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DBJ: UDF Execs to Remain Free Pending Sentencing on Securities Fraud Convictions

January 25, 2022 Bill Hethcock of the Dallas Business Journal

The CEO and three other executives of Grapevine-based United Development Funding convicted of securities fraud, wire fraud and conspiracy will be free while they await sentencing in May, a federal magistrate ruled Monday.

Hollis Greenlaw, CEO and chairman of UDF’s board of trustees, was taken into custody along with three other convicted executives of the residential development lending firm on Friday after a jury found them guilty of 10 counts apiece, including securities fraud, wire fraud affecting a financial institution and conspiracy to commit securities fraud.

In a detention hearing Monday, U.S. Magistrate Judge Jeffrey Cureton ruled that the executives don’t pose a high flight risk and can remain free until a sentencing hearing on May 20. As terms of their release, Cureton continued the same conditions set in an Oct. 19 hearing shortly after the four were initially arrested.

Some of those conditions include supervision by the U.S. Probation Office, continued employment, surrendering of passports and no firearm possession. The convicted executives are also prevented from incurring new debt, opening new lines of credit or selling or transferring substantial assets without the approval of the court.

Greenlaw appeared in federal court along with 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. The four were shackled and wearing khaki jail scrubs and sandals.

Cureton’s decision came after testimony from family members and a request by federal prosecutors for the four to remain incarcerated pending sentencing.

Assistant U.S. Attorney Tiffany Eggers said Greenlaw, Obert, Jester and Wissink face punishments of roughly 12 to 14 years in federal prison on the low end and 22 to 27 years in the upper range, according to federal sentencing guidelines. Where they land on that spectrum depends on how much the financial losses are calculated to total and on each defendant’s role and level of participation in the crimes, according to the guidelines.

The amount of losses has not yet been tallied.

“It’s now very, very real that prison is a likelihood,” Eggers said. “That’s why the government argues for the defendants to be detained.”

About 80 people, including family members, friends and coworkers of the Greenlaw, Obert, Jester and Wissink, filled the second-floor courtroom gallery to near capacity.

The four UDF executives were convicted of defrauding investors 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 its different funds to deceive banks and investors and enrich themselves.

For more coverage on the trial from the Dallas Business Journal, please click here.

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