U.S. Attorney for the Northern District of Texas Chad E. Meacham announced that multiple executives of a Grapevine-based real-estate company were convicted of fraud on January 21.
According to a report by CBS 11 News, four executives of United Development Funding were involved in the case.
United Development Funding (UDF) CEO Hollis Morrison Greenlaw, CFO Cara Delin Obert, Partnership President Benjamin Lee Wissink, and Asset Management Director Jeffrey Brandon Jester were convicted of ten counts of fraud by a federal jury after a five-day-long trial and about 12 hours of deliberation.
“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.
The four were found guilty of conspiracy to commit securities fraud, conspiracy to commit wire fraud affecting a financial institution, and securities fraud.
Evidence presented at trial shows that the defendants put together a scheme to mislead investors and the SEC about the performance of their funds.
CBS 11 News reported that UDF, founded in 2003, is an investment company invested in various residential real estate developers and private homebuilders using a family of five funds — UDF I, II, III, IV, and V. Per the report, developers failed to repay the money borrowed from one fund, and that led to multi-million dollar shortfalls.
The four executives transferred money from another fund to cover up the shortfalls. They used that money to pay distributions to the original fund’s investors without disclosing the transfers to the investing public and the SEC.
U.S. Attorney Chad Meacham said that the four executives “shuffled money from one fund to another without disclosing the co-mingling to investors or regulators.”
“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,” Meacham said.
The trial was presided over by U.S. District Judge Reed C.O’Connor. The investigation was conducted by the Federal Bureau of Investigation’s Dallas Field Office. Prosecutors on the case were Assistant U.S. Attorneys Tiffany H. Eggers (NDTX Criminal Chief), Elyse Lyons, Errin Martin, and Rachael Jones.
Each of the four defendants now faces up to 25 years in federal prison.
