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.
“Specifically, the complaint alleges that Defendants used shareholder money to pay their own personal obligations under a SEC settlement, lied about using shareholder money to satisfy the personal financial obligations of certain of the Defendants under the SEC settlement, improperly spent millions of dollars in shareholder money to fund their criminal defense, paid themselves lucrative management fees on overvalued assets, and tried to hide their actions by blocking audited financials of UDF.”
"[T]he court denies the UDF Defendants’ Motion to Dismiss Plaintiffs’ First Amended Complaint (Doc. 47), and denies Defendant Mehrdad Moayedi’s Motion to Dismiss Plaintiffs’ First Amended Complaint (Doc. 49). The court and its staff have expended numerous hours and scarce judicial resources in ruling on Rule 12(b)(6) motions. The court directs all Defendants not to file any further Rule 12(b)(6) motions."
“Plaintiffs [UDF] sued Defendants [Hayman Capital and Kyle Bass] for business disparagement, tortious interference with contract, tortious interference with business relations and civil conspiracy. Plaintiffs hereby nonsuit all of Plaintiffs’ claims against Defendants."