It is encouraging the UDF V has continued to pay dividends around the $1.2 range. That's about 6%, which would be close to what they'd have to distribute on an un-levered fund.
They big question still left unanswered is why no UDF IV distributions last year?
If there is little impairment to V and IV, then most of the losses are centered around Buffington and III. The defense could then be that it was business risks that caused those. The SEC said UDF and Buffington were in protracted negotiations to unwind the partnership. IN an affidavit it was explained that another developer was going to come in and take over the Buffington deals combined with other new deals, which is what UDF apparently represented to the auditors. Perhaps they did that on good faith that it was going to get consummated until the Bass attack happened.
We are missing a lot of details but maybe that defense held water.
If the rising value of land in recent years allows Moyadi et al to pay off the loans at full value, then it's a hard case to make that it was a Ponzi scheme even if there were some transfers from IV to III.
I believe the SEC even acknowledged that UDF had the ability in the documents to transfer money from one fund to the other. Their complaint centered around how the story sold to investors didn't state that cash would be moved from one to the next in order to pay dividends. ie IV moved money to III in order to pay dividends. That isn't what was sold to investors but UDF did allow for that in all the various fund documents. Thus, there was no Ponzi and it was not legally wrong to do that- it is just that it was misleading to III and IV investors because it wasn't in presentations.
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