United Development Funding IV fka UDFI

[TwGee]

If we don't vote and they get 50% +1 then it will pass with their recommendation, correct? In the letter it says "If no direction is indicated, this proxy will be voted "FOR" the Trustee nominee in item 1." I don't see anywhere it says they won't have a quorum if they don't get 50% of votes. Where is that described?

[ofirm]

Going to take your advice with my units. thank you.

[REITInvestor58]

Do not submit your proxy. If they don’t get 50% of outstanding shares plus 1, they don’t have a quorum and cannot conduct business at the meeting. Gives NexPoint time to make something happen.

[Phaedrus77]

I believe NexPoint initiated the tender offer just to get a list of shareholders. If not that, then it was for a reason other than actually buying stock. They were already at the ownership cap, so they couldn't buy any regardless of how many were tendered.

UDF management put the cap in place as another way to entrench themselves, along with staggering the Board, refusing to hold annual meetings and not allowing shareholders to vote on directors for 8 years.

Because nothing says, "Shareholders should be content with current management" like 20 years worth of prison sentences, a deregistered stock, sanctions for the auditor, etc etc etc.

[Dr Quest]

You mean after 13 tender offer extensions by Nexpoint to buy UDFI IV at $1.10, nobody tendered any shares? Did the majority have to take the offer or else the offer was cancelled?

I wasn't going to sell at $1.10 so I never really paid attention to the deets.

[Phaedrus77]

"How many shares did Nexpoint acquire at $1.10... anybody?"

zero

[Dr Quest]

It's not like you have a choice anyway, but I'll take the board members who "oversaw" a business convicted of wrong doing over Dondero, who has a 1.5B suit against him by UBS and seems even more corrupt.

The devil I know over the devil I don't.

How many shares did Nexpoint acquire at $1.10... anybody?

[Phaedrus77]

Well....all of the current trustees oversaw a business that was convicted of being a ponzi scheme (or ponzi-like, if you prefer). So they don't exactly have clean hands.

Like I said before, let the shareholders vote. If Dondero's a crook and UDF shareholders want to vote him in, then let them. What's it say about the current trustees that they think Dondero is a crook and that they're also afraid he'd beat them?

Also, NexPoint only owns ~5% of the stock...it's not like they have a controlling position.

Finally, how many shares of UDF IV do the current trustees own? Based on the last proxy filed with the SEC (the 2023 proxy doesn't contain share ownership information):

Phillip Marshall - 2,000 shares
Heath Malone - 4,347 shares
Steve Finkle - 20,000 shares
James Kenney - not listed in last proxy...I assume 0, unless he bought some after it was deregistered.
Lawrence Jones - not listed in last proxy. I assume 0, unless he bought some after it was deregistered.

So the trustees own a total of 26,347 shares. That's less than I own. And they're telling me who I can & can't vote for? Why do they care so much....maybe because they want to keep the gravy train rolling.

[Dr Quest]

And Dondero being sued by by UBS is even worse....but you're right , they are still trading...for now. We'll see what the future brings

[Phaedrus77]

Thanks for posting that.

From the letter, "The stock price of NXDT, NREO’s parent company, is currently trading at a discount of approximately 70% to its book value and has declined 64% over the past 5 years."

Well, at least it's still trading...

One thing I've never understood about corporate elections (in general, and in UDF's case)...if the trustees are so confident that they've treated shareholders well, then why don't they un-stagger the board and let the shareholders vote on all the trustees this year?

If they done such a great job of steering this ship through the Bass-infested waters, then they should have no concerns about being re-elected.

For some reason, UDF management has chosen to treat all shareholders like shit, even though it was only Bass (a non-shareholder) that caused them any problems. If this management team had any integrity at all, they'd all admit that UDF needs new leadership (even if they personally did nothing wrong) and resign immediately.

[Dr Quest]

https://udfonline.com/wp-content/uploads/2023/11/2023-UDFIV-ShareholderCommunication-Nov6_Final.pdf

[Phaedrus77]

I voted against them. According to a NexPoint suit, they are led by an ex-employee of Whitley Penn, UDF IV's old auditor. And we all know what a bang up job Whitley Penn did on the audits.

If they'd clean house, they'd have no problem getting an auditor. IMO, their proclaimed "difficulty" was nothing but a bullshit excuse because they didn't want financials to come out before Greenlaw's trial (or appeal).

[Enterprising Investor]

I hope no one votes “against” the accountants.

