UDFI is a Maryland Real Estate Investment Trust, and they are governed by the Maryland REIT Law, which incorporates and operates side by side with the Maryland General Corporation Law. By statute, UDFI is required annually to provide a Statement of Affairs including a balance sheet and statement of operations. The statute doesn’t require that these be audited. The statute also requires UDFI to hold an annual meeting for purpose of electing trustees. The Declaration of Trust provides that UDFI will hold an annual meeting after delivery of the annual report. They take the absurd position that because they have not provided an annual report (a volitional omission on their part), they are not required to hold an annual meeting - ergo, no director has been elected for 8 years and Larry Jones and Jim Kenny have never been elected. It seems to be a crystal clear legal case that a judge should order an annual meeting. That lawsuit would be subject to their exclusive forum bylaw, which requires all internal corporate matters be litigated in Maryland courts.
As for derivative action, that is a very complicated process in Maryland. The shareholder bringing the case is first required to demand that the board cause the entity itself to bring the action against the offending parties, unless the shareholder can convince the court that such demand is futile. Asking directors to cause corporate entity to sue themselves would seem futile, but decisions in Maryland are not so crystal clear. Moreover, UDFI is represented by Venable, whose partner, Jim Hanks, authored much of the corporation and REIT statute and who have shall I say a very “cozy” relationship with the Maryland state court judges. UDFI has also shown they will spare no expense to maintain control and perpetuate the fraud that is now a decade old. There is the possibility of recovering legal fees in successful derivative action, but someone will have to foot a pretty substantial legal bill to advance on that path.
Other than that, all things at UDFI are peachy!
AI
