Kehoe Law Firm, a leading securities litigation firm, has filed a securities class action suit against United Development Funding IV (UDF IV), a real estate investment trust (REIT). The lawsuit, filed in the U.S. District Court for the Northern District of Texas, represents investors who purchased shares in the company during the class period between June 4, 2014, and Dec. 10, 2015.
UDF IV, a REIT under the United Development Funding umbrella, has been accused of operating a “Ponzi scheme” in the lawsuit.
The allegations gained momentum after a report titled “A Texas Sized Scheme” was released by Harvest Exchange, detailing alleged similarities between Ponzi schemes and certain organizations under the United Development umbrella. The report highlighted that funds raised by UDF IV were allegedly used to provide liquidity to previous iterations of United Development, leading to a significant decline in UDF IV’s stock prices.
The subsequent class action lawsuit alleges that UDF IV violated federal securities laws by failing to disclose that current iterations of UDF companies were providing liquidity to previous vintages, enabling the older companies to pay off early investors. The complaint also asserts that the defendants failed to disclose that, without funding from previous United Development operations, these companies would likely collapse, leaving investors with worthless stocks.
Furthermore, the lawsuit alleges that UDF IV offered liquidity to UDF I, UDF III, and other affiliates, exacerbating the perceived “scheme.” The defendants are accused of not informing investors about the similarities between United Development’s operations and a Ponzi scheme and that UDF IV was the subject of a Securities and Exchange Commission (SEC) investigation.
Michael Yarnoff, a partner at Kehoe Law Firm, expressed the firm’s commitment and satisfaction in representing UDF IV investors, stating:
“We are pleased to stand alongside and represent investors who have been affected by the alleged misconduct involving United Development Funding IV. Our firm is dedicated to seeking justice for those who have suffered financial losses and holding accountable those responsible for potential securities law violations. Investors deserve transparency and fair treatment, and we are committed to pursuing their rights vigorously.”
For more information about Kehoe Law Firm and its involvement in this matter, please contact Michael Yarnoff at [email protected] or call (215) 792-6676.