GRAPEVINE, Texas (CBSDFW.COM) – Four executives of a Grapevine-based real-estate company were found guilty of fraud on Friday, January 21, announced US Attorney for the Northern District of Texas Chad E. Meacham.
After a five day long trial and almost 12 hours of deliberation, a federal jury convicted United Development Funding (UDF) CEO Hollis Morrison Greenlaw, Partnership President Benjamin Lee Wissink, CFO Cara Delin Obert, and Asset Management Director Jeffrey Brandon Jester on ten counts.
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The charges included conspiracy to commit wire fraud affecting a financial institution, conspiracy to commit securities fraud, and securities fraud.
“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.”
“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.
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“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. I would like to thank the agents, analysts, and forensic accountants who spent years investigating these allegations, and our partners at the U.S. Attorney’s Office who worked to ensure justice in this case.”
According to evidence presented at trial the defendants orchestrated a scheme to mislead investors and the SEC about their funds’ performance.
UDF was founded in 2003 and headquartered in Grapevine. It utilized 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.
The defendants now face up to 25 years each in federal prison.
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The Federal Bureau of Investigation’s Dallas Field Office conducted the investigation. Assistant US Attorneys Tiffany H. Eggers (NDTX Criminal Chief), Rachael Jones, Elyse Lyons, and Errin Martin prosecuted the case. US District Judge Reed C. O’Connor presided over the trial.
