SAN FRANCISCO--(BUSINESS WIRE)--Fourth paragraph, first sentence of the release dated Dec. 11, 2015, should read: On Dec. 10 and 11 (instead of On Dec. 9 and 10).
The corrected release reads:
HAGENS BERMAN IS INVESTIGATING UNITED DEVELOPMENT FUNDING IV (NASDAQ:UDF) AND ACCUSERS FOLLOWING “PONZI SCHEME” ALLEGATIONS
Hagens Berman Sobol Shapiro LLP, a national investor-rights law firm, is investigating United Development Funding IV (NASDAQ:UDF), and those leveling accusations against it, following allegations from a short-seller that a large portion of UDF’s 2015 distributions to shareholders were funded with borrowed money – similar to a Ponzi scheme. UDF stock has plunged over 50% in the last two days as a result.
If you suspect you have losses in your investments in UDF as result of this news or have knowledge relevant to the investigation, contact Hagens Berman Partner Reed Kathrein, who is leading the firm’s investigation, by calling (510) 725-3000, emailing UDF@hbsslaw.com or visiting https://www.hbsslaw.com/cases/UDF.
“The allegations leveled against UDF are serious, and regardless of the truth, investors have been hurt,” said Hagens Berman partner Reed Kathrein. “With help of those willing to come forward we should be able to get to the bottom of this quickly and help investors in recovering their losses.”
On Dec. 10 and 11, UDF shares were down over 50% from $17.20 to $8.55 ET as a short-seller described the company as something akin to a Ponzi scheme, according to website postings. The short-seller suggests that UDF and other “REITs pay off old investors with proceeds from freshly raised debt and equity capital.”
United Development Funding IV's SEC filings reveal only 71 percent of its year-to-date distributions in 2015 came from cash from operations. The remaining 29 percent of the distributions paid were financed by credit facilities, indicating that a large portion of UDF’s 2015 distributions to shareholders were funded with borrowed money.
The short-seller claims that different UDF REITs – UDF I, UDF II, etc. – make loans against properties previously financed by other UDF entities. According to reports, a development known as Shahan Prairie was financed first by UDF I, then received financing from UDF III, slowly increasing the loan balance through the financial crisis. In 2015, UDF V issued a larger loan to the same project, with the proceeds used to repay UDF III.
United Development Funding IV is a real estate investment trust. The company primarily invests in real estate projects in Texas, noting in its filings that it has 123 loans on Texas projects. In addition, it has three loans in Florida and one in North Carolina.
Whistleblowers: Persons with non-public information regarding UDF should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new SEC whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at (510) 725-3000 or email UDF@hbsslaw.com.
Hagens Berman is headquartered in Seattle, Washington with offices in 10 cities. The Firm represents investors, whistleblowers, workers and consumers in complex litigation. More about the Firm and its successes can be found at www.hbsslaw.com. Read the Firm’s Securities Newsletter at http://www.hbsslaw.com/hagens-berman-investor-fraud-center/securitites-newsletter, and visit the blog at www.meaningfuldisclosure.com. For the latest news visit http://www.hbsslaw.com/cases/pressreleases or follow us on Twitter at @classactionlaw.