December 11, 2015 – Kaplan Fox & Kilsheimer LLP (www.kaplanfox.com) has been investigating United Development Funding IV ("UDF IV" or the "Company") (Nasdaq: UDF), a Real Estate Investment Trust ("REIT"), for potential violations of the federal securities laws. Investors who purchased UDF IV securities may be affected.
On November 24, 2015, the Company disclosed that UDF IV's independent registered public accounting firm, Whitley Penn LLP, informed the Company that it has declined to stand for reappointment as the Company's independent registered public accounting firm.
On December 10, 2015, a third party report by the investor website Harvest (the "short seller report") was published asserting that the United Development Funding umbrella, which operates publicly listed and public non-traded REITs, "exhibits characteristics emblematic of a Ponzi scheme," as each successive UDF entity was used to raise funds to bail out "prior vintages" of REITs, which "continually needed a source of liquidity." The report further stated, in part, that (i) "[v]isits to actual development sites, which serve as collateral to UDF development loans, show that, in numerous instances, there is no development and the collateral is still non-income producing, raw land 2, 3, 5 (as much as 10) years after loans were issued"; (ii) a lawsuit was filed in Texas state court in October 2015, naming UDF IV as a co-defendant in a case involving allegations of fraud, breach of contract, tortious interference and fraudulent transfer; and (iii) in November 2015, several UDF entities disclosed that their independent registered public accounting firm, Whitley Penn LLP, declined to stand for reappointment as the Company's auditor.
Following the publication of the December 10 short seller report, shares of UDF declined by $6.05 per share, or more than 35%, to close at $11.15 per share on December 10, 2015.
In response to the short-seller report, UDF IV issued a statement on December 10, 2015 after the market closed stating that a "hedge fund is trying to unlawfully profit by manipulating and depressing the price of United Development Fund IV shares." Additionally, the Company disclosed that UDF IV and UDF III have been the subject of a nonpublic fact-finding investigation by the Staff of the Securities and Exchange Commission ("SEC") since April 2014.
On December 11, 2015, shares of UDF IV declined in midday trading by about 28% to $8.03 per share.
If you purchased shares of UDF and would like to discuss our investigation, please contact us by e-mailing
or by calling 800-290-1952.
Attorneys: Laurence D. King, Pamela A. Mayer