It might be impossible to find another firm out there up to the task!

[freddie me]

I assume people are "witholding" for director and "for" acct?

[freddie me]

I will attempt to add annual meeting info as a sticky as well

[Dharmabumster]

me again, I unfortunately own 2865 shares of UDFI. I just noticed in the vote for trustee, it says FOR or ABSTAIN- WHY CAN'T I VOTE AGAINST THIS GUY. This has got to be some kind of violation of shareholder rights. What the F.....K

[Runaway27]

Thanks, and that $52 given to them is spread out over several years so basically you lend them money and they pay you back less than half over the course of years considering inflation....Wow, can I do that with a few million??

[Phaedrus77]

UDF V is liquidating. The last update says it's currently not originating any new loans and "intends to continue returning capital...as the portfolio liquidates."

Its last remaining loan was supposed to mature in 2023, but they extended the maturity date to 2025. Got to keep that gravy train rolling, I suppose. I wonder how much Kenney is paid from UDF V.

Also, the opening of their shareholder letter boasts that they've made "total cash distributions to shareholders to over $32 million." Of course, a glance at the balance sheet shows $52 million of paid-in capital....so shareholders give UDF $52, UDF gives shareholders back $32 and has remaining assets of $12.

And UDF apparently wants a cookie for their stellar performance.

[Runaway27]

I've been reading these posts for several years, Where does UDF V sit with this circus? Is it separate or were they combined under the same umbrella? I'll write and do what I have to if it helps the cause that we have all been suffering with! I've been holding several thousand "V" shares but luckily rid myself of the IV before the implosion!

[Phaedrus77]

Since each shareholder is only allowed 1 question at the meeting, we might want to coordinate questions as well. Otherwise, we'll probably all submit versions of the same "What's a guy gotta do to get fired around here?" question.

[REITInvestor58]

Coordinating through NexPoint will be most efficient/effective way. [e-mail] is way to begin communication.

[Enterprising Investor]

Freddie is right.

Flood the court!

I suggested that shareholders write letters to the judge assigned to the Meruelo Maddux Properties, Inc. bankruptcy case. The docket contained a shareholder list. It took me some time, but eventually sent a letter to the majority of the shareholders listed. Some letters did end up in the wrong mailboxes - those with connections to insiders.

Eventually, the judge appointed an Official Equity Committee. Investors with larger investments took over.

Equity survived. The name was changed to EVOQ Properties, Inc., and the company was later sold to a group made up of Atlas Capital Investors III, LLC, Square Mile Capital Management, LLC, and USAA Real Estate Company.

We can create change here.

[freddie me]

*I recommend holders write combined letter to Courts re mistreatment

Would be great if e can get 50 signatures, provide our collective holdings

I'm happy to help, def dont think i'm most informed holder

[freddie me]

Scandal-Ridden Texas Real Estate Fund Faces Investor Rights Suit
Bloomberg Law
By Andrew Ramonas and David Hood
19 October 2023

• COURT: Md. Cir. Ct., Baltimore City

A United Development Funding shareholder has sued the beleaguered Texas-based real estate investment trust alleging it thwarted investors’ rights to nominate new board trustees after former executives were convicted of fraud.

UDF, ex-CEO Hollis Greenlaw and other trustees engaged in an “unlawful corporate governance scheme” to protect themselves from removal despite years of wrongdoing, shareholder NexPoint Real Estate Opportunities LLC said in a complaint filed in Maryland state court Thursday. NexPoint is the largest shareholder of UDF IV, a UDF fund organized under Maryland law.

Greenlaw and three former UDF executives who aren’t targets of NexPoint’s lawsuit were convicted in 2022 of using what prosecutors said was “a classic Ponzi-like scheme” to pay one fund’s shareholders with money from another fund’s investors while sidestepping disclosures to the Securities and Exchange Commission. The executives appealed, but lost their challenge in July. Greenlaw is serving a seven-year prison sentence.

“UDF IV has perpetrated and covered up a massive fraud on shareholders, effectively depriving them of their fundamental right to sell their shares and allowing the Company to languish for years with no clear business plan or direction,” NexPoint said in its complaint, which is seeking the ability to nominate and elect new board members.

UDF did not immediately respond to a request for comment.

Years-Long Concerns

The lawsuit comes three years after NexPoint submitted paperwork to the SEC saying it was interested in assuming the management of UDF IV following mounting governance concerns and legal issues for the fund.

