a distribution (unlikely, but possible), then you have a bigger issue and should consult with your CPA as to how to fix the reporting and pay any necessary taxes and penalties.... 

Roofing Consultants and Services, Danny 904-282-ROOF

If the investors you bring in are passive investors with no voting rights then it is considered a security and will have to do a PPM to avoid SEC issues.If it is a JV deal with the investors having voting rights, then no PPM is required.I would get a bridge loan that will fund the capex instead of raising it and lowering your CoC.Either way consult with an attorney and get a good mortgage broker.

The Seller should consult with an attorney about a quiet title action.

When I consulted with friends and family, they discouraged me from buying because the building was a liability.

@Pat Jackson After meeting with a lawyer together, you should also consult with an accountant.

I would at least consult with an attorney and probably have them write a demand letter or lis pendens- depending on the amount at stake.So this was a loan to a flipper/rehabber?

I would consult a 1031 certified company and check with them on this.