A judge has given federal prosecutors more time to track down alleged victims who lost money or were duped by North Texas-based United Development Funding and the firm’s executives. UDF and its executives were convicted of misusing proceeds from investors and financial institutions in a Ponzi-like scheme involving loans to residential housing developers across Texas.
Federal prosecutors say that roughly 30,000 investors are victims of the UDF executives under the Crime Victims Rights Act. The act provides certain rights to victims in federal criminal proceedings, including the right to know about and be heard at public court proceedings.
The government is collecting Victim Impact Statements.
The punishment phase is pending after a high-profile trial that concluded in January with 10 convictions for Hollis Greenlaw, the residential development lending firm’s CEO and chairman, and three of Greenlaw’s colleagues.
Because of the number of alleged victims, U.S. District Judge Reed O’Connor on Wednesday gave the government more time to contact the victims and prepare the impact statements that will be used to calculate the amount of restitution that prosecutors will seek during sentencing.
Sentencing is set for May 20 before O’Connor, who presided over the trial.
The federal Crime Victims Rights Act requires the U.S. Department of Justice and other federal departments and agencies involved in investigating or prosecuting crimes to “make their best efforts” to see that crime victims know of and can exercise their rights.
In the January trial, Greenlaw was found guilty on 10 counts, including securities fraud, wire fraud affecting a financial institution and conspiracy to commit securities fraud. Cara Delin Obert, UDF chief financial officer; Jeffrey Brandon Jester, UDF director of asset management; and Benjamin Lee Wissink, UDF partnership president and committee member, were convicted on the same 10 counts.
The four executives of Grapevine-based UDF were convicted of defrauding the investing public, shareholders and banks using funds that provided more than $1 billion in loans to developers of residential housing communities and, to a lesser extent, homebuilders.
Prosecutors in the Northern District of Texas charged the UDF executives with conspiring to illegally shift investment dollars in three of the firm’s different funds to deceive banks and investors and enrich themselves.
For more about the convictions, see this story.
The Justice Department is using its website to direct victims to a case-specific website where all required notices under the Crime Victims Rights Act are posted.
In addition, the government notified broker-dealers and financial advisors who offered UDF investments to their clients so that the broker-dealers and financial advisors can provide the information to their clients who invested in UDF funds.
Lawyers for the UDF executives argue that investors in UDF’s funds are not victims under the CVRA.
The names of more than a dozen banks that lent to UDF surfaced in the trial and in court documents, and prosecutors contend that some of those institutions are among the victims.
They include Dallas-based Texas Capital Bank, Plano-based LegacyTexas Bank, Dallas-based Veritex Bank, Arlington-based Affiliated Bank (bought in 2018 by Susser Banc Holdings Corp. and renamed Susser Bank), and Dallas-based United Texas Bank. Others include Houston-based Prosperity Bank, Independent Bank of Dallas, Ruston, La.-based Origin Bank, Capital Bank of El Paso, UMB Bank, Bank of America, BB&T (formerly based in Winston-Salem, N.C., and now merged with SunTrust to form Charlotte-based Truist), and City National Bank.
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