United Development Funding (UDF) Investment Losses

The securities lawyers of Gana LLP are currently representing clients that have invested in the United Development Funding (UDF) suite of non-traded real estate investment trusts (Non-Traded REITs) funds. The UDF Funds have been accused of operating a massive Ponzi-like investment scheme that has ensared nearly $1 billion in investments. The funds issued by UDF include United Development Funding L.P., United Development Funding II, L.P., United Development Land Opportunity Fund, L.P., United Development Funding III, L.P., United Development Funding IV, UDF 2013 – 1, and United Development Funding Income Fund V.

One of the funds UDF IV, is a publicly traded REIT that plummeted about 50% in value after allegations arose claiming that UDF runs its REIT programs like a Ponzi scheme. Thereafter, according to newsources the FBI raided the offices of UDF on February 18, 2016.

The FBI declined to comment on the details of the criminal search warrant they executed. However, it was observed that boxes of files were removed from the building and the FBI did confirm that they were conducting law enforcement activity. As a result of the raid, trading in UDF IV shares was halted at 12:33 p.m. at which point the price had declined 54.6% percent to $3.20 a share from highs in December of $17.25 a share.

The allegations against UDF IV claim that the fund has made false or misleading statements and omissions about its business. UDF IV has been accused of failing to disclose that: (1) subsequent UDF REIT companies provide significant liquidity and capital to earlier UDF companies which allows those companies to repay earlier investors; (2) if funding to the latest UDF company were halted the earlier UDF companies would not be capable of continuing operations; (3) UDF IV provided liquidity to UDF I, UMT and UDF III, as part of an investment scheme; (4) UDF IV was being operated in a manner similar to a Ponzi scheme where new capital is being used to pay prior investors; (5) UDF IV failed to disclose that the company was being investigated by the SEC for its practices; and (6) UDF IV’s business prospect representations were false and misleading.

UDF has fought back against the allegations on its website called the attacks “false and misleading statements about our company and management team” and claiming that the motive was because the “Dallas-based hedge fund has confirmed they have built a significant short position in UDF IV.”

As a background, Non-Traded REITs are speculative investments and due to these risks the UDF Funds may have been unsuitable for the investor. In addition, Non-Traded REITs suffer from conflicts of interests and are opaque investment vehicles. The Non-Traded REIT industry is commonly subject to customer and regulatory complaints due to these conflicts of interest. In addition, studies have shown that Non-Traded REITs fail to appropriately compensate investors for these risks over publicly available REIT investments.

The investment fraud attorneys at Gana LLP represent investors who have suffered securities losses in the UDF Funds. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.

Client Reviews
★★★★★
"I will never forget how much you helped me by winning my case! I never thought I would see any money from my investment. I admire the way you fight for everyday people against big companies. Thank you so much!"
★★★★★
"Adam is an outstanding lawyer. I have worked on several cases with Adam and look forward to working with him again in the future." Rob D. - Co-Counsel.
★★★★★
"If you want an attorney that is easy to talk to and genuinely cares about your legal situation, contact Adam Gana. He helped me settle a difficult contract dispute. When you work with Adam, he makes you feel as if you are his top priority. He will call you regularly to stay on top of the situation and submits all necessary legal documentation in a timely manner. His writing is excellent, his demeanor professional, and his work exceptional." Nancy N.
★★★★★
Adam helped me recover money from my broker when I thought all was lost. My house was about to be foreclosed, and I lost everything. Adam came in and saved my life. Jean C.
★★★★★
Gana LLP has the best attorneys period. They work hard, they work fast and I would recommend them to anyone. They are like family. Liz N.