"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."
"[UDF is] using this ‘Bivens action’ to yet again interfere with legitimate law enforcement activity. In furtherance of their efforts, [UDF] asks the Court to unseal a redacted complaint and publicize their version of the history of a very active ongoing criminal investigation in the NDTX including details of non-public aspects of the investigation."
"The 'reporting requirements are the primary tools which Congress has fashioned for the protection of investors from negligent, careless, and deliberate misrepresentations in the sale of stock and securities.' Respondents engaged in serious and recurrent violations of these critically important requirements and did so with a high degree of culpability."
“The Board is imposing these sanctions based on its findings that: (1) Powell and Babb violated PCAOB rules and standards in connection with the audits of the 2012-2014 financial statements of United Development Funding III, L.P., and the review of that issuer's Q3 2015 interim financial statements; (2) Lawlis violated PCAOB rules and standards in connection with the audits of the 2013-2014 financial statements of United Development Funding IV and the review of that issuer's Q3 2015 interim financial statements; and (3) WP violated PCAOB rules and standards by failing to design, implement, and maintain appropriate quality control policies and procedures.”
“The Board deems it necessary and appropriate, for the protection of investors and to further the public interest in the preparation of informative, accurate, and independent audit reports, that disciplinary proceedings be, and hereby are, instituted pursuant to Section 105(c) of the Sarbanes-Oxley Act of 2002, as amended (the "Act") and PCAOB Rule 5200(a)(1) against Respondents.”
On July 16, 2019, the U.S. Federal District Judge Sam Lindsay ordered the creation of a Fair Fund to compensate investors in UDF who lost money because of UDF management’s illegal and unethical activities as charged by the Securities and Exchange Commission on July 3, 2018.
"To do so, UDF used funds from UDF IV, V, and LOF to (1) either 'purchase' portions of non-performing loans from UDF III, which loans defaulted shortly after the purchase, or (2) to make 'loans' to entities that had already borrowed money from UDF III but had trouble paying it back, and have those entities in turn repay the earlier loans to UDF III."