Just looking at debt doesn’t tell you anything. You would have to look at what the property is really worth, and whether the cash flow is servicing the debt.
Any debt brings with it risk, and if (actully, that should read when) the market turns, his creditors may take a bath and the house of cards may collapse, but inflation has saved many a bad decision.
As far as ‘tax free’ money, if his creditors do have to start writing down debt, those 1099s will start showing up, and he can explain them to the IRS.
Just because I wouldn’t loan him money doesn’t mean that he has a bad business plan.
My understanding is that he keeps every property separately financed and incorporated and then directions all spare financing to one property at a time until they get paid off.
At worst, he will end up with a few property that he outright owns, even if he loses everything else.