Tags: fbi | raids | grapevine | financial | firm

FBI Raids Grapevine Financial Firm After Ponzi Scheme Claim

Image: FBI Raids Grapevine Financial Firm After Ponzi Scheme Claim

 FBI agents arriving at Texas financial firm. (image from WFAA.com video)

By    |   Friday, 19 Feb 2016 06:32 AM

The FBI raided a Grapevine, Texas financial firm Thursday after the business was accused by a hedge fund of operating like a Ponzi scheme, reported the Fort Worth Star-Telegram.

FBI agents spent hours at the headquarters of United Development Funding as agents took possessions of boxes inside the building, the newspaper said. FBI Special Agent-in-Charge Thomas M. Class told the Star-Telegram only that it was "conducting (a) law enforcement activity" at the business.

Dallas hedge fund operator Kyle Bass had charged earlier that United Development Funding had characteristics of a Ponzi real estate investment scheme, calling it "a billion-dollar house of cards."

On the Hayman Capital Management website UDFexposed.com, Bass had charged that United Development Funding was using new investors' money to pay existing investors, that it was distorting its track record and financial condition with investors and preying on so-called "Mom and Pop" retail investors.

Bass, though, has admitted that he made money from the drop of United Development Funding Stock, reported the Dallas Morning News. The price of UDF stock tumbled 54.6 percent to $3.20 a share before trading on its IV shares were stopped Thursday afternoon, said the Morning News.

United Development Funding stock was at $17.25 a share before the hedge fund attack, which began in December, said the Morning News.

Hollis Greenlaw, chief executive officer of UDF, posted a statement on the company's website on Feb. 5 charging that the hedge fund's website contained "multiple false and misleading statements" against it.

"We are confident that we have appropriate policies and procedures in place to ensure accurate financial reporting and compliance with all applicable rules and regulations," Greenlaw said. "… The hedge fund acknowledges on its website that they will profit if the stock price of UDF IV falls, and given this financial incentive we believe the hedge fund intends to continue disseminating misleading information."

The Star-Telegram said three shareholder lawsuits were filed in federal court earlier, charging that UDF deceived investors.

© 2017 Newsmax. All rights reserved.

   
1Like our page
2Share
TheWire
The FBI raided a Grapevine, Texas financial firm Thursday after the business was accused by a hedge fund of operating like a Ponzi scheme, reported the Fort Worth Star-Telegram.
fbi, raids, grapevine, financial, firm
329
2016-32-19
Friday, 19 Feb 2016 06:32 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved