UDF management claims that its business model is sound.
Using cash from new investors to repay existing investors is not sound.
According to the SEC, “a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”
UDF has been the subject of a
“non-public fact-finding investigation”
being conducted by the SEC,
according to UDF disclosures.
"The purpose of the conspiracy was to: (a) conceal from Fund III, Fund IV, and Fund V's shareholders, the investing public, due diligence entities, external auditors, and the SEC the true performance of Fund Ill's business; (b) conceal from Fund III, Fund IV, and Fund V's shareholders, the investing public, due diligence entities, external auditors, and the SEC Fund Ill's financial condition, in order to encourage investment in later funds, e.g., Fund IV and Fund V; and (c) enrich defendants Hollis Morrison Greenlaw, Benjamin Lee Wissink, Cara Delio Obert, Jeffrey Brandon Jester, and others through the continued receipt of compensation."
“In all events, Hayman’s posts that UDF contends are false are also public record. There is no concealment issue here. And, because the statements are about UDF itself, it has the ability to determine whether they were in fact false. Application of the privilege would not in any way prevent UDF from discovering its claim or proving its case if, as it contends, the posts contained untrue statements."
“Thus, in addition to failing to meet its burden of establishing a prima facie case of fraud, UDF failed to establish a prima facie case of a crime or otherwise attempt to overcome its heavy burden of piercing the attorney–client privilege.”