The attached complaint was filed by the SEC and alleges from at least January 2011 through December 2015, UDF used money from a newer fund to pay distributions to investors in an older fund, without adequately disclosing the use of funds and the nature and status of loans made to developers.
The Securities and Exchange Commission announced charges against two real estate investment funds and four executives in connection with their alleged roles in misleading investors by failing to disclose that it was using money from a newer fund to pay distributions to investors in the older fund.
"Prosecutors in the Northern District of Texas have taken definitive action against four executives with United Development Funding, the Grapevine-based real estate investment trust the FBI raided in February of 2016.
Two of the four are Highland Park residents who reside just south of Beverly Drive in a $6 million home. Agents involved in the sale say the home was purchased shortly before the raid.
More than five years after that initial raid, the U.S. Attorneys’ office charged the four — CEO Hollis Greenlaw and three of his colleagues at the Grapevine-based real estate investment trust — with conspiring to deceive banks and investors through a series of real estate investment funds.
The defendants are Greenlaw of Colleyville, Benjamin Wissink and Cara Obert of Highland Park, and Jeffrey Brandon Jester of Wylie."
“The chief executive of a Grapevine lender that operates various real estate investment trusts and three other executives have been charged by federal prosecutors with engaging in a scheme to defraud banks and investors about the source of funds used to pay them.
The indictment, filed in federal court in Fort Worth and made public this week, names Hollis Greenlaw, CEO of United Development Funding, along with Benjamin Wissink, Cara Obert and Jeffrey Jester. They’re charged with conspiracy to commit wire fraud affecting a financial institution and conspiracy to commit securities fraud.”
“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.”