UDF reportedly raided by FBI

Investor Alert: United Development Funding (UDF)

According to reports, the FBI recently raided the office of United Development Funding (UDF).

Agents were purportedly seen carrying boxes out of United Development Funding and loading the boxes into large trucks.  UDF has acknowledged it has been under investigation by the U.S. Securities and Exchange Commission and said it was cooperating, but alleged that no specific charges of wrongdoing have been made.

United Development Funding invests in secured loans for the acquisitions and development of land into single-family home lots. The Fund also makes investments in residential real estate in select geographic markets and securitized real estate loan pools.

The FBI raid was the first indication that a criminal investigation into the company appears to be under way.  Shares of United Development Funding IV (Nasdaq: UDF) plunged over 50% prior to being halted.  According to Bloomberg, shares of UDF IV are down over 70% on the year.

Recovery of Losses in UDF

Kyle Bass, head of hedge fund Hayman Capital Management, recently claimed that, “United Development Funding exhibits characteristics consistent with a Ponzi scheme.”

The White Law Group continues to investigate the liability that brokerage firms may have for recommending UDF to its clients. The firm has handled a number of claims involving UDF over the years. In those claims, the firm has alleged, among other things, that the company’s investments were (1) high-risk and unsuitable for our clients given their financial situation, needs and investment objectives, (2) that the risks of the investment were not fully disclosed to them, and (3) that the brokerage firms that sold the investments failed to conduct the proper due diligence with respect to the UDF investments (as the firms are required to do by FINRA Rules).

The firm is investigating claims involving United Development Funding I, United Development Funding II, United Development Funding III, and United Development Funding IV.

If you suffered losses investing in United Development Funding or another UDF investment and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors in FINRA arbitration claims throughout the country. Visit the firm’s homepage to learn more about the firm’s representation of investors.