The Securities and Exchange Commission charged a Florida-based real estate investment trust (REIT) and its founders with operating a $152 million fraud scheme, the Business Observer reported.
RAD Diversified REIT, Inc. (RADD), and founders Brandon “Dutch” Mendenhall and Amy Vaughn, were accused of raising money from more than 5,500 retail investors nationwide through an alleged fraudulent real estate investment scheme in which Mendenhall and Vaughn collectively misappropriated nearly $5 million of investor funds.
The SEC’s complaint, filed in the U.S. District Court for the Middle District of Florida, details the alleged misconduct that spanned the period from November 2019 through March 2024.
According to the commission, the defendants systematically deceived investors about RADD’s profitability, stock valuation practices, and liquidity, through an extensive marketing campaign using unregistered sales agents and high-pressure tactics, and invoking Christian values, patriotism and support for military veterans to gain investor trust.
“The complaint alleges that the defendants falsely claimed that RADD was a profitable REIT and that “zero investors have ever lost money on their investment,” when in reality, RADD suffered millions of dollars in annual losses,” the SEC stated. “The complaint also alleges that the defendants claimed RADD’s ever-increasing stock price was based on independent appraisals or valuations of the REIT’s properties and would be regularly updated; however, the properties were not independently valued, and defendants never updated RADD’s stock beyond July 2023, despite widespread property foreclosures and internal findings showing the stock price was significantly overstated.”
Investors were told the stock price, which increased from $10 to $25.04 between 2019 and 2023, was based on independent third-party appraisals. Instead, the SEC alleges the valuations were prepared by Mendenhall’s brother, the company’s vice president of real estate operations, who lacked appraisal experience and relied on online estimates rather than professional appraisal standards.
The defendants allegedly assured investors of liquidity but were routinely denying or ignoring redemption requests. Eventually RADD froze the requests with about $3 million in requests remaining outstanding before filing for Chapter 11 bankruptcy in March 2026, the SEC said.
The defendants are also accused of diverting about $54 million of investor funds to relief defendant The Seminar Solution, LLC (TSS), an entity owned by Mendenhall and Vaughn, who then misappropriated millions for personal expenses, including IRS taxes, private jet charters, luxury goods, jewelry, adult nightclubs, gun-range fees, private school tuition, and recreational activities.
RADD, Mendenhall, and Vaughn were charged with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Relief defendant TSS is charged with unjust enrichment.
The SEC is seeking permanent injunctions and disgorgement with prejudgment interest against all defendants, and civil penalties, conduct-based injunctions, and officer and director bars against Mendenhall and Vaughn. The SEC also seeks disgorgement with prejudgment interest against relief defendant TSS.
Matthew Fornshell, an attorney representing RAD Diversified, and Paul Sisco, an attorney representing Vaughn, did not immediately respond to requests for comment, according to the Business Observer. An attorney representing Mendenhall in the SEC case could not immediately be reached.
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