UDF Execs Indicted on Fraud Charges involving UDF Fund III, IV and V
Have you suffered losses investing in United Development Funding III (UDF III)? If so, the securities attorneys at the White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment. The firm has handled a number of claims involving UDF funds over the years.
United Development Funding III LP a/k/a “UDF III” is a limited partnership that deals in mortgage loans secured by real property.
According to a complaint filed on October 18, 2021, federal prosecutors have charged four executives of United Development Funding (UDF), a real estate investment trust based in Grapevine, Texas, with allegedly defrauding financial institutions and using investor money to enrich themselves.
Prosecutors allege that from January 2011 to December 2015, the four executives, purportedly engaged in a fraudulent scheme using United Development Funding investment fund entities (UDF Fund III, UDF Fund IV, and UDF Fund V). The charges allege that the four UDF executives hid the true performance of the fund’s business and its financial condition to encourage investment and enrich themselves. The UDF managers allegedly defrauded investors and obtained money from banks by failing to disclose that shareholder funds were being used to repay developer loans and issue distributions to earlier investors, according to the indictment.
In July of 2018, the Securities and Exchange Commission reportedly reached an agreement with two United Development Funding REITs to pay $8.2 million in fines and payments to investors for failing to disclose that it could not meet its distribution payments.
“Rather than using those funds for development projects that were underwritten by UDF IV, UDF directed the developers to use the loaned money to pay down their older loans from UDF III,” according to the SEC. “In most of these cases, the developer never received the borrowed funds at all, and UDF simply transferred the money between funds so that UDF III could make the distributions to its investors.”
As we have previously reported, the SEC had been investigating UDF since 2014 and issued a Wells notice against one REIT, UDF IV, in 2016.
United Development Funding III LP (UDF III), a Delaware limited partnership, has reportedly been delinquent in its obligations to file timely periodic reports since September 30, 2015.
Secondary Sales Price- $1.25 per Share
Limited partnerships often lack liquidity because they are not sold on any public exchange, such as the NYSE or NASDAQ. These types of investments are intended for sophisticated and institutional investors. The level of risk is generally too high for conservative and moderate risk investors.
According to a secondary market for private placements, CTT Auctions, shares of United Development Funding III (UDF III) were recently sold for just $1.25 per share. This appears to be a significant loss for investors, as the shares were originally offered at $20.00/share.
If you suffered investment losses investing in UDF III the securities attorneys of The White Law Group may be able to help you recover your losses through FINRA Arbitration.
For more information on the firm’s investigations please see:
UDF IV-United Development Funding IV- Lawsuits to Recover Financial Losses
United Development Fund IV (UDF IV) Delisted by NASDAQ
UDF IV Appeal Dismissed
UDF reportedly raided by FBI
FINRA can help resolve problems and disputes through two non-judicial proceedings: arbitration and mediation. FINRA’s Dispute Resolution forum handles nearly all of the securities-related arbitrations and mediations in the United States. These claims are distinct from the class action filed directly against United Development Funding and could be pursued concurrently.
To discuss your litigation options, please call the offices 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 Seattle, Washington. 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.
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