United Development Fund Settles with the SEC Over Fraudulent Activities

Posted on July 9th, 2018 at 8:47 AM
United Development Fund Settles with the SEC Over Fraudulent Activities

From the Desk of Jim Eccleston at Eccleston Law LLC:

The United Development Funding III, L.P. and United Development Funding IV, L.P. (collectively “UDF”) has agreed to settle with the SEC over allegations that the company and its funds have been operating for several years like a Ponzi-scheme.

More specifically, since 2014, the SEC has been conducting an investigation of UDF after a hedge fund manager accused the REITS of Ponzi-scheme-like activity. The SEC’s investigation was followed by a Wells notice against the troubled real estate trust company.

According to the SEC’s complaint, the United Development Funding family of investment funds deployed investor capital towards the financing of homebuilders and land developers through private and publicly-traded investment funds.  UDF solicited investments in a series of funds by guaranteeing 8% to 9.75% in annualized returns and to pay investors regular distributions from loans for property development. However, in most cases, UDF used money from a newer fund to pay distributions to investors in an older fund, without adequately disclosing the use of funds, the nature and the status of loans made to developers.

The settlement includes a judgment, that will require UDF and certain individuals of the companies to consent to the entry of orders enjoining them from future violations of certain provisions of the federal securities laws. In addition, UDF, its officers and directors are subject to disgorgement and monetary fines. 

Eccleston Law is investigating the fraudulent activities of UDF. Those with information should contact our law firm.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, SEC, UDF

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