United Development Funding IV (NASDAQ:UDF) Investor Investigation Concerning Potential Securities Laws Violations Announcedover possible Violations of Securities Laws

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Company Name(s): 
United Development Funding IV
Affected Securities: 
NASDAQ: UDF

December 15, 2015 (Shareholders Foundation) - An investigation on behalf of investors of United Development Funding IV (NASDAQ:UDF) shares over potential securities laws violations by United Development Funding IV and certain of its directors and officers in connection certain financial statements was announced.

The investigation by a law firm focuses on possible claims on behalf of purchasers of the securities of United Development Funding IV (NASDAQ:UDF) concerning whether a series of statements by United Development Funding IV regarding its business, its prospects and its operations were materially false and misleading at the time they were made.

United Development Funding IV reported that its annual Total Revenue rose from $53.16 million in 2013 to $87.89 million in 2014 and that its Net Income grew from $29.34 million in 2013 to $50.14 million in 2014.

On December 10, 2015, a 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—e.g., UDF I, UDF II, UDF III—was used to raise funds to bail out "prior vintages" of UDF, 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 auditor.

Shares of United Development Funding IV (NASDAQ:UDF) dropped from $17.60 per share to as low as $9.46 per share during December 10, 2015