United Development Funding IV was recently raided by the FBI after allegations
surfaced that the REIT was functioning like a Ponzi scheme.
FBI recently conducted a raid of United Development Funding IV (UDF) in Dallas. UDF is a publicly traded
real estate investment trust or “REIT” that manages both traded
and nontraded REITs. In recent months, UDF’s stock price dipped
a substantial 81% - this after a hedge fund claimed the company was operating like a
UDF so far has not commented on the raid. After the REIT’s stock
price dropped 81% based on the Ponzi scheme allegations, it took another
hit after the raid – a near 55% drop in the company’s share price.
The company’s tailspin began last December when Harvest Exchange,
a popular online network for investors, published an article that essentially
alleged UDF was operating like a Ponzi scheme. Not long after, UDF responded,
vehemently denying the allegations and claiming it was actually the
victim of a smear campaign aimed at driving down the price of UDF’s stock.
The most recent development in the UDF saga was when a hedge fund manager,
earlier this month, revealed he was shorting UDF, saying, “UDF is
using new investor money to pay existing investors” which, if true,
would constitute a Ponzi scheme.
You can learn more about REITs from some of Meyer Wilson’s helpful