As disclosed by The Wall Street Journal on February 18, 2016 (“FBI Raids Headquarters of United Development Funding”), agents from the Federal Bureau of Investigation, armed with search warrants, raided the headquarters of this sponsor of real estate investment trusts and other investment vehicles and seized documents and other materials in what appears to be an expanding criminal investigation of UDF.
UDF, which has reportedly raised about $1 billion from retail investors for its non-traded real estate investment trusts, has been the subject of a number of criticisms and negative allegations in the past few months which have focused on the company’s concentrated lending practices (reportedly about 99% of the United Development Funding IV program’s loans have been made in Texas and, of that amount, approximately 67% of the loans have been advanced to a single borrower – Centurion American Development and its affiliates) and the contention that new money being raised has been used to repay earlier investors in its programs.
As to be expected with this latest development, shares of UDF’s largest fund, United Development Funding IV, crashed when news of the FBI’s raid hit the tape – falling 54% before trading was halted. Since December of 2015, the shares have now lost more than 80% of their value.
If you are an individual or institutional investor who has any concerns about your investment in any United Development Funding program, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).