I self-managed my portfolio and dealt with all kinds of headaches with the verification software on the market from them not accurately verifying the job/financials to failing to fully verify the applicant's identity leading to an eviction of a fake CPN (used by Airbnb hosts to get apartments under a fake name).

The heads of REIA's often get lots of info on the QT through the grapevine.check BOP.gov (Bureau of Prisons) - mortgage fraud guys end up doing federal time

Kyle, hang in a sec: Kudos to Mark Nolan, above, who gave those great websites, especially the SEC warnings with quotations from fraud cases.  

An insurance policy is a contract and there are no two that are identical.

As long as the owner(s) of the LLC's do not knowingly engage in fraud or illegal activities, which would "pierce the corporate veil", you are personally protected from litigation. 

@Johnny Garcia yeah no, find someone else to help or at least help him do something on the up and up, it sound's like your wife's boss is committing fraud, you really don't want your first foray into real estate to be a fraudulent transaction.

Based on that, I wouldn't (QUICKLY) transfer the property into an LLC because doing so could open you up for charges of mortgage fraud. 

From what I can gather, it all centers around fraud. 

Therefore, if one of the units is already tenant occupied and the other is in the process of rehab, then you're technically committing mortgage fraud.

We also offer some pretty cool free resources like our radio shows where we interview everyone from the mortgage fraud division of the FBI to chief economists of national organizations and associations.