Are you a victim of the UDF IV Ponzi scheme, the purported real estate investment program based in Texas and on the verge of collapse? As a UDF IV fraud attorney, I know there are many investors who now find themselves victims of this recently-discovered Ponzi scheme. United Development Funding (UDF) faces a substantial risk of bankruptcy.
The SEC (Securities and Exchange Commission) describes the UDF IV Ponzi scheme, in part, as "an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors." If you are a victim with UDF IV losses, you should be aware of how this deceptive company operates.
Here are some examples of what is going on behind the scenes that you may not be aware of:
"Mom and Pop" retail investors were being preyed upon by UDF, which used a complex web of transactions, including real estate-backed loans, to hide the fact that existing investors were being paid with money from new investors. This is, of course, the hallmark of a Ponzi scheme.
UDF essentially "bailed out" their first fund using money from an SEC registered public affiliate, its second entity. Since then, management at the company has focused on covering its tracks via this real estate scheme sustained across multiple funds.
Since April of 2014, the company has been the target of an investigation by the SEC, and has not disclosed its poor track record to investors; neither has the company disclosed the financial condition of its public SEC-registered affiliates.
The only publicly traded trust under the United Development umbrella, and one of many corporate entities created by CEO Hollis Greenlaw and partner Todd Etter, UDF IV allegedly originated and purchased or participated in secured loans made to developers who then acquired and developed properties.
Management has been staunch in its denial of deceiving the company's investors. However, rumors of possible bankruptcy and a series of defaults, lawsuits, and accusations about its structure have recently started to implode following years of mismanagement. UDF IV losses are becoming more and more common not only in Texas, but in other cities including Kansas City. If you have invested in UDF IV and are a victim, it is highly advised you consult with an experienced securities attorney with knowledge of UDF IV and class actions, as well as FINRA arbitrations, right away. Both class actions for UDF IV investors and group arbitrations for UDF IV investors are being formed.
Unfortunately, Ponzi schemes are all too common today with many investors putting their full trust (and money) into these schemes with the hopes and promises of great returns. It is extremely difficult for most investors to truly know whether the REITs, real estate investments, and securities they invest in are legitimate or simply schemes designed to put money in the pockets of management and advisers.
Those who have losses in UDF IV and considering a UDF IV lawsuit, class action or arbitration, are invited to contact UDF IV REIT attorney Diane A. Nygaard.
United Development Funding IV – Ponzi Scheme Initial Findings
Last month, the FBI raided the offices of United Development Funding IV, a REIT, and Ponzi scheme that has been sold by brokers to unsuspecting investors.
A class action has been filed against the officers of the REIT for allowing funds from later investors to be used to bail out its earlier investors. However, class actions can take years, and may not result in meaningful recoveries.
Brokerage firms who recommend securities are required to conduct “due diligence” before recommending them. However, six brokerage firms have sold millions of dollars of UDF IV.
VSR Financial Services
Centaurus Financial Inc.
IMS Securities, Inc.
We are forming groups of investors in UDF IV for group arbitrations of their fraud claims. If you own UDF and were sold it by one of these brokerage firms, please contact us.