Federal prosecutors have charged four executives of a real estate fund with a scheme to defraud banks and investors, InvestmentNews reports. An indictment filed in federal court named Hollis Greenlaw, CEO of Grapevine, Texas-based United Development Funding, along with three of the fund’s managers, Benjamin Wissink, Cara Obert and Jeffrey Jester.
The four defendants are charged with conspiracy to commit wire fraud affecting a financial institution and securities fraud. Prosecutors say they conspired to conceal the true performance of UDF’s business, to conceal the fund’s financial condition in order to encourage investment in later funds, and to enrich themselves and others through continued compensation.
According to the indictment filed in federal court in Fort Worth, the alleged scheme was conducted from 2011 to the end of 2015 during a time when UDF was providing loans to housing developers from investment funds.
When developers were not repaying those loans quickly enough, the indictment alleges that the four defendants started another fund. But the money they raised from investors was actually used to repay the loans issued to developers in previous funds and to pay distributions to previous investors. The defendants allegedly failed to disclose that the money raised was being used for these purposes.
Greenlaw’s attorney issued a statement predicting vindication for his client and the other defendants, and labeling the allegations as baseless.
The securities fraud attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases. We routinely represent investors harmed when financial professionals and their firms have engaged in misconduct that caused their clients investment losses. If you think you have sustained losses due to misconduct by your financial professional or firm, contact us at (888-655-6002) or through our online contact form for a free evaluation of your matter.