United Development Funding Claims It as Conducted an Internal Investigation; Awaiting Ongoing Civil and Criminal Investigations

Real estate finance company United Development Funding (“UDF”) publicly speaks nearly three months after an FBI raided its headquarters in February 2016.

In a news release, UDF said a board-authorized probe into its inner workings by an outside law firm UDF hired found no evidence of fraud or misconduct on the part of the trust, its management, or its advisor.  Silver Law Group has been monitoring the situation since March.

The news comes in light of heavy fire the real estate finance company has come under going back to 2015.  In December 2015, Hayman Capital Management principal Kyle Bass, anonymously at the time, posted a report and letter enumerating UDF business red flags and alleging it was being run like a Ponzi scheme.

While Bass later revealed himself and that he has a significant short position in UDF, the real estate finance company revealed after the anonymous post that it had been subject to an SEC investigation for over a year and a half.  Then, to make matter worse, the FBI raided UDF headquarters and left with stacks of documents.

Amidst the investigation and negative news, shares have plummeted and trading has been halted.  Civil and criminal investigations remain ongoing.

Despite the “good news” disseminated straight from UDF, the red flags remain brightly red.  The investigation was prompted by UDF, included three of its board members, and paid for by the real estate finance company.  Of course, the big short himself, Bass, believes that the investigation is biased and dismissed it.

Bass is biased, as he stands to profit from the downfall of UDF, but the research he and his firm has compiled is compelling, and an unbiased investigation will potentially yield findings contrary to UDF’s.  Bass’s UDF research can be found at https://udfexposed.com/.

UDF is a mortgage REIT that lends money to develop properties through its family of funds.  It has raised over $1 billion – $700  million in UDF IV alone – with a majority of that money coming from retirees, unsophisticated investors, and “mom and pop” investors.

A majority of the proceeds were allegedly raised by RCS Capital, a broker-dealer firm founded by REIT mogul Nick Schorsch.  Schorsch is the founder of AR Capital, the external advisor and co-sponsor of one of UDF’s funds.

If you invested in UDF IV or any other United Development Funding products or were sold these or other unsuitable investments by RCS Capital, you may be entitled to recover some of your investment losses.  Please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345 to speak to an attorney to find out how we may be able to help you recover some of your investment losses.