The shareholder’s 2020 filing followed an $8.2 million settlement between Greenlaw and other ex-UDF officials and the SEC in 2018 over allegations that fueled the criminal case against the former CEO and others. UDF last held an annual meeting of shareholders in 2015, violating Maryland law, NexPoint said.

Greenlaw and other trustees quickly amended the UDF IV’s bylaws to prevent NexPoint from making board nominations after its SEC filing, the shareholder said. NexPoint said it tried to nominate candidates again ahead of an annual meeting scheduled for this December, but was denied by the fund.

NexPoint also is suing UDF, Greenlaw and other former executives in Texas state court, alleging they inappropriately used fund money to pay legal fees battling criminal convictions. UDF board members didn’t appear to assess whether the ex-officials were entitled to legal assistance, NexPoint said in its Maryland lawsuit.

“UDF IV’s shareholders must have the right to vote these individuals out of office and replace them with individuals who will protect the shareholders’ investments and try to deliver to shareholders the returns that were promised when they invested,” NexPoint said.

NexPoint is represented by Zuckerman Spaeder LLP.

The case is NexPoint Real Estate Opportunities, LLC v. United Development Funding IV, Md. Cir. Ct., Baltimore City, complaint filed 10/19/23.

[freddie me]

Scandal-Ridden Texas Real Estate Fund Faces Investor Rights Suit
https://news.bloomberglaw.com/esg/scandal-ridden-texas-real-estate-fund-faces-investor-rights-suit

[REITInvestor58]

Their position is only the Managing Trustee is up for election. Under plurality voting, even if you don’t vote for him, so long as someone else does, he will be elected. For those who are ready for change, reaching out to [e-mail] is perhaps your best chance to effect change.

[Phaedrus77]

Well, if you think the Trustees have done a bang-up job, then vote yes. Otherwise, vote no. The vote doesn't have any impact on whether or not he gets elected, and none of these clowns have any shame, so it really doesn't matter.

[Phaedrus77]

Schwab sent out the proxy today. Captain Jim is involved in some related party transactions...he's as bad as the rest of these clowns.

He's paid $500k, $476k of which is paid from UDF IV. Funny how all of the other employees are paid out of the Advisor (and whose salaries are presumably covered by the advisory fees that UDF IV pays), but Captain Jim, whose position was mandated by a court settlement, is paid out of UDF IV.

So the Advisor runs the business in such a way that 4 of its executives go to jail, the stock is deregistered, etc etc. A court settlement then requires that a Chief Compliance Officer is appointed....and instead of the Advisor bearing the cost of said appointment, it makes the shareholders pay for it.

You can't make this shit up.

[Dharmabumster]

need some help, should i vote yes or no for the Trustee??? THANKS

[REITInvestor58]

See text of article issued within past hour by Bloomberg law. Anyone desiring more information or wishing to join the cause for shareholder justice at UDF IV, please email [e-mail]. Here is the Article:

Scandal-Ridden Texas Real Estate Fund Faces Investor Rights Suit
Bloomberg Law
By Andrew Ramonas and David Hood
19 October 2023

• COURT: Md. Cir. Ct., Baltimore City

A United Development Funding shareholder has sued the beleaguered Texas-based real estate investment trust alleging it thwarted investors’ rights to nominate new board trustees after former executives were convicted of fraud.

UDF, ex-CEO Hollis Greenlaw and other trustees engaged in an “unlawful corporate governance scheme” to protect themselves from removal despite years of wrongdoing, shareholder NexPoint Real Estate Opportunities LLC said in a complaint filed in Maryland state court Thursday. NexPoint is the largest shareholder of UDF IV, a UDF fund organized under Maryland law.

Greenlaw and three former UDF executives who aren’t targets of NexPoint’s lawsuit were convicted in 2022 of using what prosecutors said was “a classic Ponzi-like scheme” to pay one fund’s shareholders with money from another fund’s investors while sidestepping disclosures to the Securities and Exchange Commission. The executives appealed, but lost their challenge in July. Greenlaw is serving a seven-year prison sentence.

“UDF IV has perpetrated and covered up a massive fraud on shareholders, effectively depriving them of their fundamental right to sell their shares and allowing the Company to languish for years with no clear business plan or direction,” NexPoint said in its complaint, which is seeking the ability to nominate and elect new board members.

UDF did not immediately respond to a request for comment.

