Replies to post #2 on United Development Funding IV fka UDFI

[Enterprising Investor]

Grapevine’s United Development Funding offers investigation that refutes fraud claims (5/17/16)

By Steve Brown

A Grapevine investment and lending firm that’s been under federal scrutiny says an independent investigation by Dallas law firm Thompson & Knight finds no wrongdoing.

United Development Funding has been accused by a Dallas hedge fund investor and investigated by federal agents over claims of fraud.

UDF halted trading of one of its real estate investment trusts earlier this year after federal agents seized documents at the company headquarters.

The shut down of the United Development Funding IV came after Dallas’ Hayman Capital said the firm of mishandled investor funds, overstating the value of its assets and making improper loans to developers.

UDF officials have denied Hayman’s claims that the company was running a “billion dollar house of cards” and a “Ponzi-like real estate scheme.”

UDF said Tuesday that its audit committee composed of three of its independent directors in December hired Thompson & Knight to perform “a rigorous and exhaustive review of allegations made by Hayman Capital Management L.P. and others.”

The directors are Steven J. Finkle, J. Heath Malone and Phillip K. Marshall.

While UDF did not disclose all the details of the investigation, it said the “team searched over 1.7 million e-mails and reviewed thousands of documents.”

It said that the study by Thompson & Knight showed “no evidence of fraud or misconduct on the part of the trust, its management, or its advisor.”

The company went on to say that there was “no evidence of deception, no evidence that auditors were misled, and no evidence that efforts were made to defraud investors.”

However, UDF did say that the forensic accounting and legal research “did identify areas to be considered for remedial action.”

Thompson & Knight representatives confirm that they did the investigation of UDF IV’s operations at the bequest of the firm’s audit committee. The Dallas law firm provided no further details.

A spokesman for UDF said that Thompson & Knight was not hired by the firm and does not represent the firm in ongoing legal matters. “They did this at the request of the independent trustees,” said Jeff Eller.

He said the company has still not hired a full-time outside independent auditor.

The real estate investment trust also has not yet filed its 10-K financial statements for 2015.

UDF is facing multiple shareholder lawsuits. And company officials say they were called to give testimony to a federal grand jury.

http://bizbeatblog.dallasnews.com/2016/05/united-development-funding-says-investigation-refutes-claims-against-grapevine-firm.html/?_ga=1.255738440.1528246408.1462720517

[Enterprising Investor]

Independent Investigation of United Development Funding IV Finds No Evidence of Fraud (5/17/16)

Investigation conducted by Thompson & Knight LLP and forensic accountants from a global accounting firm

GRAPEVINE, Texas, May 17, 2016 (GLOBE NEWSWIRE) -- An independent in-depth investigation of United Development Funding IV ("UDF IV" or the "Trust") (NASDAQ:UDF) conducted by nationally recognized experts is now substantially complete. The Trust's Audit Committee commissioned the independent investigation in December 2015 by the law firm Thompson & Knight LLP with the assistance of independent forensic accountants from a global accounting firm.

The UDF IV Audit Committee is comprised of three independent directors. More information can be found at

http://investors.udfiv.com/committeechart.aspx?iid=4213398.

The independent investigation team performed a rigorous and exhaustive review of allegations made by Hayman Capital Management, L.P. and others. The Audit Committee provided the independent investigation team with full and unrestricted access to documents, records, communications and personnel and asked it to pursue every path that the facts warranted.

During the course of the independent investigation, the investigation team searched over 1.7 million e-mails and reviewed thousands of documents. The investigation team performed an in-depth review of the allegations regarding the Trust's business and conducted extensive interviews with key management of the Trust, its advisor and its asset manager. The team thoroughly analyzed the Trust's legal and financial reporting documents and records.

The independent investigation team found:

No evidence of fraud or misconduct on the part of the Trust, its management, or its advisor.

No evidence to substantiate allegations levied by Hayman Capital Management, L.P. of the operation of a Ponzi scheme. The business model was reviewed in great detail. The classic Ponzi scheme elements, as described by the Securities and Exchange Commission ("SEC") and relevant case law, are not present.

No evidence of deception, no evidence that auditors were misled, and no evidence that efforts were made to defraud investors.

Nothing that indicated any deficiency in the integrity of the management team of the Trust, its advisor and its asset manager.

The investigation did identify areas to be considered for remedial action.

About United Development Funding IV

United Development Funding IV is a Maryland real estate investment trust listed on The NASDAQ Global Select Market. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.

http://www.nasdaq.com/press-release/independent-investigation-of-united-development-funding-iv-finds-no-evidence-of-fraud-20160517-00838