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United Development Funding Accused of Ponzi Scheme

December 11, 2015 · FLEMING | NOLEN | JEZ, L.L.P.

Our securities fraud lawyers at Fleming | Nolen | Jez, L.L.P. have learned that accusations have been made against Dallas-based United Development Funding (UDF), a Real Estate Investment Trust (REIT), for running a Ponzi scheme. According to the accusations, the umbrella of UDF operates with characteristics similar to a Ponzi scheme. They allegedly exhibit the following characteristics:

  • New equity and new debt capital funds distribution to existing customers
  • Subsidiary companies under the UDF umbrella provide a significant amount of liquidity to earlier UDF companies to pay investors
  • If funding to subsidiary UDF companies stop, earlier UDF companies likely unravel.

The allegations against UDF state that a subsidiary UDF company used new retail capital in order to provide affiliates with liquidity. This was despite statements that they would not engage in this practice. UDF V is also accused of using investor capital to fund capital to investors with UDF III and UDF IV in a manner similar to that of a Ponzi scheme.

If you lost money with United Development Funding (UDF), you may be able to take legal action. By calling Fleming | Nolen | Jez, L.L.P., you are securing the representation of skilled securities fraud attorneys who are dedicated to helping you recover any losses you may have incurred. Call us today to speak with our team about your possible case.