FBI Investigating United Development Funding IV REIT

United Development Funding IVAccording to Investment News, the Federal Bureau of Investigation (FBI) has raided the offices of United Development Funding IV, a publicly-traded real estate investment trust (REIT) based in Dallas, Texas. The securities and investment fraud law firm Fitapelli Kurta is interested in speaking to investors who have lost money investing in United Development Funding IV.

United Development Funding IV manages traded and non-traded REITs, according to Investment News, and its stock price fell 81% in recent months, after a hedge fund alleged United Development Funding IV operates “like a Ponzi scheme.”

According to FBI spokesperson Allison Mahan, “The FBI is lawfully present and conducting law enforcement activity.”

United Development Funding IV is a mortgage REIT that does business lending funds for the development of properties. According to its website, United Development Funding “invests in the development and construction of new, affordable, single-family homes through a family of public and private funds, which direct investor capital towards the financing of homebuilders and land developers.” Its offerings “range from equity and land asset holdings to mezzanine and debtor-in-possession financing to secured first lien loans.”

Investment News reports that United Development Funding IV’s share price fell 55% “after it was reported that the FBI agents were carrying boxes out of the company’s headquarters.” The price fell to $3.20/share; in December, it stood at $17.20/share. The fund had assets totaling $684 million; $513.2 million of these were notes receivable. Notes receivable for related parties totaled $69.6 million, according to Investment News.

In December, Harvest Exchange posted an online report alleging that United Development Funding is a “Ponzi-like real estate scheme.” According to the Harvest Exchange post, “UDF III retail capital appears to have been used to repay UMT retail capital which was used to bail out UDF I… UDF IV has since provided liquidity to UDF I, UMT and UDF III, among other affiliates, further exacerbating the problem and perpetuating the scheme.”

Investment News also reports that hedge fund manager Kyle Bass stated earlier in February that he is shorting United Development Funding. “UDF is using new investor money to pay existing investors,” Bass said in a statement. “UDF Management is misleading investors and is preying on ‘Mom and Pop’ retail investors.”

If you have complaints regarding United Development Funding IV, call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recover lost funds. All cases are taken on contingency: we only receive payment if and when you recover money. You may have a limited window to file your complaint, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.