Years-Long Concerns

The lawsuit comes three years after NexPoint submitted paperwork to the SEC saying it was interested in assuming the management of UDF IV following mounting governance concerns and legal issues for the fund.

The shareholder’s 2020 filing followed an $8.2 million settlement between Greenlaw and other ex-UDF officials and the SEC in 2018 over allegations that fueled the criminal case against the former CEO and others. UDF last held an annual meeting of shareholders in 2015, violating Maryland law, NexPoint said.

Greenlaw and other trustees quickly amended the UDF IV’s bylaws to prevent NexPoint from making board nominations after its SEC filing, the shareholder said. NexPoint said it tried to nominate candidates again ahead of an annual meeting scheduled for this December, but was denied by the fund.

NexPoint also is suing UDF, Greenlaw and other former executives in Texas state court, alleging they inappropriately used fund money to pay legal fees battling criminal convictions. UDF board members didn’t appear to assess whether the ex-officials were entitled to legal assistance, NexPoint said in its Maryland lawsuit.

“UDF IV’s shareholders must have the right to vote these individuals out of office and replace them with individuals who will protect the shareholders’ investments and try to deliver to shareholders the returns that were promised when they invested,” NexPoint said.

NexPoint is represented by Zuckerman Spaeder LLP.

The case is NexPoint Real Estate Opportunities, LLC v. United Development Funding IV, Md. Cir. Ct., Baltimore City, complaint filed 10/19/23.

[TomB3]

Changes to MD REIT law:
https://thedailyrecord.com/2023/10/16/changes-to-md-s-corporate-and-business-laws/
Effective Oct 1, 2023

[Phaedrus77]

The proxy is supposed to be sent out in October and it should have all the information you're looking for.

[Davlund]

With the shateholders meeting set for Dec. 15th, how early will we be able to see the Bio's on t he Trustee's that we will be voting on? And will we get advanced notice on any of the motions that are up for a vote by the shareholders? Hopefully sites like this one can keep many of us more informed than what we can see on the company website. What good it does is anyones guess.

[Phaedrus77]

Sure, but you’ve still got 3 days to put your name in for this year. Somebody needs to run against these clowns.

[Enterprising Investor]

Maybe next year?

[Phaedrus77]

From the bylaws regarding shareholder nominations:

that in connection with the Trust’s first annual meeting after July 22, 2020, or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the shareholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Central Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made.

The announcement was made on 8/31, so the deadline is 9/10…or this Sunday.

Call me crazy, but I bet they purposefully didn’t put the notice on their website until yesterday rather than the day the PR was released.

Since nexpoint is engaged in litigation with them, it can’t even nominate trustees.

[Davlund]

I see IV and V are getting the same quarterly dividend as in the past or should I say the same return of capital as in the past!

[Phaedrus77]

Shareholder meeting is Dec 15th. Not sure why this isn’t also posted on UDF’s news page. It was apparently released last Thursday.

https://www.globenewswire.com/news-release/2023/08/31/2735753/0/en/United-Development-Funding-IV-Announces-Third-Quarter-Distribution-and-Date-of-Virtual-Annual-Shareholder-Meeting.html

[Runaway27]

Anybody else get the "Dear Shareholder" letter stating the audit and value of UDF V at $3.90 a share and thanking us for out continued F..king..I mean support?

[Jh5142]

The stock was driven down to less than $2 from $17 when, it appears, the asset value is above $10 per share.

There's a reason www.udfexposed.com website was taken down around the time that UDF published audited financials that countered the 'UDF IV is a worthless Ponzi like scheme' thesis.

Seems to me like a potential problem for those who profited by the decline well below asset value. Much of the info contained in udfexposed appears to have been incorrect. And, based on some court filings, that info was aggressively marketed.

[Phaedrus77]

I recently set up an account at CTT auctions.

UDF IV sold between $2.40 and $3.04 per share from June - December of 2022.

I wonder why UDF “opportunistically” paid $5.75/share when it repurchased 11,813 shares in 2022. Maybe they can explain this at the annual meeting…

Anyone want to bet those repurchased shares belonged to one of the felons?

[ofirm]

one of the things going over here is running the statue of limitation by those of used monies not belonging to them.
if you show that the trusties would not sue their executives, you extend the statue of limitation in certain cases.

[Phaedrus77]

Yes, but the Insys case is the equivalent of the UDF Trustees suing the felons to recoup the legal fees, not a shareholder suing the Advisor.

I hope shareholders elect new trustees (assuming a meeting is actually held), but it’s not a given.

