Four North Texas real estate financing executives have been found guilty on 10 federal counts of fraud. According to evidence presented at trial, executives for Grapevine-based United Development Funding orchestrated a scheme to mislead investors and the SEC about their funds’ performance.
Founded in 2003, UDF used a family of five funds – UDF I, II, III, IV, and V – to invest in various residential real estate developers and private homebuilders. When developers failed to repay money they borrowed from one fund, triggering multi-million dollar shortfalls, the defendants transferred money out of another fund in order to pay distributions to the original fund’s investors, all without disclosing the transfers to the SEC and the investing public.
After five days of trial and almost 12 hours of deliberation, a federal jury convicted the defendants of ten counts, including conspiracy to commit wire fraud affecting a financial institution, conspiracy to commit securities fraud, and securities fraud. Those convicted include:
- UDF CEO Hollis Morrison Greenlaw
- UDF Partnership President Benjamin Lee Wissink
- UDF CFO Cara Delin Obert
- UDF Asset Management Director Jeffrey Brandon Jester
“UDF executives shuffled money from one fund to another without disclosing the comingling to investors or regulators,” said U.S. Attorney Chad Meacham. “The Justice Department takes financial improprieties seriously, and we are proud to hold these defendants accountable for their crimes. After a long battle, justice has been done.”
It was six years ago that the FBI stormed the offices of United Development Funding in Grapevine.
“These executives conspired to commit multiple fraud schemes in order to mislead investors and the SEC, with multi-million dollar losses,” said Matthew DeSarno, Special Agent in Charge of the FBI’s Dallas Division. “One of the FBI’s goals is to investigate corporate fraud in order to protect market integrity and investor confidence in the U.S. markets.”
According to the company’s About Us page, “UDF invests in the development and construction of new, affordable, single-family homes through a family of public and private funds, which direct investor capital towards the financing of homebuilders and land developers.”
The defendants now face up to 25 years each in federal prison.
The Federal Bureau of Investigation’s Dallas Field Office conducted the investigation. Assistant U.S. Attorneys Tiffany H. Eggers (NDTX Criminal Chief), Rachael Jones, Elyse Lyons, and Errin Martin prosecuted the case. U.S. District Judge Reed C. O’Connor presided over the trial.