[ofirm]

This is actually a very important judgement. once management is changed, the management entities (who are Delaware corporations) will be
very volunerable to a lawsuit from the new management.

[Phaedrus77]

Must be nice to have someone actually looking out for shareholders.

[Enterprising Investor]

Insys founder Kapoor should repay $6 mln for failed legal defense, judge rules (8/18/23)

By Dietrich Knauth

Aug 18 (Reuters) - Convicted Insys Therapeutics Inc founder John Kapoor should repay his bankrupt opioid manufacturer about $6 million in legal fees that the company paid for unsuccessful criminal defense, a U.S. bankruptcy judge ruled on Thursday.

Kapoor was convicted in 2019 of conspiring to bribe doctors to prescribe the fentanyl spray Subsys and defraud insurers into paying for the drug. He was released from prison in June after serving two years of a 5-1/2 year sentence.

Arizona-based Insys, which filed for bankruptcy in 2019, advanced $5.97 million to pay Kapoor's criminal defense attorneys, as required by the company's bylaws and a separate indemnity agreement with Kapoor.

But Kapoor was not entitled to the defense for any "knowingly fraudulent or deliberately dishonest" misconduct, according to an opinion by U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware.

Dorsey sided with bankruptcy trustee William Henrich, who was appointed to pursue legal claims and recover assets for the benefit of Insys's creditors. Henrich argued that Kapoor's conviction meant that he was not entitled to a legal defense funded by the company.

Dorsey rejected Kapoor's arguments that his defense was partially successful and his attorneys at the law firms Paul, Weiss, Rifkind, Wharton & Garrison and Ropes & Gray also performed work that benefited the company.

Kapoor hired Paul Weiss in 2016 in response to investigations launched by the U.S. Departments of Justice and Health & Human Services, and he retained Ropes & Gray after being indicted on criminal charges in 2017.

Dorsey did not issue a final order, saying that the bankruptcy court does not have final authority to rule on matters of state law, like the interpretation of indemnity agreements and company bylaws. But he recommended that a federal judge in Delaware award the full reimbursement to Insys.

Eric Madden, an attorney representing the trustee at Reid Collins & Tsai, said that Henrich was pleased with the decision and would continue to pursue claims against Kapoor for the broader damages that he inflicted upon Insys and its creditors.

"This is only the beginning of holding Kapoor accountable," Madden said Friday.

Attorneys for Kapoor did not immediately respond to a request for comment.

Kapoor is the highest-level corporate executive convicted at trial of crimes related to the opioid epidemic that has killed hundreds of thousands of Americans in the past two decades.

Kapoor unsuccessfully appealed his conviction to the 1st U.S. Circuit Court of Appeals, and the U.S. Supreme Court declined to review his case in 2022.

The case is Insys Liquidating Trust v. Kapoor, U.S. Bankruptcy Court for the District of Delaware, No. 21-50557.

For the Insys Liquidating Trust: Morgan Menchaca, Eric Madden and Michael Yoder of Reid Collins & Tsai

For Kapoor: Peter McGivney and Michael McDermott of Berger Harris; Richard Pedone and Mark Knights of Nixon Peabody

https://www.reuters.com/legal/government/insys-founder-kapoor-should-repay-6-mln-failed-legal-defense-judge-rules-2023-08-18/

[Phaedrus77]

Shareholder meeting intended to be held in Q4. Rest of the letter is more fluff.

https://udfonline.com/wp-content/uploads/2023/08/2023-UDFIV-ShareholderCommunication-Aug15-FINAL.pdf

I see they filed another appeal in the Nexpoint case. Delay, delay, delay.

[Phaedrus77]

UDF V released its financials. BV is about $3.90 per share.

It has one loan outstanding. The loan was supposed to mature on 7/31 but is in the process of being extended to 6/30/25.

Maybe we’ll get an annual meeting announcement next.

[REITInvestor58]

Technically they can apply to have shares quoted in the Pinks (which is not nearly the same thing as a "listing" on a formal exchange). Practical issue for them is they have to find a sponsoring broker-dealer and a sponsoring law firm. Once shares begin trading again, they become liable for the information they disseminate (or do not disseminate), and broker-dealers and law firm take on potential additional liability as well.

[Enterprising Investor]

Michael Best: OTC Markets Guide

https://www.michaelbest.com/portalresource/OTC-Markets-Guide_Michael-Best-Securities-Team